Economists study the present, in the light of the past, for future purposes. But keeping up with this basic Keynesian standard in these non-normal times has become such a challenge that economists were missing estimates with each heartbeat.
But India's Chief Economic Adviser (CEA) Dr V Anantha Nageswaran, perhaps, considered the job of drafting the Economic Survey 2023, as either a daring adventure or nothing at all.
Softly declaring at the outset that the country's economic recovery was complete, he pegged nominal GDP growth of 11 per cent and a real rate of 6.5 per cent for FY24. That's the lowest in three years. But hey, neither the public nor the markets are in the mood for fairytales. And the only respectable way, is to be realistic than being illustrious.
But events, dear boy, can upset even the modest plans. So Nageswaran used an intelligent way to ensure that his numbers don't end up dust and ashes. He backed up the 6.5% baseline projection for FY24 GDP, with a copper-bottomed band of 6-6.8%, though even that's subject to global oil prices staying below $100 per barrel.
Tabled in the Parliament on Tuesday, the Survey, confirmed the pains of a soul-crushing FY23 and how India withstood the extraordinary set of challenges better than most economies. But as the CEA noted, the world continues to battle known unknowns, alongside the Knightian uncertainties (lack of quantifiable knowledge about possible occurrences).
Confirming more than once that the Indian economy has covered the lost ground, he then went on to reveal his own estimates of 6.5-7 per cent growth for the next fiscal. As Nageswaran explained, the stars seems to have aligned for India's disrupted financial cycle and given the potential in physical and digital infrastructure expansion, another 15-100 bps addition was likely to the trend growth.
"We don't have to speak of pandemic recovery anymore, we have to look ahead to the next phase," he asserted.
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With characteristic caution, he said there was no shortage of things to worry about. But the good news is, the global crash seems to be arriving in slow motion and given India's bouncebackability, and the bunch of cheery things that Nageswaran and his team of number-wranglers highlighted confirm that there are indeed six ways to Sunday.
For instance, the double-digit growth in credit offtake, increasing private sector investments in H1, FY23, healthy banks and corporate balance sheets, all perhaps make us believe that the government has got us covered this time. In short, the Eco Survey 2023 sheds an air that smells of all the good things awaiting us and echoes an assuring voice. One that doesn't overtly chide or cheer, but firmly concluding: By George, we've got it!
The key to this confidence lies in the whipstitch of reforms. Critics may dub the Survey's take on reforms as a needless government scorecard ahead of elections, but the fact remains that the lag effect of reforms is yet to yield. Drawing parallels to 1998-2002, the CEA elaborated how, the government then and now pursued reforms in face of the crises. Not all reforms were economic, but included several others like digital public goods, healthcare, physical infrastructure, transparent taxes, and farmers' welfare.
Take banking reforms. During 2005-2012, bank credit grew more than the GDP growth, which led to what Nageswaran called a credit indigestion. "That's now cured and both banks and corporates balance sheets are fit for growth," he observed. In fact, both corporates and banks were rearing to go, not now, but even three years ago, but the pandemic, commodity price shock, synchronised interest rate hikes delayed their restart.
But all this didn't give enough cheer to markets, which were missing the joy drought lately, thanks partly to the ongoing Adani-Hindenburg face off. They remained in a goblin mode for most of Tuesday, but as the contents of the Eco Survey began revealing, both Sensex and Nifty that sobbed in red until afternoon, ended on a sympathetic note by the closing whistle.
Meanwhile, the inflation challenge will be "less stiff" next fiscal, due to the anticipated slowdown in advanced economies. The Survey noted that the RBI's projection of headline inflation at 6.8% this fiscal was neither too high to deter private consumption nor so low as to weaken investments. However, entrenched inflation may prolong the tightening cycle, so borrowing costs may remain high. And for long.
Despite all the focus on GDP, growth is only a means to the end, which is prosperity and well being. So the Survey's chief architect called upon the 'big tent' comprising skill development, electricity, healthcare, food security, drinking water besides others. Given that education and healthcare are the life force of households, he noted that central and state government spending in education increased from 5.3% in FY19 to 7.6% in FY23. Likewise, healthcare spending doubled in the last three years from 2.66% to 5.59%.
As for agriculture, Nageswaran showed how the pick up in private sector investment in overall gross capital formation shot up from 7.5% in FY17 to 9.3% in FY23, thanks to agri reforms including the income support schemes, PM Kisan, agricultural infra fund and others.
Above all, job creation is a critical policy tool, for which the CEA listed down where we stand. Sadly though, his press briefing stopped short of giving any policy prescriptions neither to arrest the high unemployment rate nor to resolve the endless controversies about jobs data.
We are aware that surveys are a report card of the fiscal gone by, but Eco Survey 2023 unflinchingly goes past the brief to laud the government's measures taken in, not one, but the past eight years. From the 2019 corporate tax cuts, to JAM, to removal of plan and non-plan classification to the quality of expenditure to fiscal transparency, it made space for all.
The CEA shortlisted areas that can aid India's growth in the coming decade. These include reforms and enforcement of contracts, dismantling license, inspection and compliances, improving power supply, education, skilling, energy security and creating a vibrant MSME sector. But Nageswaran steered away from listing out measures that the government could have undertaken, but didn't.