The economic survey of the last fiscal year has come out on 31st January 2020. The Survey was tabled before the Parliament after the joint session address of the President. Every year finance minister puts an economic survey in Parliament a day before the Budget day. Before 1964, the Economic Survey was a part of the budget, in the mentioned year it gets separated from the budget. An economic survey is the annual report card of the government, it tells what the government did for the economy of the country as well as it also suggests some reforms for the upcoming year. It is prepared by the Chief Economic Advisor (CEA) of the country, who is also head of the department of economic affairs under the Ministry Of Finance, who currently is Mr. Krishnamurthy Subramanian. So what this Economic survey talks about lets discuss.
This year’s economic survey was made on the theme of wealth creation. The cover of the economic survey was lavender in color on which signifies the link between old and new 100 rupee note. The whole economic survey was woven around wealth creation. It is that in the known economic history of the world India remains a wealth creator for almost three fourth of the history. The survey talks about the invisible hand of trust which helps the market to grow, it tells that trust is actually a public good. The survey acknowledged the slowdown of the economy and pegged Indian growth at 5 percent for 2019-20, which is lowest in the past 10 years. It tells for this slowdown mostly external factors are responsible, like tariff wars between various countries.
Some key highlights :
- It forecasts that GDP will grow at a 6-6.5 percent growth rate for the upcoming fiscal year.
- Growth of the agriculture sector was 2.8%, growth of the industrial sector dipped down from 6.9 % to 2.5%, growth of the service sector debris down from 7.5% to 6.9%.
- CPI inflation was 4.1 %.
- The concept of thalinomics is introduced in this economic survey, which says that food became more affordable in previous years than before.
- GST collection has increased by 4.1% last year.
- Declining inflation from 3.2% in April 2019 to 2.6% in December 2019, reflecting weakening demand pressure in the economy.
- The number of persons receiving regular salaries increased from 15 % to 23% between 2011-12 and 2017-18.
- Forex reserves reached 461.2 billion dollars which is till now the highest collection.
Suggestions made by ECONOMIC SURVEY:
It suggests many reforms to the government in order to attain the goal of becoming $5 trillion economies by 2025. Some major suggestions areas.
- The economic survey tells that the major cause of the economic slowdown is the lack of demand in order to create the demand government need to create more jobs. As our industrial sector is facing the worst crisis we need to boost this sector by following the model of China. The government needs to adopt the network product model which is a labor-intensive model and in the current scenario best fit for India. This will help in boosting the export which will cure the current slowdown. The slogan given this year is ‘Assemble in India’ to ‘Make in India’. Survey also suggested increase funds for schemes like MANREGA and PM-KISAN which ultimately will put more money in the hands of rural India, this will increase more rural demand.
- The survey suggested investing more and more in infrastructure.
- In order to attract more foreign investments, India needs to ease its norms for setting up a business, for this server quoted an example “for setting up a restaurant in Delhi one needs as more as 43 documents to get license whereas to get the license for a gun one only needs 19 documents. So it suggested opening one window solution, reduction in timing for contract enforcement, etc.
- It suggested that the government should sell its share in many PSUs. Disinvestment will provide funds to the government as well as privatization will improve the quality also.
- Minimal deviation from the fiscal deficit target is required to spur the growth.
- To avoid cases like the IL&FS crisis, the survey suggests the formation of an indicator that indicates the financial health score of the institution.
- The Economic survey emphasizes on mechanization of agriculture. The survey calls out for the development of irrigation facilities and efficient buffer stock management.
- The survey suggested that the government should review the Essential Commodities Act and drug price control order (2013), as these acts hinder the genuine stock holding and also restrain traders to develop good storage infrastructure, which is very essential in a country like ours.
- Weaning away from ‘pro-crony’ policy that may favor specific private interests, especially powerful incumbents.
- Governments should not promote frequent debt-waivers as it destroys the credit culture and impact economy in a negative manner.
- Recapitalization of banks and strengthening the Insolvency and bankruptcy code.
- Survey suggested more and more investment in renewable energy sector to reduce carbon footprint as well as become more energy independent.
- Announcement of National Infrastructure Pipeline worth rupees 103 lakh crores, this will improve infrastructure and job creation.
These were some suggestions made in an economic survey which will help in making India a 5 trillion economy by 2025. One another important question was answered by Mr. Krishnamurthy Subramanian, the question was weather Indian GDP figures are over estimated Last CEA of Government of India, Mr. Arvind Subramanian raised a question on the methodology for estimation of GDP. Current chief economic advisor inserts that we have calculated the GDP of 91 countries by the method given by Mr. Arvind Subramanian and we found GDP figures were flawed for 56 countries out of 91. But Mr. Arvind Subramanian acknowledged the need for improvement in data collection for GDP estimation introduction of artificial intelligence in data collection.
In a nutshell, we can say that this economic survey is full of optimism and focussed mainly on-demand creation, more exports, healthy credit sector and privatization. Most of the suggestions were given heed and addressed in this year’s budget, some were left out like infusing more money in NREGA to boost rural demand. We will further see in due course of time that how much more suggestions will get the shape of policy.