Industry and Infrastructure | Economic Survey & Government Reports - UPSC PDF Download

 Page 1


CHAPTER
08
“In the midst of every crisis, lies great opportunity.”
?Albert Einstein
The Indian economy encountered a “once in a century” crisis due to the COVID-19 
pandemic that affected economic activities and consequently impacted the livelihood of 
billions of people. The industrial sector, not an exception to this shock, experienced a 
sharp decline during the period of the lockdown. The economic activity, however, started 
recovering as the unlocking process began. The various subcomponents of Index of 
Industrial Production (IIP) and eight-core index have experienced a V-shaped recovery 
with consistent movement being seen towards the pre-crisis levels. The broad-based quick 
revival of the industrial activity stemmed from remedial measures, reforms, and the sizable 
stimulus package announced by the Government of India (GoI) under the Atmanirbhar 
Bharat package. Based on the IIP, the industrial activity contracted by 1.9 per cent 
in November-2020 recovering from the nadir of -57.3 per cent in April-2020. Further 
improvement and firming up in industrial activities are foreseen with the Government 
enhancing capital expenditure as highlighted in the fiscal policy chapter, the vaccination 
drive and the resolute push forward on long pending reform measures. It is pertinent 
to point out that the reforms undertaken in the country are probably one of the most 
comprehensive among the major economies of the world.
Industry and Infrastructure
INTRODUCTION 
8.1	 The 	 financial 	 year 	 2020-21 	 (FY21) 	 began 	 amidst 	 a 	 global 	 pandemic, 	 the 	 management 	 of	
which 	 led 	 to 	 countries 	 adopting 	 unprecedented 	 measures 	 that 	 brought 	 the 	 economy 	 to 	 a 	 grinding	
halt. 	 The 	 lockdown 	 and 	 the 	 corresponding 	 restrictions 	 on 	 local 	 and 	 global 	 movement 	 of 	 people 	 and	
goods, 	except 	for 	essential 	goods 	and 	services, 	was 	an 	exogenous 	shock 	that 	posed 	considerable	
challenges 	 to 	 the 	 economy , 	 created 	 uncertainty , 	 was 	 responsible 	 for 	 extensive 	 loss 	 of 	 livelihoods	
and 	 led 	 to 	 the 	 displacement 	 of 	 people. 	 The 	 unlocking 	 of 	 the 	 economy 	 in 	 a 	 phased 	 manner 	 has	
helped 	 the 	 economy 	 to 	 get 	 back 	 on 	 its 	 feet. 	 The 	 rebuilding 	 of 	 the 	 Indian 	 economy 	 is 	 hinged 	 on	
various 	 reform 	 measures 	 aimed 	 at 	 addressing 	 concerns 	 of 	 businesses 	 and 	 support 	 to 	 livelihoods.	
India 	 implemented 	 policies 	 aimed 	 at 	 reducing 	 transaction 	 costs, 	 supporting 	 Micro 	 Small 	 and	
Medium 	 Enterprises 	 (MSMEs), 	 enhancing 	 competition, 	 fostering 	 employment 	 creation 	 and	
securing 	 sustenance 	 through 	 the 	 Atmanirbhar 	 Bharat 	 Abhiyan. 	 The 	 performance 	 of 	 the 	 industrial	
sector 	 is 	 critical 	 given 	 its 	 deep 	 backward 	 and 	 forward 	 linkages 	 with 	 the 	 other 	 sectors 	 of 	 the	
economy . 	 A 	 strong 	 industrial 	 sector 	 is 	 a 	 sine 	 quo 	 non 	 for 	 an 	 Atmanirbhar 	 Bharat. 	 Any 	 initiative	
aimed 	 at 	 securing 	 a 	 rapid 	 recovery 	 needs 	 to 	 keep 	 industry 	 concerns 	 at 	 the 	 core 	 of 	 its 	 intervention.
Page 2


CHAPTER
08
“In the midst of every crisis, lies great opportunity.”
?Albert Einstein
The Indian economy encountered a “once in a century” crisis due to the COVID-19 
pandemic that affected economic activities and consequently impacted the livelihood of 
billions of people. The industrial sector, not an exception to this shock, experienced a 
sharp decline during the period of the lockdown. The economic activity, however, started 
recovering as the unlocking process began. The various subcomponents of Index of 
Industrial Production (IIP) and eight-core index have experienced a V-shaped recovery 
with consistent movement being seen towards the pre-crisis levels. The broad-based quick 
revival of the industrial activity stemmed from remedial measures, reforms, and the sizable 
stimulus package announced by the Government of India (GoI) under the Atmanirbhar 
Bharat package. Based on the IIP, the industrial activity contracted by 1.9 per cent 
in November-2020 recovering from the nadir of -57.3 per cent in April-2020. Further 
improvement and firming up in industrial activities are foreseen with the Government 
enhancing capital expenditure as highlighted in the fiscal policy chapter, the vaccination 
drive and the resolute push forward on long pending reform measures. It is pertinent 
to point out that the reforms undertaken in the country are probably one of the most 
comprehensive among the major economies of the world.
Industry and Infrastructure
INTRODUCTION 
8.1	 The 	 financial 	 year 	 2020-21 	 (FY21) 	 began 	 amidst 	 a 	 global 	 pandemic, 	 the 	 management 	 of	
which 	 led 	 to 	 countries 	 adopting 	 unprecedented 	 measures 	 that 	 brought 	 the 	 economy 	 to 	 a 	 grinding	
halt. 	 The 	 lockdown 	 and 	 the 	 corresponding 	 restrictions 	 on 	 local 	 and 	 global 	 movement 	 of 	 people 	 and	
goods, 	except 	for 	essential 	goods 	and 	services, 	was 	an 	exogenous 	shock 	that 	posed 	considerable	
challenges 	 to 	 the 	 economy , 	 created 	 uncertainty , 	 was 	 responsible 	 for 	 extensive 	 loss 	 of 	 livelihoods	
and 	 led 	 to 	 the 	 displacement 	 of 	 people. 	 The 	 unlocking 	 of 	 the 	 economy 	 in 	 a 	 phased 	 manner 	 has	
helped 	 the 	 economy 	 to 	 get 	 back 	 on 	 its 	 feet. 	 The 	 rebuilding 	 of 	 the 	 Indian 	 economy 	 is 	 hinged 	 on	
various 	 reform 	 measures 	 aimed 	 at 	 addressing 	 concerns 	 of 	 businesses 	 and 	 support 	 to 	 livelihoods.	
India 	 implemented 	 policies 	 aimed 	 at 	 reducing 	 transaction 	 costs, 	 supporting 	 Micro 	 Small 	 and	
Medium 	 Enterprises 	 (MSMEs), 	 enhancing 	 competition, 	 fostering 	 employment 	 creation 	 and	
securing 	 sustenance 	 through 	 the 	 Atmanirbhar 	 Bharat 	 Abhiyan. 	 The 	 performance 	 of 	 the 	 industrial	
sector 	 is 	 critical 	 given 	 its 	 deep 	 backward 	 and 	 forward 	 linkages 	 with 	 the 	 other 	 sectors 	 of 	 the	
economy . 	 A 	 strong 	 industrial 	 sector 	 is 	 a 	 sine 	 quo 	 non 	 for 	 an 	 Atmanirbhar 	 Bharat. 	 Any 	 initiative	
aimed 	 at 	 securing 	 a 	 rapid 	 recovery 	 needs 	 to 	 keep 	 industry 	 concerns 	 at 	 the 	 core 	 of 	 its 	 intervention.
262 Economic Survey 2020-21   V olume 2
8.2	 A 	 bouquet 	 of 	 measures 	 equivalent 	 to 	`	 29.87	 lakh 	 crores 	 or 	 15	 per 	 cent 	 of 	 India’ s 	 GDP	
were 	 introduced 	 as 	 a 	 measure 	 of 	 relief 	 and 	 support	 to 	 the 	 economy . 	 These 	 were 	 subsequently 	
backed	 by 	 initiatives	 to 	 further 	 strengthen 	 the 	 economy . 	 The	 details 	 of 	 the 	 stimulus	 package 	
pertaining 	to 	industry 	and 	infrastructure 	sector 	is 	in 	Box-1.	
Box-1: Atmanirbhar Bharat Abhiyan
Atmanirbhar 	 Bharat 	 is 	 the 	 vision 	 of 	 the 	 GoI 	 of 	 making	 India 	 a 	 self-reliant 	 nation.	 The 	 announcements 	
under	 the 	 Atmanirbhar 	 Bharat 	 Abhiyan 	 were 	 made 	 in 	 three 	 tranches. 	 The 	 key 	 measures 	 pertaining 	 to 	
industry 	and 	infrastructure 	are 	summarized 	below:
Atmanirbhar Bharat 1.0
I.  Relief and credit support to MSMEs to fight against COVID-19.
 1. ` 3 lakh crores Collateral-free Automatic Loans for Businesses, including MSMEs: The 
Emer gency 	 Credit	 Line 	 Guarantee 	 Scheme 	 (ECLGS) 	 has 	 been 	 formulated 	 as 	 a 	 relief	 measure 	
to 	 the 	 MSMEs 	 by	 providing 	 them	 additional	 funding 	 of 	 up	 to 	`	 3	 lakh 	 crores 	 in 	 the 	 form 	 of 	 a 	
fully 	 guaranteed 	 emer gency 	 credit 	 line. 	 The 	 borrowers 	 with 	 up	 to 	`	 25	 crores 	 outstanding 	 and 
` 	 100	 crores 	 turnover 	 are 	 eligi ble. 	 This 	 scheme 	 provides 	 100	 per 	 cent 	 credit 	 guarantee 	 cover 	 to 	
Banks	 and 	 NBFCs 	 on	 principal 	 and 	 interest. 	 No 	 guarantee 	 fee, 	 no	 fresh 	 collateral 	 is 	 required. 	
