The annual Economic Surveyreleased a day ahead of the Union budget has mostly been of appeal to policymakers and economy wonks. Efforts have been made in recent years by successive chief economic advisers, who lead the exercise, to reach a wider readership. One of Arvind Subramanian’s surveys memorably had gender equity as its theme, while K.V. Subramanian went for nudge theory in a survey sprinkled with ancient quotations. The latest one for 2022-23 under the charge of V. Anantha Nageswaran—his first since taking office as CEA—has clipped the document back to shape. He has widened its coverage, with detailed chapters on climate change and the social sector, but exerted enough bloat control in key areas to offer a read that is refreshingly to-the-point. It relies on clarity and coherence to make itself accessible, offers a well-selected data trove, and, above all, places our economic story in a global context with the realism this aspect deserves. In terms of analysis, this would qualify as its strong suit.
As for the survey’s specifics, it sees India’s economy growing between 6% and 6.8% in fiscal 2023-24, with a base prediction of 6.5% in real terms. Without adjusting for inflation, it expects nominal growth at 11%. While the wide range reflects the uncertainties that prevail, 6.5% seems a tad too optimistic. The International Monetary Fund’s latest forecast for India’s growth next fiscal year is 6.1%, which would be robust enough for the country to be a bright spot in global comparison. It’s important for the 11% nominal projection not to go awry on account of inflation, as we saw happen in 2022-23. Global weaknesses are expected to weigh on our expansionary impulses, but we must still pursue fiscal consolidation. On this, the survey makes a point that could sound counter-intuitive. “Fiscal discipline translates into a fiscal stimulus for all sections of the economy through lower interest rates," it states, arguing that emerging economies may have more to gain than advanced ones by way of lower risk premiums delivered by less imbalanced budgets, since financial markets do not treat them alike. The former could get “greater rewards for fiscal prudence", which can make a difference “in an era of rising interest rates." Yet, as the survey indicates, state spending must still support growth. For India to pull off both, we would need a deft recalibration of outlays in favour of more productive purposes. Plain expense burdens should be cut back.
The survey’s chapters on the social sector and climate change cover some fresh ground. The former offers an overview of various initiatives taken on human development indicators and the enabling role played by the ‘India stack’ of digital public goods. Its emphasis on health and education, particularly, is laudable. Combined spending on healthcare by the Centre and states was at 2.1% of GDP in 2022-23, a notch lower than 2.2% the year earlier. It must reach 3%. The part on climate action offers arguments and brief outlines of what India is doing to attain its carbon neutrality goal by 2070. It even cites Nobel laureate Thomas Schelling, famous for game theory, on how economic emergence generally favours the planet by making more resources available. We do not confront a zero-sum situation, one in which development must suffer for the planet’s sake. It’s just that we must maintain a pace that is both fair to everybody and sustainable. On the whole, this year’s survey does a sharp job of reaching out.
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