The Big Picture – Signals from Economic Survey
Summary:
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
year’s.
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.
