Economic Survey 2021: Top 10 Highlights
Chief Economic Adviser Krishnamurthy Subramanian analysed issues ranging from economic growth to exports to overregulation.
Finance Minister Nirmala Sitharaman tabled the Economic Survey 2020-21 in the Parliament on the first day of the Budget session. The survey, authored by Chief Economic Adviser Krishnamurthy Subramanian, has analysed various topics from economic growth, fiscal stance, state of banking and more.
Here are the top highlights:
1. Advice To The Government: Keep Up The Spending!
The Economic Survey has batted for a continued expansionary fiscal stance by the government to ensure that growth returns to pre-Covid levels. A recovery in growth will boost revenue collections and help India get back on a sustainable fiscal path, it said.
2. Economy To Go Past Pre-Covid Levels In Two Years
A rebound in economic activity and the government’s reforms can help the Indian economy go past its pre-Covid level in two years, the survey said. Further upside is also possible if economic activities normalise sooner due to the vaccine rollout.
3. Higher Growth Will Keep Debt In Check
The survey tried to cast away doubts about India’s debt levels saying that as long as GDP keeps growing, the country won’t have to worry about debt. The survey argues that over the last two-and-a-half decades, higher GDP growth causes the ratio of debt-to-GDP to decline in the case of India. The reverse, however, is not true, it said.
4. Indian Banking Needs An Asset Quality Review 2.0
There is need for a fresh asset quality review of Indian banks as soon as the Covid-19 relief measures are lifted, the survey suggested. The chief economic adviser called for a clean-up of bank books to ensure mistakes of the past aren’t repeated.
5. An Eye On Core Inflation For Policy Making
The survey has suggested that a greater focus on core inflation is warranted to drive policy-making. It said that the sole focus on CPI inflation to set monetary policy may not be appropriate for four reasons.
6. In Support Of The Farm Laws
The Economic Survey has said that the new farm laws, which are being widely opposed by farmer groups, will be beneficial for small and marginal farmers and herald Indian agriculture in a new free-market era.
7. Pointing To A Problem Of Overregulation
More than lack of compliance or regulatory standards, India’s administrative process is suffering from overregulation, the survey noted. The root case is the government’s approach is one that attempts to account for every possible outcome, it said.
8. A Regulator For Healthcare?
The survey recommended setting up a sectoral regulator, and a rating agency like body, to assess the quality of healthcare providers in the country. This, the survey said, will help tackle information asymmetries.
9. Why Bangladesh Is Beating India At Exports
In the past decade, Bangladesh’s exports have grown at 8.6% annually while India’s remained stuck at 0.9%. That outperformance is because Bangladesh is exporting commodities where it has a competitive advantage.
10. India Can’t Just Rely On ‘Jugaad’
The Economic Survey made a case for higher research and development spending by the private sector to boost India's innovations. Relying on “jugaad innovation” risks missing the crucial opportunity to innovate our way into the future, the survey said.