The Economic Survey was tabled in the Parliament today and everything that the Chief Economic Advisor (CEA) Krishnamurthy Subramanian sad, rung so true. We all nodded our heads in affirmation, thinking, “yes, this is exactly what we need!”
Growth, ease of doing business, consumer spending, new structure for divestment, wealth creation, all the right buttons were pressed. The CEA even spoke about climate change and sustainable development. It all sounded so good and unlike the President’s speech, which sounded more like an advertorial for the Govt’s achievements – social and big on nationalism; the CEA’s address and the actual Survey document spoke about our biggest concern – economic growth. It is undoubtedly an extremely mature and “feel good” Survey and that’s the fear, hope it does not remain merely on paper, a rhetoric which never gets translated into reality.
The CEA very realistically said that for FY21, the Govt will have to pay little heed to fiscal deficit and pay more attention to kicking off growth. The Survey has projected a growth revival in FY21, putting the GDP at 6 to 6.5% and it is placed at 5% in FY20. So it is looking at a jump of 100 to 150 bps jump on a year-on-year. For this to happen, the Survey very clearly states that the Govt will have to incur more expenses to support growth and once the momentum of growth picks up, the Govt can then tighten the purse strings. The Survey says that fiscal deficit target for current fiscal may need to be relaxed to revive growth. And that’s not such a bad thing because growth is hurting and the Q3 earnings which we have seen till now shows that India Inc is also hurting big time.
The Survey has asked the Govt to “use its strong mandate to deliver expeditiously on reforms, which will enable the economy to strongly rebound in 2020-21."
Apart from adopting this pro-business strategy which the CEA and his team laid out in the Survey, it was very heartening to see that the Survey actually spoke out on the crony capitalism too saying that steps needed to be taken to stay away from ‘pro-crony’ policies that favour specific private interests. Well, we all know who those “private interests” are and it would be really good if others around are also allowed to create more wealth and we are able to bring down this rising gap in inequalities. The Survey said that for wealth to be distributed, it needs to be first created and the wealth creators need to be called for with respect.
And there was of course the newly coined terminology – Thalinomics, which is the price which a common man pays for one vegetarian thali. There is an entire full chapter on this – the synopsis is that thalis have become more affordable than what they were a few years ago. The Survey said, affordability of vegetarian 'thalis' improved by 29% while that of non-vegetarian by 18% from FY07 to FY20.
This an annual statement which is put together by the Finance Ministry of India, showcasing the economic development during the course of the year. The draft of the survey is prepared by Department of Economic Affairs and cleared by Chief economic Advisor and the secretary Economic Affairs. The final version is vetted by Finance secretary and Finance Minister. The Union Budget is a statement for the future while the Economic Survey is a statement of the past fiscal.
All in all, as we said earlier, the Survey is rooted but the suggestions sound more Utopian; in an ideal world, this is the vision which our country should have, following the path chalked by the Survey. But then we do not live in an ideal world….