The Economic Survey 2019-20 was recently presented to the Parliament by the Union Minister for Finance. The survey, whose theme is “India’s aspiration of #Economy@5trillion along with #WealthCreation”, is a comprehensive report that offers a glimpse into the country’s economic health over the past year, the challenges it may face in the future, and possible solutions to these issues.
The Economic Survey: An Overview
The Economic Survey is a significant document as it provides an official and detailed account of the government’s perspective on the country’s economic status. This document is devised by the Economic Division of the Department of Economic Affairs (DEA), under the guidance of the Chief Economic Adviser (CEA), who currently is Dr Krishnamurthy Subramanian. It should be highlighted that while the government presents this survey, it is not constitutionally required to implement its recommendations.
Wealth Creation: A Primary Focus
The Survey seeks to design a framework of policies that will stimulate wealth creation in India which, in turn, could fix the economy on an upward growth path. It pinpoints several potential drivers of Wealth Creation, including:
– Grassroot Entrepreneurs: Entrepreneurship is viewed as a strategy to drive productivity growth and wealth creation.
– Competitive Market: Advocates for ‘pro-business’ policies that harness the power of competitive markets to generate wealth. Conversely, it discourages ‘pro-crony’ policies that might favour existing private interests.
– Removing Outdated Government Interventions: Recommends abolishing policies that hinder markets through unnecessary government intervention.
‘Assemble in India’: A New Vision
The survey suggests integrating ‘Assemble in India’ into ‘Make in India’ to concentrate on labour-intensive exports and subsequently create jobs at a large scale. It recommends focusing on other labour-intensive sectors like textile, clothing, footwear and toys.
Banking and Privatization
The survey emphasised the need to efficiently scale up the banking sector to match the Indian economy’s size and monitor the shadow banking sector’s health. It strongly advocated using privatisation as a means to promote efficiency, thereby reinforcing the case for aggressive disinvestment of Central Public Sector Enterprises (CPSEs).
The Role of Market in Wealth Creation
The Survey underscores the importance of fostering openness in the market. This approach can lead to wealth creation which stimulates economic activity through enhanced investment.
The Significance of Trust in Economic Growth
The Survey argues that India’s historical global economic dominance can be attributed to two factors: the ‘Invisible Hand of Market’ and ‘Trust’. For instance, the Indian economy bounced back to high growth following economic liberalisation due to increased trust. The Survey emphasises that trust is a public good that increases with use.
Understanding ‘Thalinomics’
The Survey aims to explain economics to the average person using a relatable everyday concept – a plate of food, i.e., a ‘Thali’. It posits that the affordability of Thalis regarding a day’s pay of a worker has improved over time, pointing to enhanced welfare of the common person.
Last Modified: February 7, 2024