V2C8: INDUSTRY AND INFRASTRUCTURE

INDUSTRY

Industrial sector performance is critical to achieving the ambitious goal of making India a five-trillion economy. The sector plays a decisive role in determining the overall growth of national output and employment through its backward and forward linkages with the other two sectors of the economy (namely; agriculture and services). It contributes close to 30 per cent of total gross value added (GVA).

• Industrial sector performance in terms of its contribution in GVA improved in 2018-19 over 2017-18.
• However, for 2019-20, industrial sector performance has slowed. The low growth is primarily due to manufacturing sector which registered a negative growth of 0.2 per cent in 2019-20 H1.

Economic interpretation and explanation

• Forward and backward linkages: Hirschman introduces the concept of backward and forward linkages. A forward linkage is created when investment in a particular project encourages investment in subsequent stages of production. A backward linkage is created when a project encourages investment in the backend facilities of a project through which the product navigates.
• Gross Value Added (GVA): GVA is the measure of value of goods and services produced in an area, industry or sector of an economy. GVA does not include intermediate consumption.

Index of Industrial Production (IIP)

• Moderation in growth: IIP growth moderated to 3.8 per cent in 2018-19 compared to 4.4 per cent in 2017-18. (The outlook doesn’t look very positive for FY20 either).
• All segments of use-based classification of IIP registered decline in the current financial year 2019-20 (April-November) as compared to previous corresponding period.
• Reasons for moderation: Moderation in industrial growth rose mainly from subdued manufacturing activities due to:
  • Slower credit flow to medium and small industries
  • Reduced lending by NBFCs owing to liquidity crunch
  • Tapering of domestic demand for key sectors such as automotive sector, pharmaceuticals, and machinery and equipment
  • Volatility in international crude oil prices
  • Prevailing trade related uncertainties, etc.
  • Exports of key labour intensive sectors, such as gems & jewellery, basic metals, leather products and textile products under-performed during the current financial year (FY 20).

Economic interpretation and explanation

Index of Industrial Production: IIP is a measure of industrial performance. It assigns a weight of 77.6 per cent to manufacturing followed by 14.4 per cent to mining and 8.0 per cent to electricity.

Use based classification of IIP: A use-based classification of IIP includes these subheadings>Primary goods, Capital goods, Intermediate goods, Infrastructure/construction goods, Consumer durables, Consumer nondurables.

Index of Eight Core Industries

No growth: Growth of Eight Core Industries was 0 per cent during the current financial year (April November, 2019) compared to 5.1 per cent growth in corresponding period of previous year.

Industry wise growth: While fertilizers, steel and coal have seen expansion in their production, production of crude oil, natural gas, refinery products and electricity have contracted during the current financial year.

• Coal: Excessive rainfall during monsoon, law and order problem prevailing in mining areas and strike during September 2019 impacted the coal sector.
• Crude oil: Crude oil industry continued to show contractionary trend owing to operational issues like power shutdowns, electrical faults due to rains/winds/ thunderstorms, etc.

Economic interpretation and explanation

Index of Eight Core Industries: Measures performance of eight core industries i.e., Coal, Crude Oil, Natural Gas, Refinery Products, Fertilizers, Steel, Cement and Electricity. These industries comprise 40.27 per cent weight in IIP.

Central Public Sector Enterprises (CPSEs)

• Number of CPSEs: There are 348 CPSEs as on 31.03.2019, of this, 249 are in operation, 86 CPSEs are yet to start commercial operations and 13 CPSEs are under closure/liquidation.
• Performance of CPSEs: The overall net profit of the 249 operating CPSEs went up by 15.52 per cent in 2018-19. During this period;
  • The contribution of CPSEs to Central Exchequer increased by 4.67 per cent.
  • The increase in investment in all CPSEs was 14.65 per cent.
  • Capital employed in CPSEs went up by 11.71 per cent.

Corporate Sector

Corporate performance: As per Reserve Bank of India (RBI) Studies on Corporate Performance, demand conditions for the manufacturing sector weakened, with a contraction (y-o-y) in nominal sales.

