Context:
Finance Minister tabled the Economic Survey 2019-20 in the Parliament after a joint address by President Ram Nath Kovind to both Lok Sabha and Rajya Sabha.
Prepared by Chief Economic Advisor, the Economic Survey gives a review of the developments in the economy over the previous 12 months and also gives an outlook for the next financial year.
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.
About Economic Survey:
Ministry of Finance presents an annual document known as Economic Survey which gives the details of various sectors of the economy and overall economic scenario of the country in the past years.
The Economic Survey is a technocrat’s advice to the government. Not only this, it also provides an outline for the year ahead.
The first Economic Survey of India was presented in 1950-51. It was presented along with the Union Budget up to 1964 and from 1964 onwards, it had been separated from the Union Budget.
The Economic Division of the Department of Economic Affairs prepared the Economic Survey in the Finance Ministry under the overall guidance of the Chief Economic Adviser.
When senior officers provide their inputs in the Ministry of Finance, the final version of the Economic Survey is scrutinized by the Finance Secretary and finally approved by the Union Finance Minister.
Aggressive Disinvestment Target:
Economic Survey has recommended an aggressive target for disinvestment of the Central Public Sector Enterprises.
The decision is intended to bring higher profitability and promote efficiency in the operations Public Sector Units.
Furthermore, disinvestment will also bring in higher competition and promote professionalism in the operational culture of the organizations.
Calls for Urgent Reforms in Banking Sector:
Economic Survey said that Indian’s Banking Sector needs urgent attention and reforms that can support the growing economy.
The survey calls for a healthy banking sector that is led by Public Sector Banks.
Among the three key recommendation for banking sector, the survey mentions use of Fintech across all banking functions, employee ownership to enhance efficiency and use of emerging technologies such as big-data, artificial intelligence and machine learning to improve operations.
Economic Survey on Employment Data:
Economic Survey also talks about Employment Data which showcased that around 2.62 crore new jobs were createdin rural and urban areas between 2011-12 and 2017-18.
Of the total jobs created, around 1.21 crore in rural areas and 1.39 crore in urban areas under regular wage and salaried employees category.
Of the total number of jobs created for regular wage and salaried employees; there has been around 8% growth in regular Employment of Women in 2017-18 over 2011-12.
The survey also adds that around 69.03 lakh people were trained under Pradhan Mantri Kaushal Vikas Yojana (PMKVY).
- Total Number of Jobs Created in 5 years: 2.62 crore
- Total Number of Jobs Created in Rural Areas: 1.21 crore
- Total Number of Jobs Created in Urban Areas: 1.39 crore
- Growth in Employment of Women wage earners: 8%
- Number of candidates trained under PMKVY: 69.03%
Infra Spend – Roadmap to UDS 5 Trillion Economy:
As part of the roadmap to the ambitious target of achieving USD 5 Trillion Economy, the Economic Survey highlighted that India needs to invest UDS 1.4 Trillion on the development of Infrastructure.
Lack of Infrastructure was cited as a ‘binding constraint’ on the economic growth ranging from power infrastructure, transport and poor connectivity.
Economic Survey said that India’s aspiration of becoming a $5 trillion economy depends on two things
1) Promoting ‘pro-business’ policy that unleashes the power of competitive markets to generate wealth.
2) Weaning away from ‘pro-crony’ policy that may favour specific private interests, especially powerful incumbents.
Chief Economic Advisor praised his team for “working hard” and having prepared the “second economic survey in the span of six months”.
The government must use its strong mandate to deliver expeditiously on reforms, which will enable the economy to strongly rebound in 2020-21.
It also called for improving governance in public sector banks and the need for more disclosure of information to build trust. It also talks about dwarfism in the banking sector.
Conclusion:
Economic Survey calls for measures to make it easier to start new business, register property, pay taxes, enforce contracts.
Government interventions seem to be ineffective in stabilising prices of commodities such as onions: Survey
Economic Survey calls for more reforms for making it easier to do business in country.
Weak global growth impacting India as well as investment slowdown due to financial sector issues had led to growth dropping to a decade low in current fiscal, the survey said, adding 5% growth projected for 2019-20 is the lowest it could fall for now.
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.
The higher growth hopes for the coming year are actually based on ‘conservative’ estimates.
By this time next year, there will be some clarity on whether it was wishful thinking or 20/20 vision.
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