Economic Survey 2019-20 seeks end to norms stifling competitiveness

Economic Survey pushes to encourage wealth creation by entrepreneurs; CEA sees growth rebounding to 6%

Chief Economic Adviser Krishnamurthy V. Subramanian presents the Economic Survey 2019-20 during a press conference in New Delhi on January 31, 2020.

The Economic Survey for 2019-2020 seems an exercise driven by 20/20 hindsight, combined with an optimistic 20/20 vision for the year to come, as it expects GDP growth to revive from the 5% estimated for this year to a range between 6%-6.5% next year.

The Survey hints at going easy on fiscal deficit targets in a bid to shore up growth and makes a valiant attempt to evangelise wealth creation by entrepreneurs instead of demonising them.

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It also calls for unravelling multiple regulations stifling Indian industry’s global competitiveness and urges policy makers to stop being “judgemental” about importing inputs, assembling them and re-exporting them, even if it means little value-added at home. Focussing on just six such ‘network’ sectors, could generate 4 crore jobs by 2025 and 8 crore jobs by 2030 and reverse the country’s tepid job creation record, the Survey said.

Blames UPA

While admitting there has been a slowdown in economy, poised to grow at just 5% in 2019-20 — the slowest in 11 years — Chief Economic Adviser (CEA) Krishnamurthy Subramanian, who had in his last Survey projected 7% growth for the year, attributed the deceleration to slower global growth and domestic financial sector woes that need urgent attention.

But he added that the seeds for the growth decline since 2017 were sowed under the UPA regime in 2013, when private investment began tapering off due to a credit boom-bust.

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To make a point about how being pro-crony is different from being pro-business, the Survey refers to the gains made unfairly by stocks of connected companies before the CAG report on the 2G spectrum allocations came out in 2011, again rejuvenating UPA-era malfeasance memories.

 

While food inflation has spiked, the Survey uses behavioural economics to show that eating a thali has become more affordable in recent years, more so for vegetarians.

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Since 1 A.D, the CEA said, India has been a dominant economic powerhouse, driving wealth creation in the world for three-fourths of known economic history.

Indicating that it was time to get away from misplaced socialistic instincts to return India to its past glory, Mr. Subramanian called the Survey a synthesis of old ideas with new ones, juxtaposing contemporary evidence with ancient texts.

The Survey delves into texts from 4th century BC and cites Tamil poet Tiruvalluvar’s Thirukural and Kautilya’s Arthashastra to espouse the virtues of the invisible hand of the market combined with trust in wealth creation.

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It then goes on to tap Wikipedia to identify the 100 largest banks in the world where just one Indian bank figures. The Survey hopes for at least eight domestic entities to join the league so that India can be a $5 trillion economy.

The higher growth hopes for the coming year are actually based on ‘conservative’ estimates, asserted Sanjeev Sanyal, Principal Economic Adviser to the Finance Ministry. By this time next year, there will be some clarity on whether it was wishful thinking or 20/20 vision.