Production slowdown: Petroleum products, iron and steel, motor vehicles and other transport equipment companies were the major contributors to slowdown.

Gross Capital Formation in industrial sector

• Improvement in GCF: As per NSO data on January 31, 2019, the rate of growth of GCF in industry registered a sharp rise from (-) 0.7 per cent in 2016-17 to 7.6 per cent in 2017-18.
• Upward momentum of investment in industry: Mining & Quarrying, Manufacturing, Electricity, Gas, Water Supply & Other Utility Services and Construction registered growth.

Gross Capital Formation: Capital formation refers to addition of capital goods, such as equipment, tools, transportation assets, and electricity. Replacement of old capital goods is essential for production to continue to grow. Generally, higher the capital formation of an economy, faster the economy can grow its aggregate income.

Capital accumulation through household savings or based on government policy: Countries with a high rate of household savings can accumulate funds to produce capital goods faster, and a government that runs a surplus can invest the surplus in capital goods. GCF is measured as a percentage of GDP.

Credit Flow to the Industrial sector

• Growth in gross bank credit: Gross bank credit flow to the industrial sector rose to 2.7 per cent in September 2019 as compared to 2.3 per cent in September 2018.
• Sectors with increased credit flow: Food processing, chemicals & chemical products, vehicles, vehicles parts & transport equipment, wood & wood products, all engineering, cement & cement products, construction and infrastructure.
• Sectors where credit flow contracted: Mining & quarrying, textiles, petroleum, coal products & nuclear fuel, glass & glassware and basic metal & metal products.

Ease of Doing Business

Improvement in Ease of Doing Business: Emphasis has been on simplification and rationalization of existing rules and introduction of IT to make governance more efficient and effective.

• As a result, India improved its rank in 7 out of 10 indicators related to Ease of Doing Business.
• India jumped from 77th to 63rd position among 190 countries in World Bank’s Doing Business 2020 Report.

Start-up India

Start-up India, Stand-up India: The initiative aims to create an ecosystem that is conductive for growth of start-ups. Start-ups drive economic growth, create employment and foster a culture of innovation.

• As on January 8, 2020, 27,084 start-ups were recognized across 551 districts, 55 per cent of which are from Tier I cities, 45 per cent from Tier II and Tier III cities.
• 43 per cent of recognized start-ups have at least one woman director.
• Eased regulations, such as exemptions from Income tax on investments raised by start-ups.
• Implementation of 32 regulatory reforms to improve Ease of Doing Business for start-ups.
• Self-certification regime for six labour laws and three environmental laws.
• Start-up India Hub as ‘One Stop Shop’ for the start-up ecosystem.
• Best performers: Maharashtra, Karnataka and Delhi are the top three performers in terms of State-wise distribution of recognized start-ups in India.
• As per industry-wide distribution, IT Services accounted for 13.9 per cent of recognised start-up, followed by Healthcare and Life Sciences (8.3 per cent) and education (7.0 per cent).

Foreign Direct Investment (FDI)

Investment promotion through a liberal FDI policy: FDI is a major driver of economic growth as it enhances productivity by bringing capital, skills and technology to the host country.

• For 2019-20, up to September2019, total FDI Equity inflows were US$26.10 billion.
• 80 per cent of these inflows were from Singapore, Mauritius, Netherlands, USA and Japan.

Steel sector

India stood at second position in the production of crude steel, after China. It is also the third largest consumer of finished steel after China and USA.

Coal sector

• Overall production of raw coal saw a growth of 8.1 per cent during the year 2018-19.
• In the current year 2019-20 (April-November), a growth rate of (-) 5.3 per cent was witnessed due to heavy and unseasonal rains.
• The gap between demand and supply of coal in the country is currently being met through coal imports by consuming sectors.

Micro, Small & Medium Enterprises (MSME)

Significant to economic and social development: MSMEs add to their significance by fostering entrepreneurship and generating largest employment opportunities at comparatively lower capital cost, next only to agriculture.

