How to reform the Economic Survey
For the past several years, people who expected the annual Economic Survey to serve as a predictor of government policy actions have been routinely disappointed. Typically, Surveys have laid out an ambitious and emphatic road map for reforms - and, just as typically, governments have not been influenced by them in the least. Perhaps when the finance ministry was the pivot of reforms these expectations were justified. But, since the onus has shifted to other ministries, the links have broken down. Perhaps things will be different this year, with a new government apparently committed to a broad and deep reform agenda, if manifestos and campaign promises are anything to go by. Then again, there's many a slip between campaign and governance, a lesson that this government will continually learn during its term in office.
That said, taken at its face value, the first Economic Survey of the new government clearly does attempt to lay out a reform road map for its term. Its assessment of the macroeconomic situation reflects widely shared perceptions; it did not need to put any gloss on the situation and it hasn't done so. But, at the end of the rather bleak picture that has been painted, its rather optimistic growth projection - between 5.4 and 5.9 per cent for the current year - strikes a somewhat discordant note. Presumably, it assumes that the new government will quickly eliminate bottlenecks and logjams, revitalising private investment in the process. Monsoon and oil price risks are insufficiently acknowledged. Overall, the list of actions suggested in various areas is, by and large, unexceptionable. There are also some good new ideas, such as the use of a national approach to the repeal of the onerous agricultural produce marketing committees Acts as a quick way to dampen food price pressures. There are also some holdovers from the previous regime: notably the Rs 60-lakh-crore infrastructure investment target over five years, notwithstanding the spotty record on this front; the advocacy of the Indian Financial Code; and the privatisation of coal mining.
So far, so good. These and the other recommendations should be on any government's to-do list. What is and has been lacking in the Survey document, which is partly why it breaks down as an agenda for action, is a clear prioritising of the items on the agenda. Which of the recommendations are most critical to achieving the goals of faster growth and lower inflation, for example? Which of them is most important from a poverty-reduction perspective? Are there potential conflicts; if so, which objective should come first? How can competing interests be satisfied? These are the building blocks of good strategy. But this is something that the Survey has never attempted to do. The rest of the government, seeing a set of recommendations that look so daunting, simply goes about its business as usual. Reforms are carried out, but without coherence and co-ordination. This must change. The finance ministry will present its next Survey only a few months from now. It must continue with the improvement it has brought about this year in the presentation and packaging of data in the Survey, making its content less daunting and more accessible. But it must also transit from merely outlining a wish list to presenting an effective strategy.
Profit growth supported by the special dispensation by RBI on sale to ARC, usage of counter cycle buffer
Price hikes of 15-16% in the cigarette business could not fully compensate for an estimated 13% fall in volume