01

Agriculture

Growth of the sector

The Economic Survey of 2016-17, was tabled in Parliament on January 31, 2017. The Survey forecasted a growth rate of 6.75 to 7.5% for FY18, as compared to the expected growth rate of 6.5% in FY17. Over the medium run, the implementation of the Goods and Services Tax (GST), follow-up to demonetisation, and enacting other structural reforms should take the economy towards its potential real GDP growth of 8% to 10%.

GDP growth was expected to be between 6.75% and 7.50% in 2017-18.  Real GDP growth was expected at 6.5% in 2016-17 and GVA growth at basic prices 7.0% in 2016-17. The growth rate for the agriculture and allied sectors is estimated to be 4.1% for 2016-17.

The production of Kharif food-grains during 2016-17 was estimated at 135.0 million tonnes compared to 124.1 million tonnes in 2015-16. The area sown under kharif and rabi crops during 2016-17 was 3.5% and 5.9% higher respectively compared to 2015-16. During the South West Monsoon Season (June-September) of 2016 the country as a whole received rainfall which was 97% of its long period average (LPA). The stock of food-grains (Rice and Wheat) was 43.5 million tonnes as on December 01, 2016 compared to 50.5 million tonnes as on December 01, 2015 vis-à-vis the buffer stock norm of 30.77 million tonnes as on October 01, 2015.

Challenges

Agriculture now accounts for less than 15% of the gross domestic product (GDP); it is still the main source of livelihood for nearly half of our population. Agriculture is still the core of our food security. With over 1.3 billion mouths to feed, imports will not solve our problem if there is a severe drought and food shortage. However, the rising frequency of farmers’ agitations in Tamil Nadu, Maharashtra, Madhya Pradesh and elsewhere and the high incidence of farmer’s suicides are symptoms of a deep malaise in the sector.

Landless or marginal farmers lack the resources to either buy or lease more land or invest in farm infrastructure, irrigation, power, farm machinery, etc. to compensate for the scarcity of land. The large majority of small farmers are dependent on the rains. A weak monsoon or even a delayed monsoon means a significant loss of output. Farmers are usually at the mercy of traders. The better the crop the lower would be the price. Net income sometimes collapses if there is a very good crop of perishables. Agricultural Produce Market Committees (APMCs), which were supposed to protect the farmer, have had the opposite effect. Farmers have to sell their produce through auctions in regulated markets controlled by cartels of licensed traders, whose licenses give them oligopolistic market power.

Future of the sector

Agriculture should be practised as a culture by policy makers, says chairman of the parliamentary standing committee on farmers. A freedom that is must for someone who spends day and night in the farm fields to arrange food for us. According to JLN Srivastava, former agriculture secretary government of India, “A farmer with restrictions in land ceiling act (LCA), has to seek for different permissions to sell his own land which he may use for agrarian purposes, or for a better living”. According to Pre-Budget Memorandum by FICCI, “With PMFBY (Pradhan Mantri Fasal Bima Yojana), Government of India has taken a big step towards insurance of crops. However, for the success of the scheme it is important that state as well as central government should make provision for timely subsidy to insurance companies. This would be important to serve the additional features such as prevented sowing, on account claims and localized claims.”

The introduction of Agriculture Produce and Livestock Marketing Act (APML) 2017 may free both farmers and consumers from the core problem of price differences in different regions over different products. Higher market connectivity and free licensing mechanisms may prove to be highly responsive. Support of digital market tools like e-NAM (electronic national agriculture market) has though given some relief already. MS Swaminathanm, the father of Indian green revolution, suggests, “Effective crop insurance need to be affordable and must be small farmers’ friendly”. 

 

2017-18 Budget allocation

1.  In the Budget that was placed in 2017, Rs 35, 984 crore was allocated for agriculture sector.

2. Allocation under Pradhan Mantri Gram Sadak Yojana increased to Rs 19,000 crore.

3. MGNREGS got a sum of Rs 38,500 crore. 100% village electrification was promised by May 1,2018.

4. Agricultural credit target was set for Rs 9 lakh crore.

5. Government was supposed to allocate Rs 5,500 crore for crop insurance scheme.

6. The Paramparagat Krishi Vikas Yojana was supposed to bring 5 lakh acres under organic farming. 

Industry speak   

The Finance Minister will present the Union Budget for 2018-19 with major thrust on the agricultural and rural sector with an aim to fulfill the challenging agenda of doubling farmer’s income by 2022.

The agriculture sector is the backbone and crucial in our Indian economy that provides employment to 48.9 percent of the total workforce in India and contributes around 17-18% to the country’s GDP.This year’s budget can be a landmark in terms of agrarian policies and rural initiatives. Government will continue to keep emphasis for the growth of agriculture, focus more on the market reforms and to ensure that the farmers get a better price for the produce.