Key initiatives for faster growth of the sector:

• In-principle approval for loans up to 1 crore within 59 minutes through online portal.
• Interest subvention of 2 per cent for all GST registered MSMEs on credit up to 1 crore.
• All companies with a turnover of more than 500 crore to be mandatorily on TReDS platform.
• All CPSEs to compulsorily procure at least 25 per cent of their total purchases from MSEs.
• Out of the 25 per cent procurement, 3 per cent reserved for women entrepreneurs.
• All CPSEs to compulsorily procure through GeM portal.
• GoI to bear 70 per cent of the cost for establishing Pharma clusters.
• Returns under 8 labour laws and 10 Union regulations to be filed once in a year.
• Single consent under air and water pollution laws.
• For minor violations under the Companies Act, entrepreneurs no longer have to approach court but can correct them through simple procedures.

Textile and Apparels sector

• Textiles contributed 18.0 per cent of manufacturing and 2.0 per cent of GDP in 2017-18.
• Share of textiles and clothing in India’s total exports was 12 per cent in 2018.
• This sector is the biggest employer after agriculture and it employs 4.5 crore people directly and 6 crore people in allied sectors.
• Handicrafts from India have increased by 3% in 2018-19.

Infrastructure

It is well-accepted that investment in infrastructure is necessary for growth. Provision of adequate infrastructure is essential for growth and for making growth inclusive. Following are the reasons how investment in infrastructure is necessary for growth:

• Power shortages lead to dependence on expensive captive power, which in turn impels high costs and lack of competitiveness for the economy.
• Inadequate transport infrastructure leads to bottlenecks; both in the supply of raw materials as well as movement of finished goods to the marketplace.
• The price that farmers get for their produce is depressed if there is no connectivity through good quality rural roads, which in turn keeps rural incomes low, negating the fruits of high overall growth performance.

National Infrastructure Pipeline (NIP) 2020-2025

India recently launched National Infrastructure Pipeline for the period FY 2020-2025. To achieve the GDP of $5 trillion by 2024-25, India needs to spend about $1.4 trillion over these years on infrastructure.

• NIP captures the infrastructure vision of the country for the period FY20-25 and is the first ever such exercise undertaken. However, its financing may be a challenging task.
• To draw up the NIP for each years starting from FY 2019-20 to FY 2024-25, an inter-ministerial Task Force was set up in September 2019 under the chairmanship of Secretary (DEA), Ministry of Finance.
• NIP is expected to enable well-prepared infrastructure projects which will create jobs, improve ease of living, and provide equitable access to infrastructure for all, thereby making growth more inclusive.
• NIP intends to facilitate supply side interventions in infrastructure development to boost short-term as well as potential GDP growth.
• Improved infrastructure capacities will also drive competitiveness of Indian economy.

Report of the Task Force on NIP 2020-25:

• Projected total infrastructure investment of 102 lakh crore during the period.
• Energy (24 per cent), Roads (19 per cent), Urban (16 per cent), and Railways (13 per cent) amount to over 70 per cent of the projected capital expenditure during the said period.
• Central Government and State Government are to have an equal share (39 per cent each) in funding of the projects followed by Private Sector (22 per cent).
• Recommendations to develop a robust bond market for infrastructure companies, speedy resolution of infrastructure disputes, optimal risk sharing through better and balanced PPP contracts, and sanctity and enforceability of contracts.

Road Sector

Importance of Road Network in the Country: A good road network is an essential requirement for the rapid growth of the economy. Roads provide connectivity to remote areas, open up backward regions and facilitate access to markets, trade and investment. Roads should not be looked at in isolation, but as part of an integrated multi-modal transport system, which provides crucial links with airports, railway stations, ports and other logistical hubs.

• As on 31.3.2018, India had a road network of about 59.64 lakh km. The total length of National Highways was 1.32 lakh km as on March 1, 2019.
• The pace at which roads have been constructed has grown significantly from 17 kms per day in 2015-16 to 29.7 kms per day in 2018-19. However, the pace seems to have moderated in 2019-20.
• Total investment in the Roads and Highway sector has gone up more than three times in five year period of 2014-15 to 2018-19.

