The Economic Survey 2017-18 presented by India’s Finance Minister Arun Jaitley on 29 January conveyed caution as well as optimism, while scripting the way forward for the future.
Every year, big data is mined on how different sectors perform in India. All this data and analyses are presented as the Economic Survey in the Parliament a day ahead of the annual budget. Though tabled by the finance minister it is authored by the Chief Economic Adviser, a post held by Dr Arvind Subramanian, this year. His Economic Survey came out in two volumes. Volume 1 contained the analytical overview and more research-cum-analytical material. Volume 2 provided the more descriptive review of the current fiscal year, encompassing all the major sectors of the economy. The survey is the first one after the implementation of the Goods and Service Tax (GST).
What is the Economic Survey? It is a comprehensive review of India’s development as an economy for the past 12 months. It is considered a flagship document of the Ministry of Finance. It shows the performance of policy initiatives undertaken by the Government in the past year. It also talks about India’s economic growth in both the long-term and short-term perspectives.
Projection of Hope: The Survey projects that GDP growth could accelerate to 7-7.5 per cent in 2018-19, from 6.75 percent in the current fiscal, reinstating India as the world’s fastest-growing major economy.”Economy is picking up as the temporary impact of GST and demonetisation is dissipating, andexports are also picking up,” Dr Subramanian said in the Survey.
Surge in Tax Payers: The CEA, in his assessment, said that there has been a sudden increase in the number of big tax filers, post-demonetisation in November 2016. The Survey states that the number of unique indirect taxpayers has increased by more than 50 percent—from 34 lakh to 98 lakh,after GST roll out. Secondly, chief economic advisor Arvind Subramanian and his team also carried out a rigorous assessment of the impact of demonetisation and found that the note ban and GST resulted in an additional 1.8 million individual tax papers, representing 3PC of existing taxpayers.
Commitment to Growth &Reforms: The Chairman of the Economic Advisory Council to the Prime Minister (EAC-PM), Dr. Bibek Debroy, has said that the Economic Survey is a reflection of the Government’s commitment to growth and development. “The Survey is optimistic in its tone because of the Government’s commitment to carry forward structural reforms, such as GST, deregulation measures, bank re-capitalisation and resolution through the Insolvency and Bankruptcy Code process,” Dr Debroy observed in a statement.
India Inc. Jubilant: “The economy will start reaping benefits of these reforms in the next fiscal year and we look forward to continuity in the reforms process displayed by the Government,” said Rashesh Shah, president FICCI-a leading industry chamber. This optimism is also reflected in the improved ratings of India by the Moody’s and the country’s rating in the World Banks’ ease of doing business index.
Need for Competitive Exports: The Survey highlighted how the top one percent of Indian firms account for 38PC of India’s exports, unlike other comparable economies. The global economy is showing an improvement and to fully capitalise the same, Indian exports need to be made more competitive, it stressed.
Export Incentives: The apparel sector has immense potential to drive economic growth, increase employment, and empower women in India. Drawing attention to how China’s share of global apparel exports has come down in recent years, the Survey laments how India has not, or not yet, capitalised on this opening. “Instead, countries, such as Vietnam and Bangladesh are quickly filling the void left by China,” the Survey reads.
A Policy Agenda for Employment: The Survey honestly acknowledges the lack of consistent, comprehensive, data to make a serious assessment of the challenge of employment. It calls for policy agenda for the next few years absolutely that has to include “finding good jobs for the young and burgeoning workforce”. It also points out that the real estate and construction sector “will create over 15 million jobs over the next five years.”
Irrigation: In the chapter titled, ‘Climate, Climate Change and Agriculture’, the Survey calls for expansion of irrigation facilities as farmers could lose income from climate change. The Survey warns that the farm income loss could be between 15 percent and 18 percent on average, rising to anywhere between 20 percent and 25 percent in unirrigated areas. According to a World Bank report, in 2013-14, only about 47.7PC of total agricultural land in India was reliably irrigated.
Mission Approach to R& D: In India, public expenditure on research has been stagnant—between 0.6-0.7 percent of GDP—over the past two decades. So, the Survey calls for several actions including redoubling its efforts to improve science and R&D in the country. This can be done first and foremost by doubling national expenditure on R&D and by adopting a mission-driven approach, if India has to realise its potential for being a global leader in a number of areas. In this regard, it has called for the establishment of a national mission in six critical areas —dark matter, genomics, mathematics, agriculture, cyber-physical system and energy storage system.
Improvement in Research Culture: An important action area for this government and its successors in the future is to improve the culture of research, says the Survey. The representation of younger scientists in decision-making bodies in their areas of expertise is a matter that needs attention.
Timely Justice: After improving its position in World Bank’s ease of doing business ranking, the Modi government is planning now to turn its attention to the administration of justice. It has suggested expansion of judicial capacity in lower courts and reduction of existing burden on the Supreme Court and High Courts.
Costly Litigation: The Survey revealed that the project costs of stayed projects—at the time that they were originally stayed—amounted to about Rs 52,000 crores. According to the Economic Survey, the Ministries of Power, Roads and Railways have been the hardest hit. Since project costs were predominantly debt-financed, it is likely that project costs have increased by close to 60 percent given the average duration of stay. The overall impact of rising pendency has led to spiralling legal expenses of corporate India.
21 Million Unwanted Girls: The preference for sons continues to be strong among Indian parents despite decades of government-sponsored awareness programmes to promote gender equality. The Economic Survey 2017-18, in its first ever estimate of number of ‘unwanted girls’, has said that India could have as many as 21 million ‘unwanted girls’, that is, girls whose parents preferred to have sons instead. The Survey states: “Families that have sons are more likely to stop having children than families where a girl is born. This is suggestive of parents having children until they have as many sons as they want”.
Every economic survey is a slice of history—of what is shaping and shaking contemporary India. It can guide the policy makers to unlock the destiny of 1.30 billion plus Indians, strengthen and initiate the debate over development, equitable distribution of natural and financial resources, priorities for growth and consequently strengthen democracy. Yet, the Survey only hogs the limelight in the Indian media for a day or two, till the federal budget is presented. After that it is conveniently forgotten by all till the next year!