To ensure the advancement of the rural economy, the combination of strong agricultural regulations,ease of improving the source of non-farm incomes and thereby promoting rural employment schemes and good policy are especially important for the upgradation of rural sector.

The sector will attract more budgetary outlays from this budget. Reforms such as ‘Pradhan Mantri Fasal Bima Yojana’, the delivery of remunerative prices to farmers, electronic trading facilities, boost to agro processing facilities, crop insurance, etc. will all aid in reviving of the sector and the income of the farmers.

Also, the focus of the budget shouldalso be on dairy, fruit and vegetable items which have potential to grow 3-4 times. To meet the future challenges, governmentshould create additional milk processing infrastructure to aid the scheme of doubling farmers’ income. The contribution of dairy and animal husbandry to the GDP is 30% of the agricultural share and also growth rate is as high as 14%. Dairysector should be treated at par with the agriculture sector with more fund allocation during the budget, with attractive schemes where maximum people in rural India can grow. It should also enjoy the income tax exemption as the agriculture sector.

Mayank Jalan

Chairman and Managing Director, Keventer Agro Ltd.

Key Member of Expert Committee Group under NITI Aayog 

 

Technology

Growth of the sector

The internet industry in India is likely to double to reach $250 billion by 2020, growing to 7.5% of gross domestic product (GDP). The number of internet users in India is expected to reach 730 million by 2020, supported by fast adoption of digital technology, according to a report by National Association of Software and Services Companies (NASSCOM). Indian IT exports are projected to grow at 7-8% in 2017-18, in addition to adding 130,000-150,000 new jobs during the same period. Digital commerce market in India is set to grow at 30.4% year-on-year to Rs 220,330 crore ($34.11 billion) by December 2017, according to a report by Internet and Mobile Association of India and IMRB Kantar. Indian technology companies expect India’s digital economy to have the potential to reach $4 trillion by 2022, as against the Government of India’s estimate of $1 trillion. Digital payments in India rose 55% in volume and 24.2% in value year-on-year in FY 2016-17, stated Ratan Watal, Principal Advisor, Niti Aayog.

The public cloud services market in India is slated to grow 35.9% to reach $1.3 billion according to IT consultancy. The Indian Healthcare Information Technology (IT) market is valued at $1 billion currently and is expected to grow 1.5 times by 2020. India’s business to business (B2B) e-commerce market is expected to reach $700 billion by 2020 whereas the business to consumer (B2C) e-commerce market is expected to reach $102 billion by 2020. Cross-border online shopping by Indians is expected to increase 85% in 2017, and total online spending is projected to rise 31% to Rs 8.75 lakh crore ($128 billion) by 2018.

Challenges

Increased oversight on work visa regime in countries like the US, competition from new players in Eastern Europe and lack of skilled manpower in digital technologies are among the key challenges for the Indian IT- BPM sector. $150-billion IT-BPM industry is “feeling the pinch” of the global slowdown and political uncertainties as clients go slowly on decision-making and investment processes. The European Union has introduced ‘Data Protection and Privacy Rules’ that effectively prevents Indian companies from providing services from India, while the US has been given safe harbour status. The rising unemployability of the BPO workforce is yet another challenge that Indian BPOs have to overcome. India does have a million graduates passing out year after year. But this is not enough and one must question as to how many of these graduates actually qualify for employment.

According to Pre-Budget Memorandum by FICCI, “Under the existing provisions contained in section 72A of the Act, the benefit of carry forward of losses and unabsorbed depreciation is allowed in cases of amalgamation of a company owning an industrial undertaking or a ship, with another company. Industrial undertaking is defined to mean any undertaking which is engaged in the manufacture or processing of goods or computer software, the business of generation or distribution of electricity or any other form of power, the business of providing telecommunication services, whether basic or cellular, including radio paging, domestic satellite service, network of trunking, broadband network and internet services, mining or the construction of ships, aircrafts and railway systems.”

Future of the sector

India is the topmost offshoring destination for IT companies across the world. Having proven its capabilities in delivering both on-shore and off-shore services to global clients, emerging technologies now offer an entire new gamut of opportunities for top IT firms in India. $150 billion Indian IT industry’s export revenue to grow at 7-8% and domestic market revenue was projected to grow at 10-11% in 2017-18. The Railway Ministry plans to give a digital push to the India Railways by introducing bar-coded tickets; Global Positioning System (GPS) based information systems inside coaches and other facilities. All the 400 field offices of the Central Public Works Department (CPWD) have been connected through a special integrated portal. The Telecom Regulatory Authority of India (TRAI) will soon release consultation papers ahead of framing regulations and standards for the rollout of fifth-generation (5G) networks and Internet of Things (IoT) in India.