	 2.	 ` 20,000 crores Subordinate Debt for Stressed MSMEs: Provision 	 made 	 for 	`	 20,000	
crores 	subordinate 	 debt 	 for 	 the 	 MSMEs 	which 	 are 	NP As 	 or 	 are 	 stressed. 	 Government 	 to 	support	
them	 with 	` 4,000 	 crores 	to 	 Credit	 Guarantee 	 T rust 	 for 	 Micro 	 and 	 Small 	 enterprises 	 (CGTMSE). 	
Banks	 are 	 expected 	 to 	 provide 	 the 	 subordinate-debt 	 to 	 promoters 	 of 	 such 	 MSMEs 	equal 	 to 
15 	per 	cent 	of 	the 	existing 	stake 	in 	 the 	unit 	subject 	to 	a 	maximum 	of 	`	75	lakhs. 	
 3. ` 50,000 crores equity infusion through MSME Fund of Funds: Government 	 to 	 set 	 up	
a 	 Fund 	 of 	 Funds 	 with 	 a 	 corpus 	 of 	`	 10,000	 crores 	 that	 will 	 provide 	 equity	 funding 	 support	
for 	 the 	 MSMEs. 	 The 	 Fund 	 of 	 Funds 	 shall 	 be 	 operated 	 through 	 a 	 mother 	 and 	 a 	 few 	 daughter 	
funds. 	 It 	 will 	 provide 	 equity	 funding 	 for 	 viable 	 MSMEs. 	 This 	 scheme 	 will 	 help 	 the 	 MSMEs 	
to 	 expand 	 its 	 size 	 and 	 capacity 	 and 	 will 	 also 	 encourage 	 them	 to 	 get 	 listed 	 on	 stock 	 exchanges.
 4. New definition of MSME: Low 	 threshold 	 in 	 the 	 MSME 	 definition 	 have 	 created 	 a 	 fear 	
among 	 the 	 MSMEs 	 of 	 graduating 	 out 	 of 	 the 	 benefits. 	 Hence, 	 the 	 government 	 has 	 revised 	 the 	
definition 	 of 	 MSME 	 by	 raising 	 the 	 investment 	 limit.	 An 	 additional	 criteria 	 of 	 turnover 	 has 	
been 	 introduced 	 and 	 distinction 	 between 	 manufacturing 	 and 	 service 	 sector 	 stands	 removed. 	
Revised 	MSME 	classification 	is 	discussed 	in 	 T able 	9.
	 5.	 Global tenders to be disallowed upto ` 200 crores: 	 General 	 Financial 	 Rules 	 (GFR) 	 of 	 the 	
Government 	 amended 	 to 	 disallow 	 global	 tender 	 enquiries 	 in 	 government 	 procurement 	 of 	
goods 	 and 	 services 	 of 	 value 	 of 	 less	 than 	`	 200	 crores. 	 This 	 is 	 a 	 step 	 in 	 support	 of 	 the 	 Make 	 in 	
India 	 initiative 	and 	will 	promote 	MSMEs 	to 	grow .
 6. Other Measures for MSMEs: 	 e-market 	 linkage 	 for 	 MSMEs 	 to 	 act 	 as 	 a 	 replacement 	 for 	 trade 	 fairs	
and 	 exhibitions. 	 The 	 MSME 	 receivables 	 from 	 the 	 Government 	 and 	 the 	 CPSEs 	 to 	 be 	 released 	 in	
45 	 days. 	 This 	 would 	 help 	 the 	 MSMEs 	 to 	 solve 	 the 	 problems 	 of 	 marketing 	 and 	 liquidity .
	 7. Income Tax Refund: 	 Income 	 tax 	 refunds 	 to 	 nearly 	 8.2	 lakh 	 small 	 businesses 	 worth 	`	 5,204	
crores 	 has 	 been 	 issued	 with 	 the 	 objective 	 to 	 help 	 the 	 MSMEs 	 to 	 carry 	 on	 their 	 business 	
activities 	without 	pay 	cuts 	and 	layof fs 	in 	these 	challenging 	times.
Page 3


CHAPTER
08
“In the midst of every crisis, lies great opportunity.”
?Albert Einstein
The Indian economy encountered a “once in a century” crisis due to the COVID-19 
pandemic that affected economic activities and consequently impacted the livelihood of 
billions of people. The industrial sector, not an exception to this shock, experienced a 
sharp decline during the period of the lockdown. The economic activity, however, started 
recovering as the unlocking process began. The various subcomponents of Index of 
Industrial Production (IIP) and eight-core index have experienced a V-shaped recovery 
with consistent movement being seen towards the pre-crisis levels. The broad-based quick 
revival of the industrial activity stemmed from remedial measures, reforms, and the sizable 
stimulus package announced by the Government of India (GoI) under the Atmanirbhar 
Bharat package. Based on the IIP, the industrial activity contracted by 1.9 per cent 
in November-2020 recovering from the nadir of -57.3 per cent in April-2020. Further 
improvement and firming up in industrial activities are foreseen with the Government 
enhancing capital expenditure as highlighted in the fiscal policy chapter, the vaccination 
drive and the resolute push forward on long pending reform measures. It is pertinent 
to point out that the reforms undertaken in the country are probably one of the most 
comprehensive among the major economies of the world.
Industry and Infrastructure
INTRODUCTION 
8.1	 The 	 financial 	 year 	 2020-21 	 (FY21) 	 began 	 amidst 	 a 	 global 	 pandemic, 	 the 	 management 	 of	
which 	 led 	 to 	 countries 	 adopting 	 unprecedented 	 measures 	 that 	 brought 	 the 	 economy 	 to 	 a 	 grinding	
halt. 	 The 	 lockdown 	 and 	 the 	 corresponding 	 restrictions 	 on 	 local 	 and 	 global 	 movement 	 of 	 people 	 and	
goods, 	except 	for 	essential 	goods 	and 	services, 	was 	an 	exogenous 	shock 	that 	posed 	considerable	
challenges 	 to 	 the 	 economy , 	 created 	 uncertainty , 	 was 	 responsible 	 for 	 extensive 	 loss 	 of 	 livelihoods	
and 	 led 	 to 	 the 	 displacement 	 of 	 people. 	 The 	 unlocking 	 of 	 the 	 economy 	 in 	 a 	 phased 	 manner 	 has	
helped 	 the 	 economy 	 to 	 get 	 back 	 on 	 its 	 feet. 	 The 	 rebuilding 	 of 	 the 	 Indian 	 economy 	 is 	 hinged 	 on	
various 	 reform 	 measures 	 aimed 	 at 	 addressing 	 concerns 	 of 	 businesses 	 and 	 support 	 to 	 livelihoods.	
India 	 implemented 	 policies 	 aimed 	 at 	 reducing 	 transaction 	 costs, 	 supporting 	 Micro 	 Small 	 and	
Medium 	 Enterprises 	 (MSMEs), 	 enhancing 	 competition, 	 fostering 	 employment 	 creation 	 and	
securing 	 sustenance 	 through 	 the 	 Atmanirbhar 	 Bharat 	 Abhiyan. 	 The 	 performance 	 of 	 the 	 industrial	
sector 	 is 	 critical 	 given 	 its 	 deep 	 backward 	 and 	 forward 	 linkages 	 with 	 the 	 other 	 sectors 	 of 	 the	
economy . 	 A 	 strong 	 industrial 	 sector 	 is 	 a 	 sine 	 quo 	 non 	 for 	 an 	 Atmanirbhar 	 Bharat. 	 Any 	 initiative	
aimed 	 at 	 securing 	 a 	 rapid 	 recovery 	 needs 	 to 	 keep 	 industry 	 concerns 	 at 	 the 	 core 	 of 	 its 	 intervention.
262 Economic Survey 2020-21   V olume 2
8.2	 A 	 bouquet 	 of 	 measures 	 equivalent 	 to 	`	 29.87	 lakh 	 crores 	 or 	 15	 per 	 cent 	 of 	 India’ s 	 GDP	
were 	 introduced 	 as 	 a 	 measure 	 of 	 relief 	 and 	 support	 to 	 the 	 economy . 	 These 	 were 	 subsequently 	
backed	 by 	 initiatives	 to 	 further 	 strengthen 	 the 	 economy . 	 The	 details 	 of 	 the 	 stimulus	 package 	
pertaining 	to 	industry 	and 	infrastructure 	sector 	is 	in 	Box-1.	
