The Economic Survey 2017-18 is strikingly different in tenor and substance from the earlier two versions produced by the chief economic advisor, Arvind Subramanian. It has eschewed stand-out ideas this time, with the CEA actually saying that the Government only needs to stick to what it has been doing so far. So, while the earlier avatars mooted universal basic income, and focussed on primary deficit rather than fiscal deficit, this one lists the achievements of the Government, and suggests little more than continuity along the roadmap of ease of doing business, cooperative federalism, fiscal prudence and trade openness. Remarkably absent, given the political economy context, is a prominent treatment of the agrarian crisis and the jobs question. On the first, the Survey confines itself to medium-term issues such as “efforts to bring science and technology to farmers and “replacing untargeted subsidies by direct income support”, without really grappling with the challenge of ensuring fair prices. On the second, it advocates “creating a climate for rapid economic growth on the strength of the only two sustainable engines — private investment and exports”. It is rightly sanguine about the long-term effects of GST, in terms of expanding the tax base, both in terms of individuals and business entities. But the question of whether a growth rate of over 7 per cent can be sustained on the strength of supply-side reforms alone, is a question the Survey does not seem to address squarely. It seems reasonable to assume that Thursday’s Budget will have made its revenue projections on the basis of over 7 per cent GDP growth. Growth estimates for 2017-18 have been upped by 25 basis points over the CSO estimates of 6.5 per cent.
That said, the document cannot be faulted for projecting a sober and realistic picture of the risks ahead next year. Gone is the ‘sweet spot’ of low oil prices. The main risks now emanate from rising crude prices and the prospect of a market correction. However, growth is expected to benefit from the fruits of bold tax reforms (which need to be pursued to ease the GST-related difficulties of exporters), cleaning up bank NPAs and recapitalisation of banks, and a revival of private investment and exports, of which there are distinct signs. As in the last Survey, the CEA presses the case for disinvestment of Air India.
While there can be no denying that the Centre has traversed some ground in banking reforms, the Financial Resolution and Deposit Insurance Bill is not foregrounded in the discussion. Nor has the issue of Aadhaar been elaborated upon, even as it remained one of the CEA’s favoured themes in earlier Surveys — the wonders of the Jan Dhan-Aadhaar-Mobile trinity. In all, there is reticence and restraint written all over the document, as the Centre prepares for its last full Budget — and gears up for a slew of elections to follow.