New Delhi: The Narendra Modi government’s first Economic Survey tabled in Parliament on Wednesday promised “achche din” for the country at large. After growing below five per cent in last two fiscal, the survey predicted GDP could expand up to 5.9 per cent in 2014-15 and possibly even regain 7-8 per cent growth after two years.
In line with Mr Modi’s pro-industry and pro-reform image, the survey is heavily loaded with the reform agenda and talks of making it easier for industry to do business in India, acceleration of project clearances, simplification of tax policies, an environment of policy certainty and repeal of archaic laws that govern market access.
The survey recommended a revamp of the Centre’s social sector schemes, including the UPA’s flagship NREGA to “prevent its misuse and make it a development-oriented programme, creating tangible and meaningful assets.” Finance minister Arun Jaitley may announce a revamp of NREGA in the Budget on Thursday.
The survey said there is a need to keep the fiscal deficit in check without compromising on capital expenditure and to implement the Goods and Service Tax and a simpler Direct Tax Code.
It said there is a need to step up efforts to further reduce inflation not only to counter the direct macroeconomic consequences, but to provide leeway to the RBI for monetary easing and to counter external challenges effectively.
On subsidies, the Survey recommended that households below the poverty line be identified and that they be given cash, that will result in reduction in poverty at a lower cost than compared with subsidy programmes that exist now.
It said that new biometric identification technologies and payments through mobile phones have created a range of new possibilities on this front.
The Economic Survey suggested farmers should be given the freedom to directly sell their products in the market without depending on middlemen.
Taking a potshot at the Opposition, the survey blamed the UPA’s policies, such as on land acquisition, and delayed environmental clearances, ill-targeted subsidises and lack of quick decisions among the factors which aggravated the economic slowdown. “Part of the slowdown in investment growth post-2007-08 can be attributed to the policy uncertainty emanating from difficulties in land acquisition, delayed environmental clearances, infrastructure bottlenecks, problems in coal linkages and ban on mining in selected areas,” said the survey that was tabled in Parliament by finance minister Arun Jaitley.
It also said employment growth in the NDA government under Atal Behari Vajpayee had been faster than in the 10 years of UPA rule.
The survey said that things will become better on the economic front due to the decline in the current account deficit and the fiscal deficit. It said due to expectations of “change for the better, financial markets have surged”. It added: “Moderation in inflation would help ease the monetary policy stance and revive the confidence of investors, and with the global economy expected to recover moderately, particularly on account of performance in some advanced economies, the economy can look forward to better growth prospects in 2014-15 and beyond.” It said there was need to address domestic structural constraints that engendered an undulating and gradual recovery.
The survey said there was a need to accelerate project clearances and streamline implementation procedures. It said there was a need to revamp the dispute resolution mechanism for commercial disputes, which would lend greater predictability to policy. “An environment of policy certainty, continuity and transparency will help boost business sentiments further,” it spelt out. The survey said CAD should be maintained in the range of 2-2.5 per cent of GDP. “This may turn out to be challenging if non-oil imports revive upon growth revival and oil prices harden. Therefore, policies that help in sustained export growth remain relevant,” the survey said. To harness the demographic dividend, it pointed out that the non-agrarian sector must generate employment.
The survey said sustained and high overall economic growth was possible with the farming sector growing at around 4 per cent per annum. “This requires a boost to investment and productivity in the sector, crop protection and insurance, and a fresh look at policies towards procurement, marketing, transport, storage, and processing,” it said.
The survey said there was a need for shifting subsidy programmes away from price distortions to income support. It said there was a need for polices that boost manufacturing growth.
The survey said the priority of the government should be to revive business sentiments “that could be at the heart of restarting the investment cycle”. The survey made a case for a “reality check” on a large number of free trade pacts implemented by the nation as these were adversely impacting domestic industry. It recommended market-linked pricing to boost domestic oil and gas exploration and production.
