Bihar Economic Survey 2020-21
■ Bihar Economy: An Overview
On 19th February 2021 Bihar’s Finance
Minister Tarkishore Prasad tabled the 15th Bihar Economic Survey on
the floor of the Legislative Assembly. The first survey was presented in
2006-07.
■ Bihar Economy:
• In 2019-20 the Gross State Domestic Product (GSDP), of Bihar at current prices was ₹ 6,11,804 crore and ₹4,14,977 crore at constant prices with the base year
2011-12.
( To remember: Current: FAA,H0D; Constant: DAD,IGG)
★•The Gross State Domestic Product (GSDP) in Bihar had grown at 10.5% (Constant
Price) in 2019-20. This growth rate is higher than the growth compared to 4.2% for the
Indian economy.
• The Net State Domestic Product (NSDP) in 2019-20 was ₹5,62,710 crore at current prices and ₹3,77,276 crore
at constant (2011-12) prices.
• The Per capita Net State Domestic Product (NSDP) at
constant prices (2011-12) in 2019-20 for Bihar is ₹ 31,287.
★•The Net per capita income of Bihar was 32.9% of
the national average (₹ 94,954) in 2019-20.
■ Structural Composition of Bihar Economy
Among the three major
sectors (Primary, Secondary and Tertiary), the share of each sector in the
overall Gross State Value Added (GSVA) in the year 2019-20 are as
follows:
• Primary sector: 19.5% (Its
contribution has declined steadily from 23.4% in 2013-14)
Share of the 'Crop' sector has decreased from 14.2% in 2013-14 to 9.7% in 2019-20, a sharp drop of 4.5 percentage points.
• Secondary sector: 20.3% (It
has recorded a small change from 19.3% in 2013-14)
★• Tertiary sector: 60.2% (It
has recorded a noticeable increase from 57.3% in 2013-14)
Within the tertiary sector, two sub-sectors that had noticeably increased their share in GSVA between 2013-14 and 2019-20 are, Road transport (from 4.4 to 5.9%) and other services (from 10.5 to 13.8%)
(Data based on Quick
Estimates (2019-2020); Source: Directorate of Economics and Statistics, GOB)
■ Sectoral growth rate:
In 2019-20, the growth
rate for three major sectors was the following:
• Primary sector: 3.6%
Growth rates for Agriculture, Forestry and Fisheries has been declining over the years and, in 2019-20, it had recorded no growth.
• Secondary sector: 8.2%
Within the secondary sectors, two sub-sectors recorded high growth rate, viz. EGWUS (Electricity, Gas, Water Supply and Other Utility Services) of 20.3% and Construction of 11.4%.
• Tertiary sector: 8.5% (Grew
faster than the Primary and Secondary sectors)
Within the tertiary sector, three sub-sectors recorded double-digit growth rate, viz. Road Transport, Services Related to Transport and Public Administration.
Air Transport, Storage and Other Services has also recorded double digit growth, either in 2018-19 or 2019-20.
■ District-wise Disparity:
From the ranking of the 38 districts with regard to Per Capita GSDP in 2017-18;
The three most prosperous
districts in Bihar are:
- Patna (Highest)
- Begusarai
- Munger
The three most
impoverished districts are:
- Sheohar (Lowest)
- Araria
- Kishanganj
★• All the prosperous
districts except Begusarai lie in south Bihar, and all impoverished lie in
North Bihar.
• The Per Capita GDP in
Patna is more than six times the Per Capita GDP of Sheohar
■ Inflation:
The annual Inflation Rate
for Consumer Price Index (CPI) base 2011-12, for the year 2019-20 is as
follows:
Rural: 9.36%
Urban: 12.25%
Combined: 9.80%
• The CPI in Bihar has registered a higher Inflation Rate during the last year, compared to the national average, for both rural and urban areas.
• For Rural areas, there
were three states (Andhra Pradesh, Chhattisgarh and West Bengal) where the Inflation
Rates were even higher.
• For Urban areas, the
Inflation Rate was the highest in Bihar.
■ Impact of COVID-19 on Bihar Economy:
Based on reasonable
assumption, Bihar recorded a negative
growth rate of 18.2% in the first quarter
of the financial year 2020-21. However, this negative impact was relatively less
than the -23.9% fall in the growth rate of the Indian economy during the
same period.
On the nature of the
different sectors, the negative impact was classified as Low, Medium and High,
with respect to both ‘lockdown restrictions on production activities’ and ‘reduction
in demand’.
• Low impact group included 6 sectors, viz.
- Crops,
- Livestock,
- Forestry and Logging,
- EGWUS (Electricity, Gas, Water Supply and Other Utility Services),
- Storage and
- Public Administration.
• Medium impact group included 7 sectors, viz.
- Fishing and Aquaculture,
- Trade and Repair Services,
- Water Transport, Services Incidental to Transport,
- C&SRB ( Communication and Services related to Broadcasting),
- Financial Services,
- REID&PS (Real Estate, Ownership of Dwellings and Professional Services) and
- Other Services.
