Blue-sky visions: on Economic Survey 2018-19
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Meanings are given in Bold
The Economic Survey for 2018-19 reflects the views of its principal author, Chief Economic Adviser (CEA) Krishnamurthy Subramanian. And the CEA has made bold to use the new government’s first economic assessment-cum-agenda setting exercise to posit ( put forward as fact or as a basis for argument ) a range of ideas that he attributes ( regard something as being caused by ) to “blue sky thinking”. From an embrace of a “world that is in constant disequilibrium ( a loss or lack of equilibrium or stability, especially in relation to supply, demand, and prices )”, and the need therefore to adapt to it, to the stress on drawing upon Richard Thaler’s work in the behavioural economics of ‘nudge ( touch or push (something) gently or gradually )’ for addressing issues including gender equality, savings and tax compliance, the survey attempts to reset multiple paradigms ( a typical example or pattern of something; a pattern or model ).
The broad goal is to help drive economic strategy to achieve sustained real GDP growth of 8% so as to enable fulfilment of the government’s grand vision of making India a $5 trillion economy by 2025. For that, the first task is to take stock of the economy’s current state. The CEA is cautiously ( in a way that deliberately avoids potential problems or dangers ) confident that the slump ( fail or decline substantially ; drop ) in investment, which he rightly identifies as the key driver of growth, jobs and demand, has bottomed out. Setting the huge electoral mandate for the government as an enabler that would “push the animal spirits of the economy”, the survey projects real GDP growth to rebound to 7% in 2019-20.
But the CEA doesn’t shy away from flagging ‘consumption’ as being crucial in determining the growth trajectory ( the path followed by a projectile flying or an object moving under the action of given forces ) in the current fiscal year, and in pointing out its vulnerability ( the quality or state of being exposed to the possibility of being attacked or harmed, either physically or emotionally ) to the health of the monsoon-dependent rural economy. With rainfall as on July 3 about 28% less than average and large parts of southern and western India in the grip of a crippling ( causing a person to become unable to walk or move properly ) drought, clearly the circumspection appears well warranted.
On the fiscal front, the survey is even less optimistic ( hopeful and confident about the future ). It lists several challenges to achieving the fiscal deficit target of 3% of GDP by March 2021: the “apprehensions of slowing of growth” and the implications for revenue collections; the shortfall in GST collections and the imperative ( an essential or urgent thing ) that it places on revenue buoyancy ( a high level of activity in an economy or stock market ; growth ; development ) this year; the hunt for resources to fund the expanded PM-KISAN scheme, Ayushmaan Bharat and other government initiatives; and the impact ( have a strong effect on someone or something ) on oil purchase prices due to the U.S. sanctions on import of crude from Iran.
It is, however, on the policy prescriptions front that the CEA comes into his own. Central to the recommendations is the focus on triggering a self-sustaining “virtuous ( ethical ; good ) cycle” of savings, investment and exports. To achieve which, he suggests, presenting data as a ‘public good’, ensuring policy consistency and reducing the cost of capital. Micro, small and medium enterprises must be nourished, especially firms that are most likely to boost both job creation and productivity, and labour laws made flexible. Ultimately, it is the implementation that may well decide how “blue sky” these ideas are.