Growth rate a worry, economic survey sets next reforms agenda
The Economic Survey report presented in Parliament on Tuesday is a cocktail of hope and despair—of course, the hopes are well articulated while keeping the despairs draped in a thin veil. The Survey expects the country to hit a higher growth trajectory after eight years of relentless reforms by the Modi government, but it predicts the economy will grow at 6.5–7% for the rest of this decade. The Centre seems to have given up the hope of growing over 8% anytime soon.
The Chief Economic Advisor draws a parallel between the last eight years of the Modi government and the reforms it pursued with that of Vajpayee’s between 1998–2004. The comparison extends to the growth rates as well: Like the reforms in Vajpayee’s time led to a record GDP growth between 2002 and 2010, India’s economy would grow at a faster pace in the rest of the decade thanks to the reforms undertaken since 2014. However, a 6.5–7% rate is not the kind of ‘faster’ growth the country is looking for. It needs to grow at a higher pace, maybe 8% and above, to ensure the kind of jobs growth India needs for its growing youth population and to improve the living conditions of a large portion of the population.
The Survey acknowledges that the export growth India saw between 2002 and 2010 may not materialise in the current decade, given the slowing global economy. Perhaps the report failed to acknowledge that the global economy is missing a China-like booster that was seen in the first decade of the 21st century. The report indicates that the government will continue to try boosting manufacturing through a scheme like PLI and that it believes India missed the manufacturing bus because of the lack of physical and digital infrastructure in the earlier decades. Now that the government has ensured these two have been in place over the past eight years, India is ready to realise the dream of being a manufacturing hub.
The report also sets the agenda for the next round of reforms, focusing on administrative reforms, contract enforcement, and ensuring energy security, education and skills. The Economic Survey report tried to paint a rosy picture of the economy and its outlook, but the fine print indicates otherwise.