Economic Survey: A snapshot

LOOK AND FEEL

• Revamped presentation style of the Economic Survey
• Volume I is forward-looking and more data-driven
• Identifies 10 areas for policy reforms that can be matched with Budget announcements
• Has been bold in suggesting lowering of income tax threshold, instead of pushing it upward every year

TRIVIA

• Uses a lot of new terms, following up on 'JAM' introduced last year
• Names of chapters draw attention - Mother and Child, Chakravyuha Challenge, More from Less
• Each chapter details extant literature in the area before offering solutions
• Chapter on fertiliser is the longest-ever on the subject in any Economic Survey

STATE OF THE ECONOMY

• FY17 GDP expected to be in the range of 7-7.75%. Current year's at 7.6%
• Arguments to stick to fiscal consolidation path
• But need to revisit medium-term fiscal policy framework
• Farm prices and trade policies need to account that India is a big market for the world
• Twin balance sheet problem - banking stress and that of the corporate sector hampering economy

ISSUES AND PRIORITIES

• Exit problems clogging up investment in sectors like fertiliser, banks, telecom
• Institutions like DRTs and ideas like "sanctification of the small" block quick exits
• Need to spread the Jan Dhan-Aadhaar-Mobile trinity as a tech solution in fertiliser, other subsidies
• Rationalise MSP policy and remove wedges between retail and wholesale prices
• Massive investment in health services for babies and infants
• Need for reforms in the fertiliser sector through introduction of DBT

PUBLIC FINANCE

• Remove tax incentives for small savings, as mostly the rich benefit from them
• Impose tax on gold since it is hoarded by the rich
• Rs 1-lakh-crore subsidy going to the rich from the government
• Fast-growth years for GDP have led to larger inequality in India; need for measures like wider property tax in the context of smart cities
• Only four per cent of Indians pay income tax; this has to rise to about 23 per cent

PRICES & MONETARY MANAGEMENT

• Benefits of low global oil prices transient
• El Niño effect on agriculture to continue for some more time
• Crop-wise yields in India compared to the world are low for rice, wheat and pulses
• Need to shift to demand-driven agri-extension services
• Food not the only reason for low transmission of rate cuts by RBI

OTHER SECTORAL REFORMS NEEDED

• Challenge of creating good jobs is proving difficult
• Too many regulations have harmed job creation - worker-centric rule needed
• Competitive federalism is needed to reduce bottlenecks in clearances
• Transparency and simplicity needed in power rates
• Easier power supply to encourage 'Make in India'