CONTENTS 1.STATE OF THE ECONOMY AND PROSPECTS 1 Growth of GDP and Other Macro Aggregates 1 Aspects of Growth 3 Quarterly Estimates of Growth of GDP 5 Private Final Consumption Expenditure 6 Investment 7 Net Exports 9 Public Finance10 Domestic Savings 14 Prices and Monetary Management 17 The Balance of Payments and External Position 18 Assessment and Policy Measures 20 Prospects, Short Term and Medium Term 21 Agriculture and Food Management 22 Industry and Infrastructure 23 Services Sector 23 Financial Intermediation 24 Human Development 24 Sustainable Development and Climate Change 25 2 SEIZING THE DEMOGRAPHIC DIVIDEND 26 Comparative Growth and Trade 27 Why is Business not creating more Productive Jobs? 36 Why are Services not creating Jobs? 49 Consequences and Conclusion 53 3 PUBLIC FINANCE 56 Fiscal Marksmanship 57 Non-Debt Receipts 58 Direct Taxes 60 Indirect Taxes 62 Collection Rates65 Service Tax 65 Tax Expenditure 66 Non-Tax Revenue 68 Non-Debt Capital Receipts 68 Actual Revenue Outcome in 2012-13 68 Expenditure Trends 70 Subsidies 70 Interest Payments 71 Pay Allowances and Pension 71 Central Plan Outlay 72 Supplementary Demands for Grants 72 Economic and Functional Classification 72 Expenditure Outcome in 2012-13 73 Deficit Outcome in 2012-13 73 Government Debt 73 Performance of Departmental Enterprises of the Central Government 74 State-Level Finances 76 Consolidated General Government 77 Outlook 78 4 PRICES AND MONETARY MANAGEMENT 79 Inflation-Broad Trends 79 WPI-Food Inflation 82 WPI Non- Food Non-Manufacturing Inflation 84 WPI Non-Food Manufacturing Inflation 85 Consumer Price Indices (CPIs) 86 Why Has Inflation Persisted? 88 Measures to Contain Inflation 92 Trends in Global Commodity Prices 94 RESIDEX 96 GDP Deflators 96 Monetary Management 97 Liquidity Management 101 Money Market 103 Challenges and Outlook 103 5 FINANCIAL INTERMEDIATION 105 Bank Credit 105 Rural Infrastructure Development Fund (RIDF) 109 Financial Inclusion 110 Financial Performance of Banks 113 Non-Banking Financial Institutions 116 Capital Market 120 Major Policy Initiatives 123 Insurance and Pension Funds 127 Challenges and Outlook 128 6 BALANCE OF PAYMENTS 130 Global Economy 130 Balance of Payments 131 Foreign Exchange Reserves 138 Exchange Rate 140 External Debt 145 Challenges and Outlook 148 7 INTERNATIONAL TRADE 149 World Trade 149 India's Merchandise Trade 150 World Trade in Services 160 India's Services Trade 161 Trade Credit 163 Trade Policy 164 WTO Negotiations in India 167 Bilateral and Regional Cooperation 169 Challenges and Outlook 171 8 AGRICULTURE AND FOOD MANAGEMENT 173 Performance of the Agriculture Sector 174 Crop Production 175 Agricultural Inputs 178 Price Policy for Agricultural Produce 180 Major Schemes/Programmes for the Agriculture Sector 182 Agricultural Marketing 185 Animal Husbandry, Dairying and Fisheries 185 Food Management 187 Commodity Futures Market 189 Challenges and Outlook 190 9 INDUSTRIAL PERFORMANCE 192 Investment in the Industrial Sector 195 Credit Flow to Industrial Sector 197 Corporate Performance 198 Organized Manufacturing 202 MSMEs 204 CPSEs 205 Foreign Direct Investment 205 Industry-Environment Linkages 207 Labour Relations 207 Challenges and Outlook 208 10 SFRVICES SECTOR 210 Services Sector: International Comparison 210 India's Services Sector212 Performance of Some Major Services 216 Challenges and Outlook 229 11 ENERGY, INFRASTRUCTURE AND COMMUNICATIONS 231 Overview of Performance 231 Energy 232 Power 234 Petroleum 237 Coal 240 Railways 240 Roads 242 Civil Aviation 244 Ports 245 Telecommunication 246 Urban Infrastructure 247 Credit Flow to Infrastructure Sector 249 Challenges and Outlook 250 12 SUSTAINABLE DEVELOPMENT AND CLIMATE CHANGE 254 Introduction 254 Sustainable Development and Climate Change in The Indian Context 256 International Collaboration and Efforts 258 Financing Climate Change 262 Challenges and Outlook 267 13 HUMAN DEVELOPMENT 269 Human and Gender Development: International Comparison 269 Inclusive Development 270 Poverty 272 Inequality 273 Employment 274 Socio-economic Profile of States and Inter-States Comparisons 278 Poverty Alleviation and Employment Generation Programmes 279 Social Protection Programmes 281 Rural Infrastructure and Development 282 Urban Infrastructure, Housing and Sanitation 283 Skill Development 283 Unique Identification Authority of India (UIDAI) 284 Education 284 Health 287 Women and Child Development 289 Welfare and Development of SCs, STs, OBCs and Other Weaker Sections 291 Outlook and Challenges 294