The CII believes that the government needs to extensively use of IT tools, Data Analytics, etc with minimum taxpayer interface, so as to track undeclared wealth and improve tax administration system. The Blockchain technology should be explored for greater tax compliance and reduction of evasion.

2017-18 Budget allocation

1. Rs 745 crore incentives for electronic manufacturing in the country, was allotted in the budget, which is expected to benefit the device makers and handset makers of the country.

2. 250 investment proposals worth `126,000 crore in the electronic manufacturing sector to make phones and television sets in India was there already.

3. Rs 10,000 crore was allotted for expanding the BharatNet project in FY18. By 2017-18-end high speed broadband will reach more than 150,000 gram panchayats via Wi-fi hotspots.

4. The government has proposed to decrease tax rate of companies of Rs 50 crore turnover by 5%, which is a big boost for start-ups.

5.  DigiGaon initiative was supposed to be launched to provide tele-medicine, education, and skills, through digital technology.

 

Health

Growth of the sector

Healthcare has become one of India’s largest sectors both in terms of revenue and employment. The industry is growing at a tremendous pace owing to its strengthening coverage, services and increasing expenditure by public as well private players. During 2008-20, the market is expected to record a CAGR of 16.5%. The total industry size is expected to touch $160 billion by 2017 and $280 billion by 2020. As per the Ministry of Health, development of 50 technologies has been targeted in the FY16, for the treatment of diseases like Cancer and TB. The government is highlighting  the eHealth initiatives such as Mother and Child Tracking System (MCTS) and Facilitation Centre (MCTFC). Indian companies are entering into merger and acquisitions with domestic and foreign companies to drive growth and gain new markets. India is experiencing 22-25% growth in medical tourism and the industry is expected to double its size to $6 billion by 2018. Over 80% of the antiretroviral drugs used globally to combat AIDS are supplied by Indian pharmaceutical firms. A total of 3,598 hospitals and 25,723 dispensaries across the country offer AYUSH (Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy) treatment, thus ensuring availability of alternative medicine and treatment to the people. 

Challenges

The result of this disease burden on a growing and ageing population, economic development and increasing health awareness is a healthcare industry that has grown to $81.3 billion (`54,086 lakh crore) in 2013 and is now projected to grow to 17% by 2020, up from 11% in 1990.  With the lowest government spend and public spend, as a proportion of gross domestic product (GDP), and the lowest per capita health spend, China spends 5.6 times more, the US  around 125 times more and Indians met more than 62% of their health expenses from their personal savings, called “out-of-pocket expenses”, compared with 13.4% in the US, 10% in the UK and 54% in China. India’s existing infrastructure is just not enough to cater to the growing demand. The ability to spend Rs 47 per day in urban areas, Rs 32 per day in rural areas, continues to rely on the under-financed and short-staffed public sector for its healthcare needs. The rural healthcare infrastructure is three-tiered and includes a sub-center, primary health centre (PHC) and CHC. PHCs are short of more than 3,000 doctors, with the shortage up by 200 % over the last 10 years to 27,421.

Future of the sector

India is a land full of opportunities for players in the medical devices industry. India’s healthcare industry is one of the fastest growing sectors and in the coming 10 years it is expected to reach $275 billion. The country has also become one of the leading destinations for high-end diagnostic services with tremendous capital investment for advanced diagnostic facilities, thus catering to a greater proportion of population. Indian healthcare sector is much diversified and is full of opportunities in every segment which includes providers, payers and medical technology.

According to Pre-Budget Memorandum by FICCI, “A staggering 70% of India’s population lives in rural areas and has no or limited access to hospitals and clinics. Nearly one million Indians die every year due to inadequate healthcare facilities. An increase in the budgetary allocation, which will improve the healthcare infrastructure and facilities, is the only way India can fight against diseases. Efforts should be made to increase the public spend on healthcare to 4% of GDP to meet the universal healthcare goals
of the country.”

2017-18 Budget allocation

1. The government allocated Rs 48,853 crore for the health sector for the financial year 2017-18.

2.   Two new AIIMS was supposed to come up in Jharkhand and Gujarat.

3. The government has prepared an action plan to eliminate Kala-Azar and Filariasis by 2017, Leprosy by 2018 and Measles by 2020.

4.  Elimination of tuberculosis by 2025 is also targeted. Similarly, action plan has been prepared to reduce Infant Mortality Rate(IMR) from 39 in 2014 to 28 by 2019 and Maternal Mortality Rate (MMR) from 167 in 2011-13 to 100 by 2018-2020.

