Economic survey dreams of income for all

The Economic Survey 2016-17 presented in the Parliament Tuesday was a sombre, matter-of-fact economic progress card.

The Economic Survey 2016-17 presented in the Parliament Tuesday was a sombre, matter-of-fact economic progress card. Despite Chief Economic Advisor Arvind Subramanian’s theatrical flourish, the survey tells the story straight: India’s economy has slowed. Rising oil prices, escalating trade tensions and protectionism could hit exports, jobs and prosperity.Breaking silence on demonetisation, he concluded the bottom line evidence was mixed. Considering broad indicators, FY17 GDP was revised to 7.1 per cent, higher than IMF’s ‘over-optimistic’ 6.6 per cent. The CEA said notes ban caused insignificant short term costs and offered long-term benefits, but gave no indication if it was worth the pain. With full remonetisation, he believes, the glorious 7.5 per cent growth is round the corner, if consumption, private investments, and exports catch up.

The survey reiterated the twin balance sheet problem of banks and corporates as worrisome.Banks are unable to write off loans, and since existing solutions aren’t working, he proposed a state-run bad bank. Higher government and consumer spending compensated for the hesitancy of private investments, else growth could have been worse. Surprising economists, Subramanian termed the fiscal activism of advanced economies irrelevant to India, perhaps indicating the government should (will) borrow to invest. Going a step ahead, he questioned the sovereign rating agencies’ ‘astonishingly inconsistent’ grading of China and India.

Meanwhile, analysis showed government spending was inadequate where the concentration of the poor was high. To skirt layers of bureaucracy, he proposed Universal Basic Income, which could cost 45 per cent of the GDP. But he punctured all perceptions that UBI will replace existing schemes from tomorrow, and sought discussions. At root, the survey called for a societal shift in ideas to retain India’s sweet spot, but is the finance minister listening? We shall know soon.

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