• High impact group included 7 sectors, viz.
- Mining and Quarrying,
- Manufacturing,
- Construction,
- Hotels and Restaurants,
- Railways,
- Road Transport and
- Air Transport.
■ Few Definitions:
■ Gross State Domestic Product (GSDP): GSDP is defined as a measure, in monetary terms, of the volume of all final goods and services produced within the boundaries of the State during a given period of time.
■ Gross State Value Added (GSVA):
Value of output minus cost of inputs is the value added by a production unit.
GSVA is the sum of value added for all final goods and services. GSDP is GSVA plus
subsidies, minus taxes.
■ Constant prices are a way of measuring economic change considering a
year as base
year as in this case, it is 2011-12. It gives the real Gross State Domestic Product (GSDP) growth.
Constant prices adjust for the effects of inflation, while
computing GSDP. Use of constant prices enables measurement of the actual change
in output, correcting for the effects of inflation.
■ Current prices are a way of measuring economic change considering
price prevailing in the same year. It gives the nominal Gross State Domestic Product
(GSDP) growth.
■ Factor cost: It is the total cost of all the factors of
production (Land, Labour, Capital and Entrepreneur) consumed or used in
producing a good or service.
■ Basic Price: It’s the amount receivable by the producer from the purchaser
for a unit of a good or service produced as output minus any tax payable, and plus any subsidy
receivable, by the producer as a consequence of its production or sale. It
excludes any transport charges invoiced separately by the producer.
Basic prices exclude any taxes on
products the producer receives from the purchaser and passes on
to government but include any subsidies the
producer receives from government and uses to lower the prices charged to purchasers.
Factor Cost
+ Production taxes
– Production subsidy
↓
= Basic prices
+ Taxes on products excluding invoiced VAT
- Subsidies on products
↓
= Producers’ prices
+ VAT not deductible by the purchaser
+Separately invoiced transport charges
+Wholesalers’ and retailers’ margins
↓
=Purchasers’ prices (or the price at which that product is being sold in the Market)
■ Production taxes or subsidies: These are paid or received with relation to production and are independent of the volume of actual production.
Examples of production taxes: Stamp duty, Registration
Fee, Land Revenues etc.
Examples of production subsidies: Interest subsidies,
Farm subsidies etc.
■ Product taxes or subsidies: These are paid or received
on per unit product hence it is dependent on volume of production.
Examples of Product taxes: Indirect taxes like Sales
Tax, GST etc
■ Per Capita Income (PCI): PCI or average income measures the average income earned per person in a given area in a specified year. It is calculated by dividing the area's total income by its total population.
It is designed to measure the changes over time in general level of retail prices of selected goods and services (basket of commodities) that households purchase for the purpose of consumption.
CPI measures price changes by comparing, through time, the cost of a fixed basket of commodities. The basket is based on the expenditures of a target population in a certain reference period. Since the basket contains commodities of unchanging or equivalent quantity and quality, the index reflects only pure price.
Uses:
- as a macroeconomic indicator of inflation.
- as a tool by Government and Central Bank for targeting inflation and monitoring price stability.
- as deflators in the National Accounts.
Given the many uses of CPIs, it is unlikely that one index can perform equally satisfactory in all applications. Therefore, there is a practice of compiling several CPI variants for specific purpose. These are:
- CPI for Industrial Workers (IW) - Base Year 2016;
- CPI for Agricultural Labourers (AL)- Base Year 1986-87
- CPI for Rural Labourers (RL) - Base Year 1986-87;
- CPI (Rural/Urban/combined) - Base Year 2012.
N.B.: The first three are compiled and released by the Labour Bureau in the Ministry of Labour, while the fourth one is released by the National Statistical Office (NSO) in the MoSPI.
The all-India linked CPI for Urban Non-Manual Employees (UNME) has been discontinued w.e.f Jan 2011.
For IIP definition, importance etc. click here.
■ Wholesale Price
Index (WPI):
It’s a measure to monitor the dynamic movement of
prices at the wholesale level.
It comprises all possible transactions at first point of bulk sale in the domestic market.
WPI tracks prices at the factory gate level, but it's only for Goods and does not include Services.
It is compiled and released on monthly basis by
the Office of Economic Adviser,
Department of Promotion of Industry and Internal Trade (DPIIT), Ministry of Commerce & Industry.
The base year of All-India WPI is 2011-12 and it uses 697 items
in the basket.
Uses:
- Track the supply and demand dynamics in industry, manufacturing and construction.
- Used as a deflator of various nominal macroeconomic variables including GDP.
- Serve as an important determinant, in formulation of trade, fiscal and other economic policies by the Government.
- Also used for the purpose of indexation/escalation clauses in the supply of raw materials, machinery and construction work.
Components of WPI:
- Primary
articles (Weight 22.62%).
- Fuel
& Power (Weight 13.15%)
- Manufactured
Goods (Weight 64.23%)
- WPI
Food Index (Weight 24.38%)
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The End.
