As usual, Economic Survey is a mixed bag. But it indicates what lies in store for the Budget
If Arvind Subramanian is remembered for one thing in a few decades time, it will be for making the annual Economic Survey of India not only one with oodles of data but also a good read and accessible to the public. For this one thing, he must be complimented. The last three economic surveys released by the Chief Economic Advisor and his team are a lesson for other Governments on how to release and study data. But the data is what matters at the end of the day and while there are some interesting factoids across the report, the headline numbers are not as great as they should be. Indian growth for 2017-18 is estimated to be at just 6.75 per cent, which is expected to climb to between seven per cent to 7.5 per cent next year. While these numbers would make politicians and economists in many other countries whoop with joy, in India, policy makers have to cope with India’s ‘demographic dividend’ and have to find 15 million new jobs every year and this years depressed growth numbers will lead to challenges going forward.
There are some other signs in the Economic Survey that should make us wake up and take notice. An entire chapter is dedicated to the challenges of climate change and agriculture in India, which also looks at the levels of stress in the agricultural sector in the country. While it is true that someone of Dr. Bhimrao Ambedkar’s caliber himself warned about the dangers of romanticising agrarian India, the fact is that agriculture employs one in every two Indians. This could be a precursor to a pro- farmer Budget in the coming days. Increasing agricultural stress has been evident in recent elections and with market prices for agricultural produce dropping, the Union Government hasan uphill task at hand, made worse by realities of climate change, which has led to a water-table crisis and soil degradation. There are some other worrying trends the Economic Survey highlights, one is of course lite drop in investments and the challenges that the Narendra Modi Government will face thanks to globally increasing oil prices. India is facing a simultaneous slump in both investments and savings, and while capital raising has improved there is still much margin to improve. Also, Subramanian recognises that there has been ‘human capital regression’, mat is the quality of mose entering the workforce leaves much to be desired and coupled with economic nationalists like Donald Trump as well as other challenges could stifle India’s economic prospects.
At the same time, there are some very positive signs from the report as well, not least of all the massive improvement in tax collection following the implementation of the Goods and Services Tax (GST) and Subramanian says one of the main targets for the government this year is the need to stabilise GST. The other major need for the government would be to put the final touches to the bank recapitalisation which Arun Jaitley announced a few months ago. The Survey also bats for Air India’s privatisation and improving the investment atmosphere. The Survey while positive is a refreshingly honest assessment of the challenges India faces and one should not be dismissive of the report no matter which side of the political spectrum they sit on.