Share in GVA: Road transport is the dominant mode of transportation in terms of its contribution GVA and traffic share.

• Share of transport sector in GVA for 2017-18 was about 4.77 per cent of which share of road transport was 3.06 per cent, followed by Railways (0.75 per cent), air transport (0.15 per cent) and water transport (0.06 per cent).

Mandate for roads: Ministry of Road Transport & Highways (MoRTH) is mandated with the development and maintenance of road networks especially the National Highways (NH) as well as the implementation of the Motor Vehicle Act.

Railways sector

Scope of the market: Indian Railways (IR) with over 68,000 route kms is the third largest network in theworld under single management.

• IR is currently world’s largest passenger carrier and 4th largest freight carrier.

Safety: Safety is accorded highest priority by Indian Railways and steps are being undertaken on a continuous basis to prevent accidents and enhance safety of passengers. Consequential train accidents have decreased.

Cleanliness: IR cover over 8,700 stations and carry around 230 lakh passengers daily with clientele of varied socio-economic backgrounds. Cleanliness is a continuous process and every endeavour is made to keep the stations and coaches in properly maintained and clean condition. Following are few initiatives:

• Special Cleanliness Campaigns under Swachh Bharat Abhiyan.
• Swachh Rail, Swachh Bharat.
• As on 31.10.2019, 75 railway stations have certification under EMS (Environment Management System) (ISO: 14001).

Modernization: A dedicated SPV, Indian Railway Station Development Corporation (IRSDC) Limited has been set up to carry out modernization of railway stations on PPP mode. Another initiative for modernisation of IR is Adarsh Station Scheme.

Civil Aviation Sector

Scope of the market: India has 136 commercially-managed airports by Airports Authority of India (AAI) and 6 under Public Private Partnerships (PPP) for Operation, Maintenance and Development of airports.

• India is the third largest domestic market for civil aviation in the world. Second is China.

Resilience: Despite a large airline suspending operations on April 17, 2019, the sector swiftly sprung back to fill the void created in passenger and air cargo capacity.

Objective to meet growing demand and improve performance quality: Capacity utilization is being augmented by way of automation at airports. A total of 43 airports have been operationalized since the scheme for operationalizing un-served airports (Udan). Following are few developments in the field:

• On airport connectivity, India stood first along with 7 others (USA, China, Japan, UK, etc.) in the Global Competitiveness Report 2019 of World Economic Forum.
• Using idle airstrips.
• Development under PPP mode (Ahmedabad, Guwahati, Jaipur, Lucknow, Mangalore, and Thiruvananthapuram).
• New green-field airports.

Financing the sector: Easing lease and financing from Indian shores in conformance with provisions of Cape Town Convention and Protocol on Aircraft Equipment, efficient use of air traffic rights, encouraging domestic and international passenger and goods transfers, and rationalizing tax regime.

Shipping sector

Scope of the sector: Around 95 per cent of India’s trade by volume and 68 per cent in terms of value is transported by sea.

• Despite one of the largest merchant shipping fleet among developing countries, India’s share in total world dead weight tonnage (DWT) is only 0.9 per cent as on January 1, 2019.
• The existing Indian fleet is also aging.

Performance: The performance of global shipping industry is generally mirrored by Indian shipping. India’s shipping tonnage was low (1.92 lakh Gross Tonnage (GT)) on the eve of independence. It gradually increased thereafter, but remained stagnant at around 70 lakh GT beginning of 2004-05.

• Tonnage tax regime was introduced in 2004-05 that boosted the growth of Indian fleet and its tonnage.
• However, the negative after-effects of global economic downturn are still shadowing the global shipping industry in general and Indian Shipping industry in particular.

Ports Sector: Ministry of Shipping has been striving to improve operational efficiencies through mechanization, digitization and process simplification. Key efficiency parameters have improved considerably.