Box-1: Atmanirbhar Bharat Abhiyan
Atmanirbhar 	 Bharat 	 is 	 the 	 vision 	 of 	 the 	 GoI 	 of 	 making	 India 	 a 	 self-reliant 	 nation.	 The 	 announcements 	
under	 the 	 Atmanirbhar 	 Bharat 	 Abhiyan 	 were 	 made 	 in 	 three 	 tranches. 	 The 	 key 	 measures 	 pertaining 	 to 	
industry 	and 	infrastructure 	are 	summarized 	below:
Atmanirbhar Bharat 1.0
I.  Relief and credit support to MSMEs to fight against COVID-19.
 1. ` 3 lakh crores Collateral-free Automatic Loans for Businesses, including MSMEs: The 
Emer gency 	 Credit	 Line 	 Guarantee 	 Scheme 	 (ECLGS) 	 has 	 been 	 formulated 	 as 	 a 	 relief	 measure 	
to 	 the 	 MSMEs 	 by	 providing 	 them	 additional	 funding 	 of 	 up	 to 	`	 3	 lakh 	 crores 	 in 	 the 	 form 	 of 	 a 	
fully 	 guaranteed 	 emer gency 	 credit 	 line. 	 The 	 borrowers 	 with 	 up	 to 	`	 25	 crores 	 outstanding 	 and 
` 	 100	 crores 	 turnover 	 are 	 eligi ble. 	 This 	 scheme 	 provides 	 100	 per 	 cent 	 credit 	 guarantee 	 cover 	 to 	
Banks	 and 	 NBFCs 	 on	 principal 	 and 	 interest. 	 No 	 guarantee 	 fee, 	 no	 fresh 	 collateral 	 is 	 required. 	
	 2.	 ` 20,000 crores Subordinate Debt for Stressed MSMEs: Provision 	 made 	 for 	`	 20,000	
crores 	subordinate 	 debt 	 for 	 the 	 MSMEs 	which 	 are 	NP As 	 or 	 are 	 stressed. 	 Government 	 to 	support	
them	 with 	` 4,000 	 crores 	to 	 Credit	 Guarantee 	 T rust 	 for 	 Micro 	 and 	 Small 	 enterprises 	 (CGTMSE). 	
Banks	 are 	 expected 	 to 	 provide 	 the 	 subordinate-debt 	 to 	 promoters 	 of 	 such 	 MSMEs 	equal 	 to 
15 	per 	cent 	of 	the 	existing 	stake 	in 	 the 	unit 	subject 	to 	a 	maximum 	of 	`	75	lakhs. 	
 3. ` 50,000 crores equity infusion through MSME Fund of Funds: Government 	 to 	 set 	 up	
a 	 Fund 	 of 	 Funds 	 with 	 a 	 corpus 	 of 	`	 10,000	 crores 	 that	 will 	 provide 	 equity	 funding 	 support	
for 	 the 	 MSMEs. 	 The 	 Fund 	 of 	 Funds 	 shall 	 be 	 operated 	 through 	 a 	 mother 	 and 	 a 	 few 	 daughter 	
funds. 	 It 	 will 	 provide 	 equity	 funding 	 for 	 viable 	 MSMEs. 	 This 	 scheme 	 will 	 help 	 the 	 MSMEs 	
to 	 expand 	 its 	 size 	 and 	 capacity 	 and 	 will 	 also 	 encourage 	 them	 to 	 get 	 listed 	 on	 stock 	 exchanges.
 4. New definition of MSME: Low 	 threshold 	 in 	 the 	 MSME 	 definition 	 have 	 created 	 a 	 fear 	
among 	 the 	 MSMEs 	 of 	 graduating 	 out 	 of 	 the 	 benefits. 	 Hence, 	 the 	 government 	 has 	 revised 	 the 	
definition 	 of 	 MSME 	 by	 raising 	 the 	 investment 	 limit.	 An 	 additional	 criteria 	 of 	 turnover 	 has 	
been 	 introduced 	 and 	 distinction 	 between 	 manufacturing 	 and 	 service 	 sector 	 stands	 removed. 	
Revised 	MSME 	classification 	is 	discussed 	in 	 T able 	9.
	 5.	 Global tenders to be disallowed upto ` 200 crores: 	 General 	 Financial 	 Rules 	 (GFR) 	 of 	 the 	
Government 	 amended 	 to 	 disallow 	 global	 tender 	 enquiries 	 in 	 government 	 procurement 	 of 	
goods 	 and 	 services 	 of 	 value 	 of 	 less	 than 	`	 200	 crores. 	 This 	 is 	 a 	 step 	 in 	 support	 of 	 the 	 Make 	 in 	
India 	 initiative 	and 	will 	promote 	MSMEs 	to 	grow .
 6. Other Measures for MSMEs: 	 e-market 	 linkage 	 for 	 MSMEs 	 to 	 act 	 as 	 a 	 replacement 	 for 	 trade 	 fairs	
and 	 exhibitions. 	 The 	 MSME 	 receivables 	 from 	 the 	 Government 	 and 	 the 	 CPSEs 	 to 	 be 	 released 	 in	
45 	 days. 	 This 	 would 	 help 	 the 	 MSMEs 	 to 	 solve 	 the 	 problems 	 of 	 marketing 	 and 	 liquidity .
	 7. Income Tax Refund: 	 Income 	 tax 	 refunds 	 to 	 nearly 	 8.2	 lakh 	 small 	 businesses 	 worth 	`	 5,204	
crores 	 has 	 been 	 issued	 with 	 the 	 objective 	 to 	 help 	 the 	 MSMEs 	 to 	 carry 	 on	 their 	 business 	
activities 	without 	pay 	cuts 	and 	layof fs 	in 	these 	challenging 	times.
263 Industry and Infrastructure
 8. Relief of ` 1500 crores to MUDRA- Shishu loans: 	 GoI 	 to 	 provide 	 interest 	 subvention 	 of 
2 	 per 	 cent 	 to 	 prompt 	 payees 	 for 	 a 	 period 	 of 	 12	 months. 	 Small 	 business 	 under 	 MUDRA 	 to 	 be 	
benefited.
	 9. Ease of doing business for business including MSMEs: 	 The 	 Government 	 announced 	
further 	 enhancement 	 of 	 ease 	 of 	 doing 	 business 	 through 	 the 	 Insolvency 	 and 	 Bankruptcy 	
Code 	 (IBC) 	 related 	 measures 	 which 	 include 	 (a) 	 raising 	 of 	 the 	 minimum 	 threshold 	 to 	 initiate 	
insolvency 	 proceedings 	 to 	`	 1	 crores 	 from 	`	 1	 lakhs 	 (which 	 lar gely 	 insulates	 the 	 MSMEs), 
(b) 	 special 	 insolvency 	 resolution	 framework 	 for 	 the 	 MSMEs 	 under 	 Section	 240A 	 of 	 the 	 Code, 
(c) 	 suspension 	 of 	 fresh 	 initia tion 	 of 	 insolvency 	 proceedings 	 for 	 up	 to 	 one 	 year 	 depending 	
upon	 the 	 pandemic 	 situation 	 and 	 (d) 	 empowering 	 the 	 Central 	 Government 	 to 	 exclude 	 COVID 	
19	 related 	 debt 	 from 	 the 	 definition 	 of 	 “default” 	 under 	 the 	 Code 	 for 	 the 	 purpose 	 of 	 triggering 	
insolvency 	proceedings. 	
 II.  Packages for Power Sector- ` 	90,000	crores 	liquidity	injection	for 	DISCOMs
III. Real Estate: The extension 	 of 	 registration 	 and 	 completion	 date 	 of 	 real 	 estate 	 projects 	 under 	 Real 	
Estate	 (Regulation 	 and 	 Development) 	 Act 	 (RERA). 	 Ministry 	 of 	 Housing 	 and 	 Urban 	 Af fairs 	 to 	 advise 	
States/UT s 	and 	their 	regulatory	authorities 	to 	the 	following 	ef fect:
	 1.	 T reat 	COVID-19 	as 	an 	event 	of 	‘Force	Majeure’ 	under 	RERA. 	
	 2.	 Extend 	 the 	 registratio n 	 and 	 completion	 date 	 suo-moto 	 by	 6	 months 	 for 	 all	 registered 	 projects 	
expiring 	on	or 	after 	25
th 	
March 	2020 	without 	need 	for 	individual 	applications.
	 3.	 Regulatory 	 Authorities	may 	extend 	this 	for 	another 	period 	of 	up	to 	3	months, 	if 	needed
	 4.	 Issue 	 fresh 	‘Project 	Registration 	Certificates’ 	automatically 	with 	revised 	timelines.
	 5.	 Extend 	timelines 	for 	various 	statuary 	compliances 	under 	RERA 	concurrently .
These 	 measures 	 will 	 de-stress 	 real 	 estate 	 developers 	 and 	 ensure	 completion	 of 	 projects 	 so 	 that	
homebuyers 	are 	able 	to 	get 	delivery 	of 	their 	booked 	houses 	within 	new 	timelines.
