EDITORIAL ANALYSIS : The Economic Survey that wasn’t

Source: The Hindu, Indian Express

• Prelims: Indian Economy(GDP, GVA, fiscal policy, budget, economic survey, GST etc)
• Mains GS Paper III: Fiscal policy, Monetary policy, GDP, Issues related to planning etc.

ARTICLE HIGHLIGHTS

• The Budget of 1991 which was presented by the then Finance Minister, is one of Indian economic history’s landmark events.
  • It marked a structural shift in India’s economy away from the hands of the government to the hands of private enterprise, and embraced free trade.

INSIGHTS ON THE ISSUE

Context

Economic Survey:

• It is a detailed report of the state of the national economy in the financial year that is coming to a close.
• The Economic Survey of India is an annual document released by the Ministry of Finance.
• It contains the authoritative and updated source of data on India’s economy.
• The government presents the state of the economy in the past one year, the key challenges it anticipates, and their possible solutions.
• It is prepared by the Economics Division of the Department of Economic Affairs (DEA) under the guidance of the Chief Economic Advisor.
• Presented a day before the Union Budget is presented in the Parliament.
• The first Economic Survey in India was presented in the year 1950-51. Up to 1964, it was presented along with the Union Budget.
  • From 1964 onwards, it has been delinked from the Budget.

Significance of economic survey:

• Its observations and details provide an official framework for analyzing the Indian economy.
• The survey is expected to diagnose the true extent of economic recovery in the Indian economy and whether India’s growth potential has lost a step or not.
• The survey can be expected to paint future scenarios and also suggest policy solutions.
• Survey is likely to bear the imprint of Chief Economic Advisory(CEA)
• It is the medium to raise issues for public discussion and ponder over such strategic economic matters.
• Surveys of the previous years had put out various ideas and issues such as:
  • Universal basic income
  • Economic divergence among States
  • Steps to improve property tax revenues using satellite technology
  • New ways to calculate inflation using the Indian thali
  • Estimating internal migration of people.

Present global economic scenario:

• Many developed economies, including America, Britain and Germany, are now reversing course to economic nationalism.
• Increasing the role of government in their economy through industrial policy
  • As a response to China’s economic might and a weaponization of trade.

Disappointments in Economic Survey of 2022-23:

• It did not provoke any deliberation or discussion.
• It was a dry compilation of data to substantiate the government’s economic performance.
• It seeks to portray a stellar image of the government’s economic management and blame the previous regime for all ills,

Interesting data in the survey:

• Data on the housing market, digital infrastructure, etc

Highlights of present Economic Survey:

• It has only one volume
• Separate ‘Highlights’ volume that lays out the key messages creatively and simplistically for a larger audience.
• The Indian economy has recovered from the novel coronavirus pandemic but impacted by global geo-political developments
• Praises Goods and Services Tax because it has improved tax buoyancy and of the corporate tax cuts of 2019 because it seemingly helped clean up bloated corporate balance sheets.
• The chapter on the social sector has researched deeper than previous surveys have done into issues of:
  • Employment
  • Rural wages
  • Demand under the Mahatma Gandhi National Rural Employment Guarantee Act
  • Other important human capital topics supplemented with vast amounts of data.
• Discussion on the employment intensity of contemporary economic growth models and ideas to boost job creation is missing.
  • The chapter concludes that the ‘PM’s Minimum government Maximum governance vision holds key to equitable economic growth.
• The Survey emphasized the increase in government capital expenditure from 12% of total expenditure in 2014 to 19%
• On private sector investment: It clearly expressed about manufacturing and Production Linked Incentive schemes
  • It claims to attract ₹3 lakh crore in capital investment and generate six million new jobs in the next five years.

Way Forward

• Well-researched policy ideas of economic survey serve as an intellectual public good by triggering a debate and forcing policy influencers to think about these issues.
• With much global uncertainty in corporate investment and precarious asset markets, the emphasis on public capital expenditure to boost the economy is prudent and wise.
• The Economic Survey is the only medium in the country for a rigorous, thoughtful and nuanced discussion of new economic ideas.

QUESTION FOR PRACTICE

Q. Explain the difference between combusting methodology of India’s Gr Domestic Product (GDP) before the year 2015 and after the year 2015.(UPSC 2021) (200 WORDS, 10 MARKS)

Q. Do you agree that the Indian economy has recently experienced recovery ? Give reasons in support of your answer.(UPSC 2021) (200 WORDS, 10 MARKS)