All about the Economic Survey 2019
The Economic Survey of India was tabled in the Parliament today by the Chief Economic Advisor to the Government of India, Krishnamurthy Subramanian. While the Budget session of India is held in January-February every year and the Economic Survey is presented in that session, this year it was delayed due to the 2019 General Elections. While an interim budget was presented in that session, no economic survey was presented and the same has now been presented in the Parliament.
What is the Economic Survey?
- The Economic Survey is an annual document presented by the Department of Economic Affairs, Finance Ministry of India in the parliament.
- The presentation of the Economic Survey usually precedes the presentation of the Budget of India.
- TheChief Economic Adviser guides the preparation and then presents the economic survey in the Parliament.
- From reading the economic survey, one can gauge the finance ministry s locus standi of the various economic activities that have a bearing on the economic development of the country.
- The Economic Survey of India also summarizes the performance of various major development programs and highlights the policy initiatives of the government.
- It also lays out the prospects of the Indian economy in the short to medium term.
- The Economic Survey is the most authoritative and updated source of data on the Indian Economy which is used by the economists and speculators to ascertain the growth and future potential of the Indian Economy.
- While the first Economic Survey was presented in the year 1950-51, it was presented along with the Union Budget till 1964 after which it was delinked from the Budget.
- There is no provision to present an Economic Survey in the Constitution. However, it has evolved into a standard practice by the Government of India to present the Economic Survey yearly before the Budget.
What does this Economic Survey say?
- The GDP growth as per the Economic Survey 2019 is 7% for the FY 2019-2020. This is the higher than GDP growth recorded in the past year.
- However, India needs to grow by atleast 8% every year if it aims to become a USD 5 trillion economy by 2025.
- To reward the honest and the high taxpayers of India, the Economic survey has suggested unique privileges that are commonly accorded to diplomats and other eminent dignitaries. One such measure can the renaming of public roads after the name of the highest tax payer. This will shift the focus of attention from tax-evasion to tax-compliance in the mass media.
- Rural wage growth (Which had bottomed out in 2018) now shows the sign of growth.
- The Economic survey states that Savings & growth are positively co-related. Hence, savings must be encouraged and increase more than investment.
- Political stability should provide an environment conducive to growing the economy.
- India suffers from poor enforcement of contracts. Also, the resolution of disputes is a major hurdle in the path of business. To improve business practices, the faster legal process to ensure disputes are handled efficiently and fast. This calls for a need to reform the judiciary, particularly the lower courts in India.
- The means suggested are increasing the working hours, improving the administration of courts and using technology to speed up the clearances.
- The key driver of simultaneous growth in demand, jobs, exports & productivity is an investment. The economic survey looks beyond the economics of equilibrium and aspires for an investment-driven virtuous cycle to sustain a growth of 8%.
- The economic slowdown in financial year 2019 can be attributed to the stress in non-banking financial corporations. The slowdown observed in Jan-march was due to the 2019 General Elections.
- The Economic Survey puts forth that nudging behavior change in people is the simplest way to solve several social issues. This was ascertained on the basis of the Give It Up campaign. The Survey thus, recommends setting up a “Behavioural Economics” unit in Niti Aayog and conducting a “Behavioural Economics” audit for every government program being implemented/planned.
- Some schemes need to be renamed to reflect the Central Government s agenda.
- It also puts forth a strong point for merging the various data sets of the government for greater public use. Data must be created for public good- of the people, for the people and by the people . It argues that a constant recalibration of government policies and approach must be done on the basis of real time data.
- The HDI ranking of India can be improved by ensuring greater per capita energy consumption. This will also increase the per capita GDP by a significant amount.
- Oil prices, which have a significant bearing on the fiscal health of India, are expected to decline in 2020. This will ensure greater fiscal headroom for the government as India imports 82% of Oil needs.
- Bad loans which have dominated discussions in the media and caused heartburn to wary investors, are starting to reduce.
- The Government of India aims to improve its fiscal prudence as fiscal deficits are being controlled and the government is to continue doing the same.
- The services sector accounts for 54 per cent of India s Gross Value Added (GVA). Its growth rate moderated to 7.5 per cent in 2018-19 from 8.1 per cent in 2017- 18.
- The Economic Survey aims that the government should foster the growth of large firms which employ more than 100 people instead of focusing on smaller firms with less than 100 workers.
- The reason offered by the Economic Survey is that the share of smaller firms in overall job creation and productivity is very less when compared to the large firms which currently account for around 90 per cent of overall productivity and three quarters of job creation.
- India needs to focus on MSMEs. The MSMEs need to be removed from the various shackles that are currently constraining their growth. Even the MSMEs need to seen by the government as ae of innovation, growth and job creation.
- Government policy that enables MSMEs to grow, create greater profits for their owners and led to job creation must be prioritized.
- The Government should aim to tap the enormous potential of growth offered by the EVs in India. India must aim to become a manufacturing hub for the electric vehicles which not only are environmentally friendly but also conducive for our precarious oil position.
- The behavioural insights from the Swachh Bharat Mission can be used for laying the foundations of a healthy India. A healthy India means more labour productivity which translates into more savings and more investment.
- According to the Survey, the financial savings to the poorest household due to behavioural change induced by Swachh Bharat Mission exceeded the financial costs by 2.4 times.
- A UNICEF study found that “on an average, every household in an open defecation free village has saved about Rs. 50,000 for every household by reducing the likelihood of disease due to better sanitary practices.
- Also, since the life expectancy for both males and females in India is anticipated to continue rising, there might be a need to increase the retirement age for both men and women in the future. This has been done in other countries to reduce pensions outgo (increasing retirement age also increases the pensionable age).
- While India is expected to reap the demographic divided for the next two decades, a few states (mainly in south India) may start to show signs of a demographical disadvantage before them.
- The Total fertility Rate (TFR) is now below the replacement level fertility (? 2.1 children per woman) in 13 of the 22 major states in India.
- India needs to reform and re-orient its infrastructure for its unique demographical situation.
The Big Picture
The 2019 Economic Survey is an amalgam of ideas, data and aspirations which have been put to word in a lucid and clear way by the CEA. He has tried to cover everything that holds some water for unleashing India s economic prowess in the decade to come. The various risks to economic growth like monsoons and oil prices along with upcoming social challenges like unemployment, overpopulation and education have been given special attention in the economic survey along with the ways and means to boost businesses in India. The Economic Survey has also covered the likely impact of climate change and water shortage on economic growth and social stability in India. However, it remains to be seen how much of the Survey s gospels are actually followed and implemented in the country. To conclude, the Economic Survey deserves accolades to daring to think beyond the current situation, suggest innovative alternatives and clearly state the times to come in the future.