5. 1.5 lakh Health Sub Centres will be transformed into Health and Wellness Centres.

6. The government had decided to take steps to create additional 5,000 Post Graduate seats per annum.

Education

Growth of the sector

The education sector in India is poised to witness major growth in the years to come as India will have world’s largest tertiary-age population and second largest graduate talent pipeline globally by the end of 2020. The education market in India is currently valued at $100 billion and is expected to nearly double to $180 billion by 2020.

Currently, the school segment is valued at $52 billion and contributes 52% to the education market in India, higher education contributes 15% of the market size, text-book, e-learning and allied services contribute 28% and vocational education in manufacturing and services contributes 5%. The higher education system in India has undergone rapid expansion. Currently, India’s higher education system is the largest in the world enrolling over 70 million students while in less than two decades, India has managed to create additional capacity for over 40 million students. It witnesses spending of over Rs 46,200 crore.

With approximately 28.1% of India’s population in the age group of 0-14 years, as of 2015, educational industry in India provides great growth opportunity. The country has more than 1.5 million schools with over 260 million students enrolled. In 2015, with 34.2 million students enrolled in approximately 48,116 colleges and institutions for pursuing higher education, India’s higher education segment is the largest in the world.

Challenges

India caters to diverse ethnicities, and EdTech companies are facing a hard time dubbing or re-creating their modules in languages understood by regional audiences.  The internet offers students a plethora of academic resources that are freely accessible. It is difficult to build a user-base that is willing to pay for subscriptions to avail personalised educational content. Classroom-learning combined with private tuitions has become the defining norm of modern Indian education. Despite the redundancy of rote-learning among other traditional practices both parents and students consider tuitions as essential to score better marks in examinations. Due to the fundamental lack of infrastructure and reach, rural areas are yet to benefit from e-learning platforms. For a long period, offline learning has been ingrained in the minds of students, and traditional teaching practices continue to rule the roost. Students are yet to be familiarised with the ease of online learning.

At present, in India, there are about 1.86 crore students enrolled in various streams of higher education including Business Management. Despite the large number of students studying in various streams, we have not seen any major shift in the productivity as skills and talents are deficient to support economic activities and, hence, there is a serious concern on employability of these educated persons. Another challenge to be addressed in strengthening the Indian education system is to improve the capacity utilisation. For example, a recent study on capacity utilisation in India for higher education indicates that the capacity utilisation in the case of MBA is about 57% in Maharashtra and 72% in Haryana. In the case of certain states, there are a lot of unfilled seats in institutions.  Another challenge for improving the Indian education system is to improve the student-teacher ratio. In India, this ratio is very high as compared to certain comparable countries in the world. For example, while in developed countries this ratio stands at 11:4, in case of India, it is as high as 22:0.

According to Pre-Budget Memorandum by FICCI, “As the GST law require recipient to obtain registration in case of any specified procurements, schools should be provided specific exemption from GST payable under reverse charge. It should be specifically provided that “Services received by Primary, Secondary or Higher Secondary schools providing education services which are exempt from GST are exempt from payment of tax on procurements under reverse charge’’.

Future of the sector

In 2030, it is estimated that India’s higher education will adopt transformative and innovative approaches in Higher education. It will have an augmented Gross Enrolment Ratio (GER) of 50%. India will be able to reduce state-wise, gender based and social disparity in GER to 5%. It will emerge as a single largest provider of global talent, with one in four graduates in the world being a product of the Indian higher education system. In 2030 it is targeted that the country will be among the top 5 countries in the world in terms of research output with an annual R&D spent of $140 billion. By 2030 it will have more than 20 universities among the global top 200.

NITI Aayog is launching the Mentor India Campaign which will bring leaders and students together at more than 900 Atal Tinkering Labs in India, as part of the Atal Innovation Mission. The Government of India will spend around Rs 20,000 crore to build six new Indian Institutes of Technology (IITs) by March 2024, of which Rs 7,000 crore will be spent by March 2020. The Government of India has approved an all-time record of over 4,000 post-graduation medical seats to be added in various medical colleges and hospitals for the academic session 2017-18.

According to CII, “In health and education, the government needs to step up its spending and create separate funds. A fund of Rs 10,000 crore for teacher training would go a long way in boosting technology usage in schools.”

 

2017-18 Budget allocation

1.  62 new Navodaya Vidyalayas were supposed to be opened.

2. Higher Education Financing Agency was to be
set-up with initial capital base of Rs 1000 crore.

3. 10 public and 10 private educational institutions were to be made world-class. Digital repository for all school leaving certificates and diplomas were promised.

 

4.  Allocation for skill development was Rs 1804 crore.