IV .  Public Sector Enterprise Policy for a New, Self-reliant India
 • Government 	 to 	 announce 	 a 	 new 	 coherent 	 policy—where 	 all	 sectors 	 are 	 open 	 to 	 the 	 private 	
sector 	while 	public	sector 	enterprises 	(PSEs) 	will 	play 	an 	important 	role 	in 	defined 	areas
 • List 	of 	strategic 	sectors 	requiring 	presence 	of 	PSEs 	in 	public	interest 	will 	be 	notified
 • In	 strate gic 	 sectors, 	 at 	 least 	 one 	 enterprise 	 will 	 remain 	 in 	 the 	 public	 sector 	 but 	 private 	 sector 	
will 	also 	be 	allowed
 • In 	other 	sectors, 	PSEs 	will 	be 	privatized 	(timing 	to 	be 	based 	on	feasibility	etc.)
 • T o 	 minimize 	 wasteful 	 admi nistrative 	 costs,	 number 	 of 	 enterprises 	 in 	 strategic 	 sectors 	 will 	
ordinarily 	 be 	 only 	 one 	 to 	 four; 	 others 	 will 	 be	 privatized/ 	 mer ged/ 	 brought 	 under 	 holding 	 companies.
Atmanirbhar Bharat 2.0 (second tranche of measures) provided 	`	 25,000	 crores 	 as 	 additional	
capital	expenditure 	to 	the 	Ministry 	of 	Road 	 T ransport 	and 	Ministry 	of 	Defence
Atmanirbhar Bharat 3.0 (third tranche of measures) initiatives that impact the industrial sector 
include: 
 • `	 1.46	 lakh 	 crores 	 boost 	 for 	 Atmanirbhar 	 manufacturi ng 	 production-linked 	 incentives 	 for 
10 	Champion 	Sectors 	(details 	in 	Box 	4)
Page 4


CHAPTER
08
“In the midst of every crisis, lies great opportunity.”
?Albert Einstein
The Indian economy encountered a “once in a century” crisis due to the COVID-19 
pandemic that affected economic activities and consequently impacted the livelihood of 
billions of people. The industrial sector, not an exception to this shock, experienced a 
sharp decline during the period of the lockdown. The economic activity, however, started 
recovering as the unlocking process began. The various subcomponents of Index of 
Industrial Production (IIP) and eight-core index have experienced a V-shaped recovery 
with consistent movement being seen towards the pre-crisis levels. The broad-based quick 
revival of the industrial activity stemmed from remedial measures, reforms, and the sizable 
stimulus package announced by the Government of India (GoI) under the Atmanirbhar 
Bharat package. Based on the IIP, the industrial activity contracted by 1.9 per cent 
in November-2020 recovering from the nadir of -57.3 per cent in April-2020. Further 
improvement and firming up in industrial activities are foreseen with the Government 
enhancing capital expenditure as highlighted in the fiscal policy chapter, the vaccination 
drive and the resolute push forward on long pending reform measures. It is pertinent 
to point out that the reforms undertaken in the country are probably one of the most 
comprehensive among the major economies of the world.
Industry and Infrastructure
INTRODUCTION 
8.1	 The 	 financial 	 year 	 2020-21 	 (FY21) 	 began 	 amidst 	 a 	 global 	 pandemic, 	 the 	 management 	 of	
which 	 led 	 to 	 countries 	 adopting 	 unprecedented 	 measures 	 that 	 brought 	 the 	 economy 	 to 	 a 	 grinding	
halt. 	 The 	 lockdown 	 and 	 the 	 corresponding 	 restrictions 	 on 	 local 	 and 	 global 	 movement 	 of 	 people 	 and	
goods, 	except 	for 	essential 	goods 	and 	services, 	was 	an 	exogenous 	shock 	that 	posed 	considerable	
challenges 	 to 	 the 	 economy , 	 created 	 uncertainty , 	 was 	 responsible 	 for 	 extensive 	 loss 	 of 	 livelihoods	
and 	 led 	 to 	 the 	 displacement 	 of 	 people. 	 The 	 unlocking 	 of 	 the 	 economy 	 in 	 a 	 phased 	 manner 	 has	
helped 	 the 	 economy 	 to 	 get 	 back 	 on 	 its 	 feet. 	 The 	 rebuilding 	 of 	 the 	 Indian 	 economy 	 is 	 hinged 	 on	
various 	 reform 	 measures 	 aimed 	 at 	 addressing 	 concerns 	 of 	 businesses 	 and 	 support 	 to 	 livelihoods.	
India 	 implemented 	 policies 	 aimed 	 at 	 reducing 	 transaction 	 costs, 	 supporting 	 Micro 	 Small 	 and	
Medium 	 Enterprises 	 (MSMEs), 	 enhancing 	 competition, 	 fostering 	 employment 	 creation 	 and	
securing 	 sustenance 	 through 	 the 	 Atmanirbhar 	 Bharat 	 Abhiyan. 	 The 	 performance 	 of 	 the 	 industrial	
sector 	 is 	 critical 	 given 	 its 	 deep 	 backward 	 and 	 forward 	 linkages 	 with 	 the 	 other 	 sectors 	 of 	 the	
economy . 	 A 	 strong 	 industrial 	 sector 	 is 	 a 	 sine 	 quo 	 non 	 for 	 an 	 Atmanirbhar 	 Bharat. 	 Any 	 initiative	
aimed 	 at 	 securing 	 a 	 rapid 	 recovery 	 needs 	 to 	 keep 	 industry 	 concerns 	 at 	 the 	 core 	 of 	 its 	 intervention.
262 Economic Survey 2020-21   V olume 2
8.2	 A 	 bouquet 	 of 	 measures 	 equivalent 	 to 	`	 29.87	 lakh 	 crores 	 or 	 15	 per 	 cent 	 of 	 India’ s 	 GDP	
were 	 introduced 	 as 	 a 	 measure 	 of 	 relief 	 and 	 support	 to 	 the 	 economy . 	 These 	 were 	 subsequently 	
backed	 by 	 initiatives	 to 	 further 	 strengthen 	 the 	 economy . 	 The	 details 	 of 	 the 	 stimulus	 package 	
pertaining 	to 	industry 	and 	infrastructure 	sector 	is 	in 	Box-1.	
Box-1: Atmanirbhar Bharat Abhiyan
Atmanirbhar 	 Bharat 	 is 	 the 	 vision 	 of 	 the 	 GoI 	 of 	 making	 India 	 a 	 self-reliant 	 nation.	 The 	 announcements 	
under	 the 	 Atmanirbhar 	 Bharat 	 Abhiyan 	 were 	 made 	 in 	 three 	 tranches. 	 The 	 key 	 measures 	 pertaining 	 to 	
industry 	and 	infrastructure 	are 	summarized 	below:
Atmanirbhar Bharat 1.0
I.  Relief and credit support to MSMEs to fight against COVID-19.
 1. ` 3 lakh crores Collateral-free Automatic Loans for Businesses, including MSMEs: The 
Emer gency 	 Credit	 Line 	 Guarantee 	 Scheme 	 (ECLGS) 	 has 	 been 	 formulated 	 as 	 a 	 relief	 measure 	
to 	 the 	 MSMEs 	 by	 providing 	 them	 additional	 funding 	 of 	 up	 to 	`	 3	 lakh 	 crores 	 in 	 the 	 form 	 of 	 a 	
fully 	 guaranteed 	 emer gency 	 credit 	 line. 	 The 	 borrowers 	 with 	 up	 to 	`	 25	 crores 	 outstanding 	 and 
` 	 100	 crores 	 turnover 	 are 	 eligi ble. 	 This 	 scheme 	 provides 	 100	 per 	 cent 	 credit 	 guarantee 	 cover 	 to 	
Banks	 and 	 NBFCs 	 on	 principal 	 and 	 interest. 	 No 	 guarantee 	 fee, 	 no	 fresh 	 collateral 	 is 	 required. 	
	 2.	 ` 20,000 crores Subordinate Debt for Stressed MSMEs: Provision 	 made 	 for 	`	 20,000	
crores 	subordinate 	 debt 	 for 	 the 	 MSMEs 	which 	 are 	NP As 	 or 	 are 	 stressed. 	 Government 	 to 	support	
them	 with 	` 4,000 	 crores 	to 	 Credit	 Guarantee 	 T rust 	 for 	 Micro 	 and 	 Small 	 enterprises 	 (CGTMSE). 	
Banks	 are 	 expected 	 to 	 provide 	 the 	 subordinate-debt 	 to 	 promoters 	 of 	 such 	 MSMEs 	equal 	 to 
15 	per 	cent 	of 	the 	existing 	stake 	in 	 the 	unit 	subject 	to 	a 	maximum 	of 	`	75	lakhs. 	
 3. ` 50,000 crores equity infusion through MSME Fund of Funds: Government 	 to 	 set 	 up	
a 	 Fund 	 of 	 Funds 	 with 	 a 	 corpus 	 of 	`	 10,000	 crores 	 that	 will 	 provide 	 equity	 funding 	 support	
for 	 the 	 MSMEs. 	 The 	 Fund 	 of 	 Funds 	 shall 	 be 	 operated 	 through 	 a 	 mother 	 and 	 a 	 few 	 daughter 	
funds. 	 It 	 will 	 provide 	 equity	 funding 	 for 	 viable 	 MSMEs. 	 This 	 scheme 	 will 	 help 	 the 	 MSMEs 	
to 	 expand 	 its 	 size 	 and 	 capacity 	 and 	 will 	 also 	 encourage 	 them	 to 	 get 	 listed 	 on	 stock 	 exchanges.
