By Anjan Roy
While the Economic Survey is optimistic about the future prospects of the Indian economy, it has also underlined several challenges. The first of these is the falling share of the industrial sector in the overall GDP, which needs to be reversed. Survey had pointed out the fall in industry’s share from 28.7% TO 237%. The government should now implement steps for raising the share of industrial sector which have been spelt out by the National manufacturing Council like creation of the national manufacturing zones or expediting process reforms for hastening setting up businesses which were pointed out by the World Bank in its “ease of Doing Business” reports.
This year’s survey is different from other years. For the first time, the Survey has observed the determining importance of social values that enhance the growth potentials of a country, such as honesty, integrity and trustworthiness. The Survey has explicitly observed: “while self-interest is a major driver of economic growth, it is important to recognize that honesty, integrity and trustworthiness constitutes the cement that binds society”. This is to be read in the political context of the recent social movements like the one led by Anna Hazare against corruption and the civil society version of the Lok Pal Bill. Thus, in a way this is the Survey’s endorsement of the social movements for cleaning the Indian polity of the wide-scale prevalence of corruption and misuse of powers.
The Survey thus adds an extra-economic dimension to the growth and development process which also needs to be taken into account.
The core of the Economic Survey this year is the chapter micro foundations of macro-economic policy (chapter 2). This chapter examines in details five issues which it is says are the foundations for macro policies, including the social values and concerns. The other micro issues are: inflation and growth, managing the exchange rate, finance and the relativity of sovereigns, infrastructure finance and fiscal prudence; and lastly, contracts and efficiency. In its policy stance, the Survey takes economic policy making from a science to something akin to moral science in which social norms and behavior determines critically the prosperity of a society. The Survey has revealed its sympathy to economics being an exact science and a social science as being more towards the latter.
This being Professor Kaushik Bau’s last Economic Survey, as he is going to rejoin Cornell this September, his experience of handling economic policy making would surely colour his views about the discipline as a professional economist. Look forward to some interesting books once he leaves government for the academia firmly.