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The Big Picture – Signals from Economic Survey

The Big Picture – Signals from Economic Survey


Economy Survey has projected that India should have 25% of the manufacturing share in the GDP by

2022. This means about 11% annual growth. To achieve this target energization of assemblies is

necessary. Assemblies contribute nearly 40% of the manufacturing, 40% of exports and 50% of the

total employment. Hence, SME is certainly the growth engine. The Survey says that the country’s

overall trade performance signals an opportune time for removal of restrictions on gold. Domestic

investments have to be encouraged.

The Economic Survey projects an optimistic vision of India’s future. It predicted that gross domestic

product (GDP), as measured using the recently revised estimates, would grow at a rate between 8.1

and 8.5% in the next financial year. It also says that a historic moment of opportunity had been

created that could propel India on to a double-digit (growth rate) trajectory in the years following

2015-16. India was, it claimed, on the cusp of a high-growth path.

The Survey estimated incremental GDP growth for 2015-16 over 2014-15 as 0.6 to 1.1% points. The

increase was based on four factors. First, what the Survey described as reforms conducted by the

new government — these include such items as diesel price deregulation, higher caps for foreign

direct investment in defence and the coal ordinance — would boost growth. Second, it was expected

lower fuel prices would decrease costs in the economy and moderate inflation. Third, the hoped-for

monetary easing would stimulate investment and encourage household spending in interest-

sensitive sectors like consumer durables. Finally, the monsoon is projected to be better than last


On subsidy control, while accepting that direct benefits transfers (DBT) were a laudable goal of

policy, the Survey pleaded developing the state capacity to implement DBT will take time. Other

ways to plug subsidy leakages, such as the Rs 10,000 crore from kerosene, needed to be

implemented first. One major reform suggested was the creation of a single market for agricultural

goods, overruling individual states’ agricultural produce marketing Acts.

However, the actual reform agenda the Survey laid out erred distinctly on the side of caution, rather

than being the revolutionary programme widely expected to drive growth. The Survey stated baldly

that big-bang reforms would not happen. Instead, it predicted a persistent, encompassing, and

creative incrementalism. Overall, the Survey has laid out a coherent, if notably restrained, policy

agenda — which differed in significant ways from the one currently being implemented.