Telecom Sector

Scope of the market: Total telephone connections in India grew by 18.8 per cent in 2014-19. Urban areas have high number of connections.

• Wireless telephony now constitutes 98.27 per cent of all subscriptions whereas share of landline telephones now stands at only 1.73 per cent.
• The overall tele-density in India stands at 90.45 per cent; rural being 57.35 per cent and urban being 160.71 per cent at end of September 2019.
• Private sector dominates with a share of 88.81 per cent.

Internet and broadband: Internet and broadband penetration in India has kept a rapid pace. Total broadband connections increased by about ten times in 2014-19. This accelerated growth in internet traffic, with data usage touching the highest ever level in year 2018.

• India is now global leader in monthly data consumption. Cost of data has also reduced substantially, enabling affordable internet access.

Competition in the sector: There are 4 major players – 3 in private sector and BSNL & MTNL in the public sector, operating in mutually exclusive zones. Since 2016, the sector has witnessed substantial competition and price cutting by the Telecom Service Providers (TSPs) creating financial stress in the sector. While some operators filed for bankruptcy, others have merged, in their quest to improve viability.

• Price of data in the country is among lowest in the world.
• Average Revenue per User (ARPU) for GSM based mobile services has gone down substantially.

Revival plans: BSNL and MTNL are affected by the tariff war that has impacted their cash flow resulting in mounting losses. Government’s revival plan of these PSUs consist of:

• Reduction of staff cost through Voluntary Retirement Scheme.
• Allotment of 4G spectrum.
• Asset monetization of land/building, tower and fiber assets of BSNL/MTNL.
• Debt restructuring through sovereign guarantee bonds.
• ‘In-principle’ approval for merger of BSNL and MTNL.

Telecom Infrastructure and Connectivity

Bharat Net Programme: Providing broadband connectivity to all the 2.5 lakh Gram Panchayats (GPs) in the country, in order to meet the goal of developing broadband highways as part of Digital India campaign. Following are few project details:

• Optimal mix of optical fibre, radio and satellite media
• Public Wi-Fi Access/hotspots
• Towers and Mobile Base Transceiver Station (BTS)
• Optical Fibre Cable
• Project for Left Wing Extremism (LWE) Areas and North East Region

Petroleum and Natural Gas

Scope of the market: India is the third largest energy consumer in world after USA and China. With a share of 5.8 per cent of world’s primary energy consumption, India’s energy requirement is fulfilled primarily by Coal, Crude Oil, Renewable Energy and Natural Gas.

Performance in oil production: India’s oil production is one of the lowest among major economies of the world and has been declining over a period of time. There has been decline in both onshore and offshore domestic crude oil production. Reduction in crude oil production may be attributed to natural decline in ageing and matured fields and no major discoveries.

• Proven reserves of crude oil have decreased concurrently since 2014, with steeper fall in onshore reserves.
• Some increase was witnessed in 2019, probably resulting from initiatives by Ministry of Petroleum and Natural Gas in exploration and licensing policy.
• There is a need to augment refining capacity to meet growing demand for petroleum fuels and petrochemicals.

Performance in natural gas production: The declining trend in domestic production of natural gas till 2016-17 was arrested in 2017-18 and it rose further in 2018-19. The similar trend can be observed for offshore production of natural gas, while onshore production increased continuously since 2014-15.

• Production of natural gas is dominated by PSUs, with its share increasing over the period.

Government reforms:

• Simplified fiscal and contractual terms
• Bidding without any production or revenue sharing to Government
• Early monetization of discoveries by extending fiscal incentives
• Incentivizing gas production through marketing and pricing freedom
• Induction of latest technology and capital
• More functional freedom to National Oil Companies for collaboration
• Private sector participation

Power sector

Progress in power sector: World Economic Forum (WEF) states India, Indonesia and Bangladesh have made fast progress towards universal electrification due to strong political commitment, a stable policy regime, use of grid expansion, and decentralized generation sources, and a supportive environment for investment in infrastructure.

