Economic Survey: Its importance and what to expect

Photo: HT
Photo: HT

Summary

Budget proposals for the coming financial year are supposed to be a fiscal policy strategy in response to the prevailing state of the economy and challenges associated with it.

New Delhi: Ahead of the Union budget on 1 February, the government today presents the Economic Survey for 2022-23. Mint examines its significance for the economy and what we could expect from the vital document.

What is the need for the Economic Survey?

Budget proposals for the coming financial year are supposed to be a fiscal policy strategy in response to the prevailing state of the economy and challenges associated with it. The Economic Survey is a flagship annual document which reviews the prevailing economic scenario and provides a bird’s eye view of the economic developments in the country in the past financial year. It analyses the state of the economy and challenges that both the domestic and global economies have been facing. It also points out appropriate policy measures required to be initiated to solve any prevailing economic crisis, in case it exists.

What could be its highlights this time?

Apart from presenting a perspective on the state of the economy, this year’s Economic Survey could discuss steering the economy ably as compared to the rest of the world in terms of economic growth (India is the fastest growing major economy); price stability and forex reserves. Besides the monetary steps by the Reserve Bank of India, efficient supply chain management by the government, resulting in satisfactory inflation management, could also be cited. Similarly, the fiscal deficit management is likely to be discussed. Reasons might also be offered for the slow progress in disinvestment goals.

Are geopolitical issues likely to appear in the survey?

The survey may highlight the supply chain disruption due to the Ukraine war and commodity prices. Possibility of a global recession and its impact on India could find mention. Impact of high inflation in developed economies leading to rate hikes; and its toll on the currency exchange rate, resulting in additional pressures on the current account deficit could be cited.

How does the survey influence policy steps?

Steps suggested in the survey help generate public debate. In the past, they have helped crystallize reforms such as the rationalization of subsidies and user charges; disinvestment and privatization; tax and banking reforms; agri-reforms and asset monetization. Privatization of two public sector banks, an insurance company, strategic sale of government’s and LIC’s stake in IDBI Bank, monetization of assets for infrastructure financing are some of the reforms that were brought about after debates.

What is the ideal time for the survey?

In reality, the Economic Survey is a mid-term review of the economy as the required data is mostly for less than nine months of the year. However, as it is meant to provide a true picture of the economy and seek public support for the required policy responses, ideally it should be presented in the winter session of the Parliament instead of a day prior to the Union budget. This would also help the government in getting meaningful inputs from different stakeholders.

Jagadish Shettigar and Pooja Misra are faculty members at BIMTECH

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