The Economic Survey recycles old tropes but does it actually provide a roadmap for a $5 trillion economy by 2025?
The Economic Survey for 2018-19 claims that it is different from previous editions because it has ‘Blue Sky Thinking’, which is belied by the sky blue colour theme of the cover. It is, as Chief Economic Advisor KV Subramanian argues, a roadmap to India becoming a $5 trillion economy by 2025, making us the world’s third-largest economy behind the US and China. India’s Gross Domestic Product (GDP) was $2.7 trillion in 2018, behind those of France, Germany, Japan and the UK. But there is a problem, as the survey itself points out. Growth for the last quarter of 2018-19 dropped to 5.8 per cent, and the annual growth rate in 2018-19 was 6.8 per cent. In 2019-2020, the Economic Survey believes growth will touch seven per cent, but to achieve Prime Minister Narendra Modi’s vision of becoming the world’s third largest economy, India will then need to grow at an annual rate of eight per cent over the next few years. That will require a huge amount of public and private sector investments. While India has steadily invested in its infrastructure over the years, the real challenge will be in getting adequate complementary private investments across the country. Some of these shared infrastructure projects are already caught up in disputes and there has to be a time-bound resolution and smoothening of bottlenecks. But other than invoking a lot of religion, does the survey really draw up a roadmap for economic growth? Some facts are about stating the obvious for the umpteenth time. Like the dire need for labour reform. The possibly even more dire need for judicial reform. Or the necessity for private sector investments to be the major growth driver. So this data-rich tome, that correctly says that data will play a big role in the future development of India, is a bit short of policy ideas even though it says interventions are needed. It tries to provide backing for some terrible ideas like a shift towards electric vehicles and some references to religion and mythology are cringe-worthy.
Of course, the Survey does at a level realise that Narendra Modi has huge political capital and could achieve the oft-repeated labour reform thanks to it and a defenestrated Opposition. The fact is India does not have a choice but has to somehow drive high rates of growth if it is to gainfully employ the hundreds of millions of youth, who will join the workforce in the coming decade. There is one aspect that the Survey could have also looked at, the global scenario. Over the last few years, India has assumed that globalisation will continue. However, we are moving towards a multi-polar world and if India is to become one of the poles in that world, there needs to be a realisation of that reality in government and economic policy-making. It is apparent that Modi is taking the economy extremely seriously in his second-term because figures do not lie and economic activity has definitely taken a hit over the past couple of quarters. Some poor decisions such as demonetisation have also hurt growth in the past and India has very little wiggle room if growth has to be supercharged. The other challenges will include oil prices after Iran sanctions, low revenue from the Goods and Services Tax, sourcing funds for big schemes and meeting social sector targets like farmer’s income and healthcare. While blue-sky thinking will be admirable towards that, there needs to be some cold, hard decisions taken if that $5 trillion economy figure is to be achieved.