• India improved its ranking to 76th position in the Energy Transition Index published by WEF.

Sector-wise distribution: Fuel-wise and sector-wise distribution shows that thermal power accounts for about 63 per cent of total installed capacity and roughly half of generation capacity is in the private sector.

• Peak deficit i.e. percentage shortfall in peak power supply vis-a-vis peak hour demand has declined from around 9 per cent in 2012-13 to 0.7 per cent during 2019-20.
• Number of hours of electricity supply increased for majority of states.

Initiatives: Access to electricity is necessary for making growth inclusive and for promoting ease of living. Following are few initiatives in the sector:

• Pradhan Mantri Sahaj Bijli Har Ghar Yojana (Saubhagya) aiming for universal household electrification by providing last mile connectivity.
• All States have reported electrification of all households on Saubhagya portal, as on 31.03.2019, except few households in LWE affected Bastar region of Chhattisgarh.

Mining Sector

Score of the sector: India produces as many as 95 minerals which include 4 hydrocarbon energy minerals (coal, lignite, petroleum & natural gas), 5 atomic minerals (ilmenite, rutile, zircon, uranium, and monazite), 10 metallic, 21 non-metallic and 55 minor minerals.

Performance: This sector provides basic raw materials to many important industries. Mining and quarrying sector contribution (at current price) to GVA accounted for about 2.38 per cent during 2018-19.

• There has been a notable turnaround in mineral production because of policy reforms.
• Production of major minerals during the year 2018-19 recorded 25 per cent growth when compared to last year in terms of value.

Housing and Urban Infrastructure

Scope of the sector: India is one of the fastest growing countries in the world with rapid urbanization. There were about 37.7 crore people residing in urban habitats of India (Census 2011), comprising about 31 per cent of total population which is expected to reach 60.6 crore by 2030 (2015: UN).

• Urban habitats and cities are epicentres of economic growth. Over 60 per cent of India’s current GDP comes from cities and towns.
• Smart Cities Mission (SCM): Achievements of Smart Cities Mission include:
  • Smart command and control centres
  • Vibrant public spaces
  • Public private partnership
  • Smart water
  • Smart roads
  • Smart solar

Pradhan Mantri Awas Yojana Urban (PMAY-U)

Mandate: PMAY-U was launched in 2015 to provide pucca house with basic amenities to all eligible urban poor by 2022. Construction sector accounts for 8.2 per cent of GDP which includes housing and employs about 12 per cent of workforce. Therefore, investment made under PMAY (U) not only provides pucca houses to eligible families to achieve the goal of ‘Housing for All’ but also triggers multiplier effect on overall economy.

• PMAY-U is one of the largest housing schemes of the world covering complete urban India.
• The significant progress of PMAY (U) with regard to earlier schemes is an outcome of comprehensive strategy of inclusion, scheme architecture, use of digital/space technology, funding mechanism etc.
• As a principle, the scheme adopts state/UT-wise demand driven approach carrying forward the ethos of cooperative federalism.
• Ownership of the house will be in name of female of household or in joint name along with male member of the household to enable women’s empowerment.

Financing: National Urban Housing Funds (NUHF) approved by Union Cabinet will mobilise resources through Extra Budgetary Resources (EBR). This will provide Central assistance in a time bound manner for uninterrupted progress of projects with States/UTs and Central Nodal Agencies (CNAs).

• The Affordable Housing Fund (AHF) in National Housing Bank (NHB) will meet priority sector lending shortfall of banks/financial institutions. The fund is used for micro financing of HFCs and NBFCs.

CONCLUSION

Industry 4.0 encompasses automation in industrial sectors whereas next generation infrastructure brings physical infrastructure and technology like internet of things, automation together to maximize the efficiency of physical infrastructure. For a smooth and fast development, India needs adequate and timely investment in quality infrastructure.

Questions

1. With reference to the power generation in India, consider the following statements:
   1. The maximum power is generated by thermal power plants.
   2. Percentage-wise, more power is generated by hydropower plants than renewable sources.
   