 4. New definition of MSME: Low 	 threshold 	 in 	 the 	 MSME 	 definition 	 have 	 created 	 a 	 fear 	
among 	 the 	 MSMEs 	 of 	 graduating 	 out 	 of 	 the 	 benefits. 	 Hence, 	 the 	 government 	 has 	 revised 	 the 	
definition 	 of 	 MSME 	 by	 raising 	 the 	 investment 	 limit.	 An 	 additional	 criteria 	 of 	 turnover 	 has 	
been 	 introduced 	 and 	 distinction 	 between 	 manufacturing 	 and 	 service 	 sector 	 stands	 removed. 	
Revised 	MSME 	classification 	is 	discussed 	in 	 T able 	9.
	 5.	 Global tenders to be disallowed upto ` 200 crores: 	 General 	 Financial 	 Rules 	 (GFR) 	 of 	 the 	
Government 	 amended 	 to 	 disallow 	 global	 tender 	 enquiries 	 in 	 government 	 procurement 	 of 	
goods 	 and 	 services 	 of 	 value 	 of 	 less	 than 	`	 200	 crores. 	 This 	 is 	 a 	 step 	 in 	 support	 of 	 the 	 Make 	 in 	
India 	 initiative 	and 	will 	promote 	MSMEs 	to 	grow .
 6. Other Measures for MSMEs: 	 e-market 	 linkage 	 for 	 MSMEs 	 to 	 act 	 as 	 a 	 replacement 	 for 	 trade 	 fairs	
and 	 exhibitions. 	 The 	 MSME 	 receivables 	 from 	 the 	 Government 	 and 	 the 	 CPSEs 	 to 	 be 	 released 	 in	
45 	 days. 	 This 	 would 	 help 	 the 	 MSMEs 	 to 	 solve 	 the 	 problems 	 of 	 marketing 	 and 	 liquidity .
	 7. Income Tax Refund: 	 Income 	 tax 	 refunds 	 to 	 nearly 	 8.2	 lakh 	 small 	 businesses 	 worth 	`	 5,204	
crores 	 has 	 been 	 issued	 with 	 the 	 objective 	 to 	 help 	 the 	 MSMEs 	 to 	 carry 	 on	 their 	 business 	
activities 	without 	pay 	cuts 	and 	layof fs 	in 	these 	challenging 	times.
263 Industry and Infrastructure
 8. Relief of ` 1500 crores to MUDRA- Shishu loans: 	 GoI 	 to 	 provide 	 interest 	 subvention 	 of 
2 	 per 	 cent 	 to 	 prompt 	 payees 	 for 	 a 	 period 	 of 	 12	 months. 	 Small 	 business 	 under 	 MUDRA 	 to 	 be 	
benefited.
	 9. Ease of doing business for business including MSMEs: 	 The 	 Government 	 announced 	
further 	 enhancement 	 of 	 ease 	 of 	 doing 	 business 	 through 	 the 	 Insolvency 	 and 	 Bankruptcy 	
Code 	 (IBC) 	 related 	 measures 	 which 	 include 	 (a) 	 raising 	 of 	 the 	 minimum 	 threshold 	 to 	 initiate 	
insolvency 	 proceedings 	 to 	`	 1	 crores 	 from 	`	 1	 lakhs 	 (which 	 lar gely 	 insulates	 the 	 MSMEs), 
(b) 	 special 	 insolvency 	 resolution	 framework 	 for 	 the 	 MSMEs 	 under 	 Section	 240A 	 of 	 the 	 Code, 
(c) 	 suspension 	 of 	 fresh 	 initia tion 	 of 	 insolvency 	 proceedings 	 for 	 up	 to 	 one 	 year 	 depending 	
upon	 the 	 pandemic 	 situation 	 and 	 (d) 	 empowering 	 the 	 Central 	 Government 	 to 	 exclude 	 COVID 	
19	 related 	 debt 	 from 	 the 	 definition 	 of 	 “default” 	 under 	 the 	 Code 	 for 	 the 	 purpose 	 of 	 triggering 	
insolvency 	proceedings. 	
 II.  Packages for Power Sector- ` 	90,000	crores 	liquidity	injection	for 	DISCOMs
III. Real Estate: The extension 	 of 	 registration 	 and 	 completion	 date 	 of 	 real 	 estate 	 projects 	 under 	 Real 	
Estate	 (Regulation 	 and 	 Development) 	 Act 	 (RERA). 	 Ministry 	 of 	 Housing 	 and 	 Urban 	 Af fairs 	 to 	 advise 	
States/UT s 	and 	their 	regulatory	authorities 	to 	the 	following 	ef fect:
	 1.	 T reat 	COVID-19 	as 	an 	event 	of 	‘Force	Majeure’ 	under 	RERA. 	
	 2.	 Extend 	 the 	 registratio n 	 and 	 completion	 date 	 suo-moto 	 by	 6	 months 	 for 	 all	 registered 	 projects 	
expiring 	on	or 	after 	25
th 	
March 	2020 	without 	need 	for 	individual 	applications.
	 3.	 Regulatory 	 Authorities	may 	extend 	this 	for 	another 	period 	of 	up	to 	3	months, 	if 	needed
	 4.	 Issue 	 fresh 	‘Project 	Registration 	Certificates’ 	automatically 	with 	revised 	timelines.
	 5.	 Extend 	timelines 	for 	various 	statuary 	compliances 	under 	RERA 	concurrently .
These 	 measures 	 will 	 de-stress 	 real 	 estate 	 developers 	 and 	 ensure	 completion	 of 	 projects 	 so 	 that	
homebuyers 	are 	able 	to 	get 	delivery 	of 	their 	booked 	houses 	within 	new 	timelines.
IV .  Public Sector Enterprise Policy for a New, Self-reliant India
 • Government 	 to 	 announce 	 a 	 new 	 coherent 	 policy—where 	 all	 sectors 	 are 	 open 	 to 	 the 	 private 	
sector 	while 	public	sector 	enterprises 	(PSEs) 	will 	play 	an 	important 	role 	in 	defined 	areas
 • List 	of 	strategic 	sectors 	requiring 	presence 	of 	PSEs 	in 	public	interest 	will 	be 	notified
 • In	 strate gic 	 sectors, 	 at 	 least 	 one 	 enterprise 	 will 	 remain 	 in 	 the 	 public	 sector 	 but 	 private 	 sector 	
will 	also 	be 	allowed
 • In 	other 	sectors, 	PSEs 	will 	be 	privatized 	(timing 	to 	be 	based 	on	feasibility	etc.)
 • T o 	 minimize 	 wasteful 	 admi nistrative 	 costs,	 number 	 of 	 enterprises 	 in 	 strategic 	 sectors 	 will 	
ordinarily 	 be 	 only 	 one 	 to 	 four; 	 others 	 will 	 be	 privatized/ 	 mer ged/ 	 brought 	 under 	 holding 	 companies.
Atmanirbhar Bharat 2.0 (second tranche of measures) provided 	`	 25,000	 crores 	 as 	 additional	
capital	expenditure 	to 	the 	Ministry 	of 	Road 	 T ransport 	and 	Ministry 	of 	Defence
Atmanirbhar Bharat 3.0 (third tranche of measures) initiatives that impact the industrial sector 
include: 
 • `	 1.46	 lakh 	 crores 	 boost 	 for 	 Atmanirbhar 	 manufacturi ng 	 production-linked 	 incentives 	 for 
10 	Champion 	Sectors 	(details 	in 	Box 	4)
264 Economic Survey 2020-21   V olume 2
 • ` 	18,000	crores 	additional	outlay	for 	PM 	 A waas 	 Y ojana 	(PMA Y) 	–Urban
 • Support 	 for 	 construction 	 & 	 infrastructure 	 –	 relaxation 	 of 	 Earnest 	 Money 	 Deposit 	 (EMD) 	 & 	
performance 	security 	on	Government 	tenders
 • `	 1.10	 lakh 	 crores 	 platform 	 for 	 infra 	 debt 	 financing 	 –	`	 6000	 crores 	 equity	 infusion 	 in 	 National 	
Investment 	 and 	 Infrastructure 	 Fund 	 (NIIF)	 Debt 	 Platform,	`	 10,200	 crores 	 additional	 budget 	
outlay 	 will 	 be 	 provided 	 towards 	 capital 	 and 	 industrial 	 expenditure 	 for 	 domestic 	 defence 	
equipment, 	industrial 	incentives, 	industrial 	infrastructure, 	and 	green 	ener gy
8.3	 As 	 per 	 the 	 latest 	 estim ates 	 on	 Gross 	 V alue 	 Added 	 (GV A), 	 the 	 industrial 	 sector 	 is 	 expected 	
to	 record 	 a 	 growth 	 of 	 -9.6 	 per 	 cent 	 with 	 an 	 overall 	 contribution 	 in 	 GV A 	 of 	 25.8	 per 	 cent 	 in 	
2020-21 	 (FY21). 	 The	 contribution 	 of 	 the 	 industrial 	 sector 	 has 	 been 	 constantly 	 declining 	 since 	
201 1-12 	 (Figure 	 1). 	 The	 fall 	 in 	 share	 is 	 across 	 the 	 board 	 except	 in 	 case 	 of 	 ‘Electricity , 	 gas, 	 water 	
supply	 & 	 other	 utility	 services’ 	 whose 	 share	 in 	 GV A 	 has 	 increased 	 from 	 2.3	 per 	 cent 	 in 	 FY12 	 to 
2.7 	 per	 cent 	 in 	 FY21. 	 The 	 performance 	 of 	 the 	 various 	 components 	 of 	 the 	 industrial 	 sector 	 namely , 	
manufacturing, 	mining 	and 	quarrying, 	electricity , 	and 	construction 	is 	presented 	in 	 T able 	1.	
