Economic Survey: Where is the expected push for public investment?

By choosing to be largely silent on the issue of raising public sector investments, the Economic Survey was like a blockbuster without the expected movie star.

Instead what we got was a rehash of the well known problems plaguing the economy peppered with new acronyms which has become the hallmark of this government.

The previous Economic Survey had made a strong case for greater government investment in roads and railways hoping that greater public investment would crowd-in private sector investments.

In line with this thinking, the Finance Minister had increased the budgetary allocations for key sectors such as roads and railways hoping that greater public sector investments would jumpstart the investment cycle.

But as recent data has shown, the intended multiplier benefits of reviving private sector investments haven’t really materialized. As a consequence many economists are now making a strong case for pushing up public spending further. But that would entail deviating from the fiscal consolidation roadmap. It is therefore surprising that given the criticality of this issue, the author has chosen not to clearly articulate his view on the issue.

Rather, what we have is a new acronym – TBS – Twin balance sheet – highlighting the well publicized challenges of the impaired financial position of public sector banks and corporate houses that is one of the most critical short term challenges confronting the Indian economy.

Here too, the author fails to put forth a roadmap of how to deal with these challenges. Rather, he pelts out the well known solutions, using another acronym -4R - Recognition, Recapitalization, Resolution, and Reform without any detail on how these are to be achieved.