   Which of the above statements is/are correct?
   A. 1 only
   B. 2 only
   C. Both 1 and 2
   D. Neither 1 nor 2

Ans. (A)
Learning Zone: The thermal power accounts for about 63 per cent of total installed capacity. The renewable energy sources and hydroelectric sources account for about 22.8% and 12. 4 % respectively 

2. Consider the following statements with reference to shipping industry in India:
1. More than 50 percent of India’s trade in terms of value is transported by sea.
2. India’s share in total world cargo-weight transport is around 5 percent.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Solution: A
Statement 1 is correct: Shipping is essential to both commodity and services trade of any country. Around 95 per cent of India’s trade by volume and 68 per cent in terms of value is transported by sea. The performance of the global shipping industry is generally mirrored by Indian shipping.

Statement 2 is not correct: As on 30th September, 2019, India had a fleet strength of 1,419 ships. Despite one of the largest merchant shipping fleet among developing countries, India’s share in total world dead weight tonnage (DWT) is only 0.9 per cent as on January 1, 2019 according to Institute of Shipping Economics and Logistics (DWT is a measure of how much weight a ship can carry). The existing Indian fleet is also aging, with the average age increasing from 15 years in 1999 to 19.71 years as on October 1, 2019 (42.06 per cent of the fleet is 21 years and above and 12.49 per cent is in the 16 to 20 year age group).

3. Global Competitiveness Report, sometimes seen in news, is published by
(a) World Bank
(b) World Economic Forum
(c) International Monetary Fund (IMF)
(d) Organisation for Economic Co-operation and Development (OECD)

Solution: B
2019 Global Competitiveness Report published annually by World Economic Forum is the latest edition of the series launched in 1979 that provides an annual assessment of the drivers of productivity and long-term economic growth. With a score of 84.8 (+1.3), Singapore is the world‘s most competitive economy in 2019, overtaking the United States, which falls to second place. Hong Kong SAR (3rd), Netherlands (4th) and Switzerland (5th) round up the top five.

India has moved down 10 places to rank 68th on an annual global competitiveness index 2019, largely due to improvements witnessed by several other economies.

India, which was ranked 58th in the annual Global Competitiveness Index, is among the worst-performing BRICS nations along with Brazil (ranked even lower than India at 71st this year).

4. Consider the following statements with reference to the telecom sector in India:
1. The wireless telephony constitutes over 95 percent of all subscriptions.
2. The teledensity in rural areas in India currently stands at more than 70 percent.
Which of the statements given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2

Solution: A
Total telephone connections in India grew by 18.8 per cent from 9,961 lakh in 2014-2015 to 11,834 lakh in 2018-19. As on 30 September 2019, the total subscription stood at 11,943 lakh of which 5,147 lakh connections were in the rural areas and 6,796 lakh in the urban areas.

Landline telephone connections were at 206 lakh while the number of wireless telephone connections stood at 11,736 lakh at the end of September 2019.

The wireless telephony now constitutes 98.27 per cent of all subscriptions whereas share of landline telephones now stands at only 1.73 per cent. Hence statement 1 is correct.

The overall tele-density in India stands at 90.45 per cent, the rural tele-density being 57.35 per cent and urban teledensity being 160.71 per cent at the end of September 2019. Hence statement 2 is not correct. The private sector dominates with a share of 88.81 per cent

5. Which of the following organisations publishes the “Energy Transition Index”?
A. World Bank
B. World Economic Forum
C. International Energy Agency
D. International Monetary Fund

Ans. (B)
The global “Energy Transition Index” is published by the World Economic Forum(WEF). It ranks countries on how well they can balance energy security and access to environmental sustainability and affordability. It has ranked 115 economies covering 40 indicators.