Figure 1: Share of Industry and its Components in GV A (Current Prices, Per cent)
3.2 3.1 2. 9 2. 7 2. 3 2. 3 2. 3 2. 3 2. 1
1. 7
17.4
17.1
16.5
16.3 17.1 16.7 16.4 16.1
15.1
14.5
2.3
2.3
2. 5
2. 5
2. 7
2. 5
2. 7
2. 7
2. 7
2. 7
9.6
9.2
8. 9
8. 5
7. 9
7. 7 7. 7
7. 8
7. 5
6. 9
32.5
31.8
30.8
30.0 30.0
29.3 29.2
28.9
27.5
25.8
0 .0
5 .0
1 0.0
1 5.0
2 0.0
2 5.0
3 0.0
3 5.0
F Y1 2 F Y1 3 F Y1 4 F Y1 5 F Y1 6 F Y1 7 F Y1 8 F Y1 9 F Y2 0 F Y2 1
M ining M an u f ac t u r i ng E le c tr ic ity * C ons t r uc t i o n I nd us t ry
*Electricity , 	gas,	water	supply	&	other	utility	services. 	
Source: 	Survey	calculations	based	on	MoSPI	data.	
Table 1: Rate of Growth of GV A in Industry and Its Components (Per cent)
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Industry 3.3 3.8 7.0 9.6 7.7 6.3 4.9 0.9 -9.6
Mining 0.6 0.2 9.7 10.1 9.8 4.9 -5.8 3.1 -12.4
Manufacturing 5.5 5.0 7.9 13.1 7.9 6.6 5.7 0.0 -9.4
Electricity* 2.7 4.2 7.2 4.7 10.0 1 1.2 8.2 4.1 2.7
Construction 0.3 2.7 4.3 3.6 5.9 5.0 6.1 1.3 -12.6
*Electricity , 	gas,	water	supply	&	other	utility	services 	
Source:	Survey 	calculations	based	on	MoSPI	Data.
Page 5


CHAPTER
08
“In the midst of every crisis, lies great opportunity.”
?Albert Einstein
The Indian economy encountered a “once in a century” crisis due to the COVID-19 
pandemic that affected economic activities and consequently impacted the livelihood of 
billions of people. The industrial sector, not an exception to this shock, experienced a 
sharp decline during the period of the lockdown. The economic activity, however, started 
recovering as the unlocking process began. The various subcomponents of Index of 
Industrial Production (IIP) and eight-core index have experienced a V-shaped recovery 
with consistent movement being seen towards the pre-crisis levels. The broad-based quick 
revival of the industrial activity stemmed from remedial measures, reforms, and the sizable 
stimulus package announced by the Government of India (GoI) under the Atmanirbhar 
Bharat package. Based on the IIP, the industrial activity contracted by 1.9 per cent 
in November-2020 recovering from the nadir of -57.3 per cent in April-2020. Further 
improvement and firming up in industrial activities are foreseen with the Government 
enhancing capital expenditure as highlighted in the fiscal policy chapter, the vaccination 
drive and the resolute push forward on long pending reform measures. It is pertinent 
to point out that the reforms undertaken in the country are probably one of the most 
comprehensive among the major economies of the world.
Industry and Infrastructure
INTRODUCTION 
8.1	 The 	 financial 	 year 	 2020-21 	 (FY21) 	 began 	 amidst 	 a 	 global 	 pandemic, 	 the 	 management 	 of	
which 	 led 	 to 	 countries 	 adopting 	 unprecedented 	 measures 	 that 	 brought 	 the 	 economy 	 to 	 a 	 grinding	
halt. 	 The 	 lockdown 	 and 	 the 	 corresponding 	 restrictions 	 on 	 local 	 and 	 global 	 movement 	 of 	 people 	 and	
goods, 	except 	for 	essential 	goods 	and 	services, 	was 	an 	exogenous 	shock 	that 	posed 	considerable	
challenges 	 to 	 the 	 economy , 	 created 	 uncertainty , 	 was 	 responsible 	 for 	 extensive 	 loss 	 of 	 livelihoods	
and 	 led 	 to 	 the 	 displacement 	 of 	 people. 	 The 	 unlocking 	 of 	 the 	 economy 	 in 	 a 	 phased 	 manner 	 has	
helped 	 the 	 economy 	 to 	 get 	 back 	 on 	 its 	 feet. 	 The 	 rebuilding 	 of 	 the 	 Indian 	 economy 	 is 	 hinged 	 on	
various 	 reform 	 measures 	 aimed 	 at 	 addressing 	 concerns 	 of 	 businesses 	 and 	 support 	 to 	 livelihoods.	
India 	 implemented 	 policies 	 aimed 	 at 	 reducing 	 transaction 	 costs, 	 supporting 	 Micro 	 Small 	 and	
Medium 	 Enterprises 	 (MSMEs), 	 enhancing 	 competition, 	 fostering 	 employment 	 creation 	 and	
securing 	 sustenance 	 through 	 the 	 Atmanirbhar 	 Bharat 	 Abhiyan. 	 The 	 performance 	 of 	 the 	 industrial	
sector 	 is 	 critical 	 given 	 its 	 deep 	 backward 	 and 	 forward 	 linkages 	 with 	 the 	 other 	 sectors 	 of 	 the	
economy . 	 A 	 strong 	 industrial 	 sector 	 is 	 a 	 sine 	 quo 	 non 	 for 	 an 	 Atmanirbhar 	 Bharat. 	 Any 	 initiative	
aimed 	 at 	 securing 	 a 	 rapid 	 recovery 	 needs 	 to 	 keep 	 industry 	 concerns 	 at 	 the 	 core 	 of 	 its 	 intervention.
262 Economic Survey 2020-21   V olume 2
8.2	 A 	 bouquet 	 of 	 measures 	 equivalent 	 to 	`	 29.87	 lakh 	 crores 	 or 	 15	 per 	 cent 	 of 	 India’ s 	 GDP	
were 	 introduced 	 as 	 a 	 measure 	 of 	 relief 	 and 	 support	 to 	 the 	 economy . 	 These 	 were 	 subsequently 	
backed	 by 	 initiatives	 to 	 further 	 strengthen 	 the 	 economy . 	 The	 details 	 of 	 the 	 stimulus	 package 	
pertaining 	to 	industry 	and 	infrastructure 	sector 	is 	in 	Box-1.	
Box-1: Atmanirbhar Bharat Abhiyan
Atmanirbhar 	 Bharat 	 is 	 the 	 vision 	 of 	 the 	 GoI 	 of 	 making	 India 	 a 	 self-reliant 	 nation.	 The 	 announcements 	
under	 the 	 Atmanirbhar 	 Bharat 	 Abhiyan 	 were 	 made 	 in 	 three 	 tranches. 	 The 	 key 	 measures 	 pertaining 	 to 	
industry 	and 	infrastructure 	are 	summarized 	below:
Atmanirbhar Bharat 1.0
I.  Relief and credit support to MSMEs to fight against COVID-19.
 1. ` 3 lakh crores Collateral-free Automatic Loans for Businesses, including MSMEs: The 
Emer gency 	 Credit	 Line 	 Guarantee 	 Scheme 	 (ECLGS) 	 has 	 been 	 formulated 	 as 	 a 	 relief	 measure 	
to 	 the 	 MSMEs 	 by	 providing 	 them	 additional	 funding 	 of 	 up	 to 	`	 3	 lakh 	 crores 	 in 	 the 	 form 	 of 	 a 	
fully 	 guaranteed 	 emer gency 	 credit 	 line. 	 The 	 borrowers 	 with 	 up	 to 	`	 25	 crores 	 outstanding 	 and 
` 	 100	 crores 	 turnover 	 are 	 eligi ble. 	 This 	 scheme 	 provides 	 100	 per 	 cent 	 credit 	 guarantee 	 cover 	 to 	
Banks	 and 	 NBFCs 	 on	 principal 	 and 	 interest. 	 No 	 guarantee 	 fee, 	 no	 fresh 	 collateral 	 is 	 required. 	
