KV Subramanian

Economic Survey is Economically Yours… Mr. Subramanian!

A day before the Budget, Nirmala Sitharaman, Finance Minister tabled the Economic Survey in the parliament. The survey highlights the current state of the economy and indicates the strategy for future growth. It’s a strong parameter to craft the Union Budget.

In 2019’s economic survey, KV Subramanian focussed on the concept of $5 trillion economy. According to Subramanian’s calculations, India needs to grow by 8% consistently to achieve the $5 trillion target by 2024-25. Currently, the size of the Indian economy is $2.9 trillion, which is growing at 6.8. And this is the lowest in the last five years. How can Indian economy almost double its size in five years?

Blue Sky thinking

Subramanian recommends ‘Blue Sky Thinking’ to achieve the potential mark. Blue sky thinking is finding new ideas. But, when one single company IL&FS have chocked many banks and financial institutions. A few NBFCs are taking their last breath with 21% decline, SME and MSMEs are struggling for pennies, manufacturing companies stalled production, from car dealers to Apple distributors are shutting down, and PSBs are looking at government with empty hands for capital. The 694-page survey report in two volumes is also blue in cover doesn’t provide any strategy to resolve such issues. According to Subramanian, the cover design of the design of the survey represents the ‘inter-linked gears’ and captures the idea of investment, savings, exports and growth and jobs.

Subramanian in the press conference used a terminology ‘shifting gears’ many times. He said, “Economy needs to shift gears through a virtuous cycle, and investment will be a key driver to create a virtuous cycle.”

It would have been apt to learn, how and when government should shift the gears.

Big Hopes but no action

Economic Survey brings hope. It shows the potential of India. It says, that India is the fastest growing economy in the world and time is in its favour. Amidst the ongoing US-China trade tensions there is a high scope for electric vehicles and battery makers, the benefit of the demography.

The survey also says that government should keep a focus on growth and investment, specifically, private investment, increase in productivity will also boost the export. Private investments are important for any government and any country. The question is what is the executable plan to spur the investments?

If India grows by 8% for the next five years, it will generate jobs, make economy stable give confidence to India Inc and foreign investor. But how to reach to 8% from current level of 6.8%?

Economic Literature

Survey has also touched social issues which needs immediate attention. Such as setting up irrigation projects, filling up vacancies in various courts of India, which will reduce the piles of the cases. There is need to create legal data system, and protecting labours with minimum wage law, considering one in every three wage workers in India. Survey also suggests that special attention need to be given to a few states like Odisha, West Bengal, etc. and much more. Highlighting such issues is crucial but without clear roadmap this remains a literature.

Year 2024 : $5 trillion and Loksabha election

From colour of the report to the charts, and from the theory of Gandhiji’s Talisman to China’s transformation into savings, survey covers it all. But economists whom we spoke to are yet to understand how can we grow faster and achieve the target? What will make India grow close to 2% higher from current 6.8% ?

Strategic blueprint is crucial for India to become a $5 trillion economy in next five years but what is more important is to resolve the current challenges. If India becomes $5 trillion economy in next 5 years, then government will also have a report card to play election for sure, considering its an election year.

As Subramanian said, ‘Blue Sky Thinking’ and Shifting gear is must but what is lacking for decades is executable solutions. Wish economic survey would have focused on that, too.