6. Consider the following statements about “Bharat Net”:
1. It aims at providing broadband connectivity to all the 2.5 lakh Gram Panchayats (GPs) in the country.
2. It envisages an optimal mix of optical fibre, radio and satellite media.
Which of the above statements is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2

Ans. (C)
For achieving the goal of developing broadband highways as part of the Digital India campaign, the Government is implementing the flagship BharatNet Programme in a phased manner for providing broadband connectivity to all the 2.5 lakh Gram Panchayats (GPs) in the country.

The project envisages an optimal mix of optical fibre, radio and satellite media. The broadband infrastructures created under the project would be available to all categories of service providers on a non-discriminatory basis.

7. With reference to the Startup ecosystem in India, consider the following statements:
1. Percentage-wise, Maharashtra has the maximum share of registered startups.
2. As per the industry-wise distribution of recognized startups, IT Services accounted for the maximum number of startups.
Which of the above statements is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2

Ans. (C)
Maharashtra, Karnataka and Delhi are the top three performers in terms of State-wise distribution of recognized startups in India. As per industry-wise distribution of recognized startups, IT Services accounted for 13.9 per cent followed by Healthcare and Life Sciences (8.3 per cent) and education (7.0 per cent)

8. With reference to the “Ease of Doing Business Report 2020”, consider the following statements:
1. India’s ranking has been increased to 63 among 190 countries from 77 in the previous year.
2. India has improved its rank in 7 out of 10 indicators.
Which of the above statements is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2

Ans. (C)
Learning Zone: The improvement in the business environment as a result of reforms is reflected in India’s considerably improved ranking to 63rd position among the 190 countries in the World Bank’s Doing Business 2020 Report. This is a jump of 14 ranks over its previous rank of 77. The ranking is based on 10 indicators which span the lifecycle of a business. India has improved its rank in 7 out of 10 indicators and has moved closer to international best practices.

9. The overall industrial activity is seen reduced in this year. Which of the following is/are the possible factors for this slump in industrial output?
1. Slower credit flow to MSMEs
2. Reduced lending by NBFCs
3. Tapering of domestic demand
4. Volatility in international crude oil
5. Trade uncertainties
Select the correct answer using the codes given below.
A. 1 and 2 only
B. 2, 3, and 4 only
C. 1, 3, 4, and 5 only
D. 1, 2, 3, 4, and 5

Ans. (D)
Learning Zone: Overall, IIP growth has moderated to 3.8 per cent in 2018-19 compared to 4.4 per cent in 2017-18. During the current year 2019-20 (April-November), it grew at 0.6 per cent as compared to 5.0 per cent in the corresponding period of the previous year.

The moderation in growth is mainly arising from subdued manufacturing activities due to slower credit flow to medium and small industries, reduced lending by NBFCs owing to liquidity crunch, tapering of domestic demand for key sectors such as automotive sector, pharmaceuticals, and machinery and equipment, volatility in international crude oil prices, prevailing trade-related uncertainties, etc.

10. Which of the following countries is the largest producer of steel (crude) in the world?
(a) US
(b) China
(c) India
(d) Japan

Solution: B
India has replaced Japan as the world‘s second-largest steel producing country. In 2019, India stood at the second position in the production of crude steel, next only to China. It is also the third-largest consumer of the finished steel after China and USA. However, its per capita consumption was only 74.1 kg during 2018-19

11. Consider the following statements about the “National Infrastructure Pipeline”:
1. It is envisaged to facilitate spending $ 1.4 trillion on infrastructure in the next five years.
2. It includes mainly economic and social infrastructure projects.
Which of the above statements is/are correct?
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2

Ans. (C)
National Infrastructure Pipeline is the investment plan unveiled by the Central Government for enhancing infrastructure in identified sectors for a period of five years from 2020-25.

The funding of the National Infrastructure Pipeline will be jointly made by the Centre, states and the private sector in the proportion of 39:39:22 (39 % each by the centre and states and 22% by the private sector).

For the next five years (2020-25), $1.4 trillion (Rs 102 lakh crores) will be invested in various social and economic infrastructure projects. It will enable a forward outlook on infrastructure projects which will create jobs, improve ease of living, and provide equitable access to infrastructure for all, thereby making growth more inclusive.