	 2.	 ` 20,000 crores Subordinate Debt for Stressed MSMEs: Provision 	 made 	 for 	`	 20,000	
crores 	subordinate 	 debt 	 for 	 the 	 MSMEs 	which 	 are 	NP As 	 or 	 are 	 stressed. 	 Government 	 to 	support	
them	 with 	` 4,000 	 crores 	to 	 Credit	 Guarantee 	 T rust 	 for 	 Micro 	 and 	 Small 	 enterprises 	 (CGTMSE). 	
Banks	 are 	 expected 	 to 	 provide 	 the 	 subordinate-debt 	 to 	 promoters 	 of 	 such 	 MSMEs 	equal 	 to 
15 	per 	cent 	of 	the 	existing 	stake 	in 	 the 	unit 	subject 	to 	a 	maximum 	of 	`	75	lakhs. 	
 3. ` 50,000 crores equity infusion through MSME Fund of Funds: Government 	 to 	 set 	 up	
a 	 Fund 	 of 	 Funds 	 with 	 a 	 corpus 	 of 	`	 10,000	 crores 	 that	 will 	 provide 	 equity	 funding 	 support	
for 	 the 	 MSMEs. 	 The 	 Fund 	 of 	 Funds 	 shall 	 be 	 operated 	 through 	 a 	 mother 	 and 	 a 	 few 	 daughter 	
funds. 	 It 	 will 	 provide 	 equity	 funding 	 for 	 viable 	 MSMEs. 	 This 	 scheme 	 will 	 help 	 the 	 MSMEs 	
to 	 expand 	 its 	 size 	 and 	 capacity 	 and 	 will 	 also 	 encourage 	 them	 to 	 get 	 listed 	 on	 stock 	 exchanges.
 4. New definition of MSME: Low 	 threshold 	 in 	 the 	 MSME 	 definition 	 have 	 created 	 a 	 fear 	
among 	 the 	 MSMEs 	 of 	 graduating 	 out 	 of 	 the 	 benefits. 	 Hence, 	 the 	 government 	 has 	 revised 	 the 	
definition 	 of 	 MSME 	 by	 raising 	 the 	 investment 	 limit.	 An 	 additional	 criteria 	 of 	 turnover 	 has 	
been 	 introduced 	 and 	 distinction 	 between 	 manufacturing 	 and 	 service 	 sector 	 stands	 removed. 	
Revised 	MSME 	classification 	is 	discussed 	in 	 T able 	9.
	 5.	 Global tenders to be disallowed upto ` 200 crores: 	 General 	 Financial 	 Rules 	 (GFR) 	 of 	 the 	
Government 	 amended 	 to 	 disallow 	 global	 tender 	 enquiries 	 in 	 government 	 procurement 	 of 	
goods 	 and 	 services 	 of 	 value 	 of 	 less	 than 	`	 200	 crores. 	 This 	 is 	 a 	 step 	 in 	 support	 of 	 the 	 Make 	 in 	
India 	 initiative 	and 	will 	promote 	MSMEs 	to 	grow .
 6. Other Measures for MSMEs: 	 e-market 	 linkage 	 for 	 MSMEs 	 to 	 act 	 as 	 a 	 replacement 	 for 	 trade 	 fairs	
and 	 exhibitions. 	 The 	 MSME 	 receivables 	 from 	 the 	 Government 	 and 	 the 	 CPSEs 	 to 	 be 	 released 	 in	
45 	 days. 	 This 	 would 	 help 	 the 	 MSMEs 	 to 	 solve 	 the 	 problems 	 of 	 marketing 	 and 	 liquidity .
	 7. Income Tax Refund: 	 Income 	 tax 	 refunds 	 to 	 nearly 	 8.2	 lakh 	 small 	 businesses 	 worth 	`	 5,204	
crores 	 has 	 been 	 issued	 with 	 the 	 objective 	 to 	 help 	 the 	 MSMEs 	 to 	 carry 	 on	 their 	 business 	
activities 	without 	pay 	cuts 	and 	layof fs 	in 	these 	challenging 	times.
263 Industry and Infrastructure
 8. Relief of ` 1500 crores to MUDRA- Shishu loans: 	 GoI 	 to 	 provide 	 interest 	 subvention 	 of 
2 	 per 	 cent 	 to 	 prompt 	 payees 	 for 	 a 	 period 	 of 	 12	 months. 	 Small 	 business 	 under 	 MUDRA 	 to 	 be 	
benefited.
	 9. Ease of doing business for business including MSMEs: 	 The 	 Government 	 announced 	
further 	 enhancement 	 of 	 ease 	 of 	 doing 	 business 	 through 	 the 	 Insolvency 	 and 	 Bankruptcy 	
Code 	 (IBC) 	 related 	 measures 	 which 	 include 	 (a) 	 raising 	 of 	 the 	 minimum 	 threshold 	 to 	 initiate 	
insolvency 	 proceedings 	 to 	`	 1	 crores 	 from 	`	 1	 lakhs 	 (which 	 lar gely 	 insulates	 the 	 MSMEs), 
(b) 	 special 	 insolvency 	 resolution	 framework 	 for 	 the 	 MSMEs 	 under 	 Section	 240A 	 of 	 the 	 Code, 
(c) 	 suspension 	 of 	 fresh 	 initia tion 	 of 	 insolvency 	 proceedings 	 for 	 up	 to 	 one 	 year 	 depending 	
upon	 the 	 pandemic 	 situation 	 and 	 (d) 	 empowering 	 the 	 Central 	 Government 	 to 	 exclude 	 COVID 	
19	 related 	 debt 	 from 	 the 	 definition 	 of 	 “default” 	 under 	 the 	 Code 	 for 	 the 	 purpose 	 of 	 triggering 	
insolvency 	proceedings. 	
 II.  Packages for Power Sector- ` 	90,000	crores 	liquidity	injection	for 	DISCOMs
III. Real Estate: The extension 	 of 	 registration 	 and 	 completion	 date 	 of 	 real 	 estate 	 projects 	 under 	 Real 	
Estate	 (Regulation 	 and 	 Development) 	 Act 	 (RERA). 	 Ministry 	 of 	 Housing 	 and 	 Urban 	 Af fairs 	 to 	 advise 	
States/UT s 	and 	their 	regulatory	authorities 	to 	the 	following 	ef fect:
	 1.	 T reat 	COVID-19 	as 	an 	event 	of 	‘Force	Majeure’ 	under 	RERA. 	
	 2.	 Extend 	 the 	 registratio n 	 and 	 completion	 date 	 suo-moto 	 by	 6	 months 	 for 	 all	 registered 	 projects 	
expiring 	on	or 	after 	25
th 	
March 	2020 	without 	need 	for 	individual 	applications.
	 3.	 Regulatory 	 Authorities	may 	extend 	this 	for 	another 	period 	of 	up	to 	3	months, 	if 	needed
	 4.	 Issue 	 fresh 	‘Project 	Registration 	Certificates’ 	automatically 	with 	revised 	timelines.
	 5.	 Extend 	timelines 	for 	various 	statuary 	compliances 	under 	RERA 	concurrently .
These 	 measures 	 will 	 de-stress 	 real 	 estate 	 developers 	 and 	 ensure	 completion	 of 	 projects 	 so 	 that	
homebuyers 	are 	able 	to 	get 	delivery 	of 	their 	booked 	houses 	within 	new 	timelines.
IV .  Public Sector Enterprise Policy for a New, Self-reliant India
 • Government 	 to 	 announce 	 a 	 new 	 coherent 	 policy—where 	 all	 sectors 	 are 	 open 	 to 	 the 	 private 	
sector 	while 	public	sector 	enterprises 	(PSEs) 	will 	play 	an 	important 	role 	in 	defined 	areas
 • List 	of 	strategic 	sectors 	requiring 	presence 	of 	PSEs 	in 	public	interest 	will 	be 	notified
 • In	 strate gic 	 sectors, 	 at 	 least 	 one 	 enterprise 	 will 	 remain 	 in 	 the 	 public	 sector 	 but 	 private 	 sector 	
will 	also 	be 	allowed
 • In 	other 	sectors, 	PSEs 	will 	be 	privatized 	(timing 	to 	be 	based 	on	feasibility	etc.)
 • T o 	 minimize 	 wasteful 	 admi nistrative 	 costs,	 number 	 of 	 enterprises 	 in 	 strategic 	 sectors 	 will 	
ordinarily 	 be 	 only 	 one 	 to 	 four; 	 others 	 will 	 be	 privatized/ 	 mer ged/ 	 brought 	 under 	 holding 	 companies.
