Economic Survey presents reforms, says the free market is part of the spirit of India
NEW DELHI: for 2019-20, launched on Friday, the post-liberalization tradition of promoting market-friendly reforms continues, but it could be said that with greater vehemence than ever.
More importantly, its source of inspiration in this direction is not, unlike the past, the experience of other fast-growing economies such as Asian tigers, but India's own past. The author of the Survey strongly argues that the civilizing ethos of India has celebrated the creators of wealth and that this is what allowed the country to be the dominant economic power worldwide for more than three quarters of economic history. known.
The Survey argues that the four decades of “alliance with socialism” in India were an aberration of this rule of relying on the market for wealth creation with the support of trust.
Effect of curbs opposite to what was intended
Quoting Kautilya and liberally, the Economic Survey for 2019-20 demonstrates that ethical entrepreneurship was the intrinsic genius of India and a return to that is what would allow it to shine once again on the world stage.
The hands-free prescription extends to eliminating the Law, government intervention in grain markets, and even drug price regulation, an area in which the current government boasts of having pushed the envelope. In each case, it argues, the actual effect of regulation was the opposite of what was intended, making controlled items costlier and in short supply. In the same vein, the Survey suggests that debt waivers were counter-productive.
Acknowledging the slowdown in the economy, which it attributes to the financial sector dragging down the real economy, the Survey observes, “Considering the urgent priority of the government to revive growth in the economy, the fiscal deficit target may have to be relaxed for the current year.”
It argues for an aggressive push to disinvestment in PSUs in the coming year, pointing out that the strong mandate to the government gives it the ability to undertake bold reforms. Public sector banks are cited as examples of inefficiency and wealth destruction. Yet, the Survey stops short of calling for their privatisation, instead suggesting steps that need to be taken to make them “more efficient so that they are able to adeptly support the nation in its march towards being a $5 trillion economy”.
The Survey makes a bold statement, saying the government could explore the privatisation of education at all levels to augment capacity. It calls for a boost for labour-intensive exports by making ‘Assemble-in-India’ an extension of Make in India. The Survey coins the term “Thalinomics”, dedicating a chapter to the idea. It tries to establish that steps taken by the government to moderate inflation have made the common thali more affordable for working people than would otherwise have been the case.
Beyond this broad impulse to allow a market-driven economy with a strong trust base, the Survey exudes optimism about the future, suggesting that the economy will grow between 6% and 6.5% in the next year. It also seeks to refute the suggestions that India's GDP figures are questionable.
Overall, the Survey makes it clear that wealth creators need not be viewed with suspicion and markets are best left to govern themselves with government s only making sure rogue elements don’t undermine trust. It attempts to “put to rest any scepticism about the benefits accruing from a market economy, both in economic thinking and policymaking” and emphasises the idea of “trust as a public good that gets enhanced with greater use”.
Referring to trade agreements, the Survey starts from official thinking, saying that exports have received a greater boost from such agreements than imports.