Publication of the Annual Economic Survey, a day before the Union Budget, is a much-awaited event. Offering rare insights into the Government’s economic thinking and giving a snapshot of the Indian Economy, together with a SWOT analysis, every word of the Economic Survey is precious to serious students of economics. The spirit and thinking behind the Budget can be perfectly understood by perusing the Economic Survey, because both documents are drafted by the same set of economists. Painstaking research, unbiased statistics and unmatch – ed scholarship ensure that the Economic Survey remains of interest long after the corresponding year’s Budget is forgotten.
The Economic Survey of 2016-17 summarised these desi – derata in the following words: It (Economic Survey) must possess a rare combination of gifts …. No part of man’s nature or his institutions must be entirely outside its regard. It must be purposeful and disinterested in a simultaneous mood, its authors as aloof and incorruptible as artists, yet sometimes as near to earth as politicians. Economic Survey 2016-17 went on to note that such was the popularity of the previous year’s Survey, that it had been pirated and was being sold on Amazon. However, last year’s Economic Survey ~ a pre-election document that ignored hard realities, and stretched facts and logic to justify Government policies ~ was a significant exception. The current Survey is a welcome change from the last one; insights and scholarship are back, making one wonder if both Surveys were drafted by the same set of people.
Compared to last year’s Survey, the present Survey is much more topical, not shying away from discussing current problems, like the worrying levels of inflation and unemployment, slow uptick in manufacturing and exports etc. Some of the topics dealt with by the current Economic Survey remain identical to earlier Surveys; the first chapter examines the state of the Indian economy, and subsequent chapters analyse India’s medium-term economic outlook, fiscal policy trajectory and so on. However, treatment of most topics is somewhat short on original thinking and long on verbiage.
While some of the earlier Surveys will be long-remembered for their insights like the Twin Balance Sheet Problem in the Economic Survey 2015-16 or the highly original Eight Interesting Facts About India in Economic Survey 2016-17 or Tracking Development through Satellite Images and Cartography in Economic Survey 2021-22, the current Economic Survey does not display acuity of such high order. The unduly optimistic tone of Economic Survey 2023-24 jars at times. Facts not conforming to the authors’ narrative are sometimes not mentioned at all, or deliberately obfuscated, an example being the chapter on India’s social sector (Chapter 7) that does not bifurcate social sector expenditure between the Centre and States, which would have revealed that the Centre’s spending on Health and Education was declining in percentage terms. In the chapters on State of the Economy and Monetary Management and Financial Intermediation, the positive outcomes of the new Corporate Insolvency Resolution Process are highlighted, but the Survey omits to mention clearly the average 69 per cent haircut to lenders in the process, or the delays that occur in insolvency resolution in many cases.
To be fair, unlike the earlier Survey that even commended the Finance Minister’s highly controversial statement it is not that the Indian Rupee has weakened, but it is the US dollar that has strengthened, the current Survey avoids defending the indefensible. Chapter 9: Agriculture and Food Management: Plenty of Upside Left If We Get It Right: reads like a Department of Agriculture handout, faithfully recounting the hundreds of schemes floated by the Central Government and the money spent thereupon. But the authors are silent about the fact that agricultural growth had been resilient despite no major initiative to boost production, or the almost zero additional budgetary support from the Centre.
The chapter also does not mention anything about the short-lived Farming Acts, that caused such furore amongst farmers. Systemic problems like fragmentation of land holdings, are mentioned in passing but no solution has been suggested. Another chapter ‘Prices and Inflation’ mentions many instances in which exports of agricultural commodities were curbed, but the Survey fails to point out that such restrictions are one of the main reasons that make Indian agriculture unremunerative. Incidentally, the Survey goes on to suggest recas ting of the Consumer Price Index, so that inflation is not seen to grow The Survey can be credited with rare prescience also. On page 144, the Survey suggested that we should overturn the earlier ban on Chinese capital investment and source FDI from China.
Within no time, we find the Government approving the import of Chinese capital, a clear case of business interests trumping defence interests, that too without any public debate. Unemployment is discussed at many places in the Survey, with an entire chapter, Employment and Skill Development: Towards Quality, discussing the employment scenario. But sadly, the discussion focuses more on issues like AI, and challenges of the future, and shies away from addressing the dire employment problem facing Indian youth. The Survey has suggested certain sectors like food processing and healthcare for creating jobs and has put the entire onus on the private sector for generating employment. The basis of many conclusions of this chapter could be flawed because the Survey has used only indirect Government data (the Government has done away with employment statistics since 2017-18), ignoring reliable statistics from reputed private sources like Centre for Monitoring Indian Economy (CMIE).
Interestingly, at another place while discussing the importance of statistics and the role of the Ministry of Statistics and Programme Implementation, the Survey has observed: A sound and dynamic statistical system is the cornerstone for an informed citizenry, data-driven policies and decision-making. This statement certainly does not gel with the Government’s approach of restricting publishing of statistics, a prime example being the indefinitely delayed decennial Census. A redeeming feature is that the Survey also ignores Reserve Bank statistics on employment, which claimed that 4.7 crore jobs were created in the last two years.
Another topic running almost throughout the Survey is climate change, with its mention at many places, and a detailed discussion on climate change encompassing two whole chapters. Here again, the treatment is academic, with a focus on global climate change and prescriptions for combating climate change at the global level. Happenings nearer home are pointedly ignored, with nary a mention of the landslides, horrendous forest fires, floods and heatwaves that have ravaged our country in the last few years.
At places, the Survey does talk about afforestation, but at the same time views delayed clearances for mining in forests, as an impediment to progress. Also, there is no mention of the unstated Government policy of putting Ease of Doing Business over environmental concerns, and amending the law, if it stands in the way, prime examples being amendments to various Acts like the Environment (Protection) Act, 1986; Forest (Conservation) Act, 1980; Wildlife Protection Act, 1972; Water (Prevention and Control of Pollution) Act, 1974; Air (Prevention and Control of Pollution) Act, 1981 and Indian Forest Act, 1927, were amended, as also the Environment Impact Notification and the Coastal Regulation Zone Notification. In conclusion, the Survey states:
The tripartite compact that this country needs to become a developed nation amidst emerging unprecedented global challenges is for governments to trust and let go, for the private sector to reciprocate the trust with long term thinking and fair conduct and for the public to take responsibility for their finances and their physical and mental health. All the above assumptions are counterintuitive; all Governments believe in control, most private enterprises try only to maximise current profits, and straitened circumstances force most individuals into a day-t0-day existence.
Yet, after Independence, the country has moved steadily forward, which is a tribute to the vision of our leaders and the native genius of Indians. Analysing the Economic Survey, one feels that much more original thinking and effort will be required to define a roadmap to catapult India into the comity of developed nations. As American architect, systems theorist, writer, designer, inventor, philosopher, and futurist, R. Buckminster Fuller had said: You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.
(The writer is a retired Principal Chief Commissioner of Income-Tax)