Atmanirbhar Bharat 2.0 (second tranche of measures) provided 	`	 25,000	 crores 	 as 	 additional	
capital	expenditure 	to 	the 	Ministry 	of 	Road 	 T ransport 	and 	Ministry 	of 	Defence
Atmanirbhar Bharat 3.0 (third tranche of measures) initiatives that impact the industrial sector 
include: 
 • `	 1.46	 lakh 	 crores 	 boost 	 for 	 Atmanirbhar 	 manufacturi ng 	 production-linked 	 incentives 	 for 
10 	Champion 	Sectors 	(details 	in 	Box 	4)
264 Economic Survey 2020-21   V olume 2
 • ` 	18,000	crores 	additional	outlay	for 	PM 	 A waas 	 Y ojana 	(PMA Y) 	–Urban
 • Support 	 for 	 construction 	 & 	 infrastructure 	 –	 relaxation 	 of 	 Earnest 	 Money 	 Deposit 	 (EMD) 	 & 	
performance 	security 	on	Government 	tenders
 • `	 1.10	 lakh 	 crores 	 platform 	 for 	 infra 	 debt 	 financing 	 –	`	 6000	 crores 	 equity	 infusion 	 in 	 National 	
Investment 	 and 	 Infrastructure 	 Fund 	 (NIIF)	 Debt 	 Platform,	`	 10,200	 crores 	 additional	 budget 	
outlay 	 will 	 be 	 provided 	 towards 	 capital 	 and 	 industrial 	 expenditure 	 for 	 domestic 	 defence 	
equipment, 	industrial 	incentives, 	industrial 	infrastructure, 	and 	green 	ener gy
8.3	 As 	 per 	 the 	 latest 	 estim ates 	 on	 Gross 	 V alue 	 Added 	 (GV A), 	 the 	 industrial 	 sector 	 is 	 expected 	
to	 record 	 a 	 growth 	 of 	 -9.6 	 per 	 cent 	 with 	 an 	 overall 	 contribution 	 in 	 GV A 	 of 	 25.8	 per 	 cent 	 in 	
2020-21 	 (FY21). 	 The	 contribution 	 of 	 the 	 industrial 	 sector 	 has 	 been 	 constantly 	 declining 	 since 	
201 1-12 	 (Figure 	 1). 	 The	 fall 	 in 	 share	 is 	 across 	 the 	 board 	 except	 in 	 case 	 of 	 ‘Electricity , 	 gas, 	 water 	
supply	 & 	 other	 utility	 services’ 	 whose 	 share	 in 	 GV A 	 has 	 increased 	 from 	 2.3	 per 	 cent 	 in 	 FY12 	 to 
2.7 	 per	 cent 	 in 	 FY21. 	 The 	 performance 	 of 	 the 	 various 	 components 	 of 	 the 	 industrial 	 sector 	 namely , 	
manufacturing, 	mining 	and 	quarrying, 	electricity , 	and 	construction 	is 	presented 	in 	 T able 	1.	
Figure 1: Share of Industry and its Components in GV A (Current Prices, Per cent)
3.2 3.1 2. 9 2. 7 2. 3 2. 3 2. 3 2. 3 2. 1
1. 7
17.4
17.1
16.5
16.3 17.1 16.7 16.4 16.1
15.1
14.5
2.3
2.3
2. 5
2. 5
2. 7
2. 5
2. 7
2. 7
2. 7
2. 7
9.6
9.2
8. 9
8. 5
7. 9
7. 7 7. 7
7. 8
7. 5
6. 9
32.5
31.8
30.8
30.0 30.0
29.3 29.2
28.9
27.5
25.8
0 .0
5 .0
1 0.0
1 5.0
2 0.0
2 5.0
3 0.0
3 5.0
F Y1 2 F Y1 3 F Y1 4 F Y1 5 F Y1 6 F Y1 7 F Y1 8 F Y1 9 F Y2 0 F Y2 1
M ining M an u f ac t u r i ng E le c tr ic ity * C ons t r uc t i o n I nd us t ry
*Electricity , 	gas,	water	supply	&	other	utility	services. 	
Source: 	Survey	calculations	based	on	MoSPI	data.	
Table 1: Rate of Growth of GV A in Industry and Its Components (Per cent)
FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21
Industry 3.3 3.8 7.0 9.6 7.7 6.3 4.9 0.9 -9.6
Mining 0.6 0.2 9.7 10.1 9.8 4.9 -5.8 3.1 -12.4
Manufacturing 5.5 5.0 7.9 13.1 7.9 6.6 5.7 0.0 -9.4
Electricity* 2.7 4.2 7.2 4.7 10.0 1 1.2 8.2 4.1 2.7
Construction 0.3 2.7 4.3 3.6 5.9 5.0 6.1 1.3 -12.6
*Electricity , 	gas,	water	supply	&	other	utility	services 	
Source:	Survey 	calculations	based	on	MoSPI	Data.
265 Industry and Infrastructure
TRENDS IN INDUSTRIAL SECTOR
Index of Eight-Core Industries and Index of Industrial Production (IIP) 
8.4	 On 	 24	 March	 2020,	 when 	 the 	 21-day 	 nationa l 	 lockdown 	 was	 imposed 	 to 	 prevent 	 the 	
proliferation 	 of 	 COVID-19, 	 it 	 was	 expected 	 that	 the 	 economic 	 activities 	 would	 freeze 	 except	
for	 some 	 essential 	 services. 	 The	 IIP 	 growth 	 started 	 contracting 	 immediately	 after 	 the 	 lockdown 	
reaching 	 its 	 historical 	 low	 in 	 April-2020. 	 The	 calibra ted 	 and 	 gradual 	 unlocking	 process 	 led 	 to 	
the	 resumptio n 	 of 	 economic 	 activities 	 translating 	 into 	 positive 	 growth 	 in 	 IIP 	 for 	 the 	 first 	 time 	 in 	
September -2020 	 since	 the 	 lockdown. 	 The	 subsequent 	 months	 have 	 seen 	 consistent	 improvement 	
and	 the	 sub-components 	 of 	 the 	 IIP 	 have 	 gradually 	 inched 	 towards 	 their 	 pre-COVID 	 levels, 	 a 	
reflection 	 of 	 the 	 beginning	 of 	 the 	 revival 	 of 	 the 	 econom y . 	 The	 improvement 	 has 	 been 	 broad-based 	
in	 both	 the 	 core 	 and 	 non-core 	 components 	 of 	 the 	 IIP 	 with 	 a 	 few 	 exceptions 	 like	 the 	 petroleum 	
products 	in 	the 	core 	group 	that	are 	still 	below 	the 	normal 	level. 	
8.5	 The 	 eight-core 	 industries 	 that	 support 	 infrastruc ture, 	 such 	 as 	 coal, 	 crude 	 oil, 	 natural 	 gas, 	
refinery 	 products, 	 fertilizers, 	 steel, 	 cement, 	 and 	 electricity 	 have 	 a 	 total 	 weight 	 of 	 nearly 	 40 	
percent 	 in 	 the 	 IIP . 	 The	 eight-core 	 index 	 recorded 	 its 	 all-time 	 low	 growth 	 of 	 (-) 	 37.9	 due 	 to 	
COVID -19 	 led 	 nation-wide 	 lockdown 	 (April-2020). 	 The 	 fall 	 in 	 growth 	 and 	 index 	 was	 expected 	
as	 was	 the 	 recovery 	 of 	 the 	 index 	 too. 	 The 	 eight-core 	 industries 	 registered 	 (-) 	 2.6	 per 	 cent 	
growth	 in 	 November -2020 	 as 	 compared 	 to 	 0.7	 per 	 cent 	 in 	 November -2019 	 and 	 (-) 	 0.9	 per 	 cent 	
in	 October -2020 	 (Figure 	 2). 	 The 	 cumulative 	 growth 	 of 	 core 	 industries 	 during 	 April-November	
2020	was 	(-) 	1 1.4 	per 	cent 	as 	compared 	to 	0.3	per 	cent 	during 	 April-November 	2019.		
8.6	 T racking 	 the 	 level 	 of 	 the 	 index 	 apart 	 from 	 the 	 Y oY 	 growth 	 enables 	 us 	 to 	 understand 	 the 	
revival	 of 	 economic 	 activity	 better . 	 The	 trajectory 	 of 	 the 	 eight-core 	 index 	 has 	 been 	 improving 	
since 	 May-2020 	 and 	 further 	 recovery/expansion 	 is 	 expected 	 in 	 remaining	 months	 of 	 FY21. 	 The 	
current	 level 	 (November -2020)	 of 	 the 	 seasonally 	 adjusted 	 eight-core 	 index 	 is 	 6	 per 	 cent 	 lower 	
than	 the	 pre-lockdown 	 levels 	 in 	 February-2020 	 (Figure 	 3). 	 The	 highlights 	 of 	 the 	 performance 	 of 	
eight-core 	 industries 	 in 	 FY21 	 are 	 presented 	 in 	 T able 	 2	 and 	 the 	 trajectory 	 of 	 the 	 respective 	 index 	
is	 in	 Figure 	 4.	 All 	 the 	 sub-components 	 of 	 the 	 eight-cor e 	 index 	 are 	 inching	 up	 to 	 the 	 pre-COVID 	
levels 	(Figure 	5).
Figure 2: IIP and Eight Core growth from Jan-19 to Nov-20 (Per cent)
-60.0
-50.0
-40.0
-30.0
-20.0
-10.0
0.0
10.0
Jan-19
Feb-19
Mar-19
Apr-19
May-19
Jun-19
Jul-19
Aug-19
Sep-19
Oct-19
Nov-19
Dec-19
Jan-20
Feb-20
Mar-20
Apr-20
May-20
Jun-20
Jul-20
Aug-20
Sep-20
Oct-20
Nov-20
Eight Core IIP
Source:	Survey	calculations	based	on	MoSPI	and	Office 	of 	Economic	 Adviser ’ s	data.