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India in ‘sweet spot’, time for big bang reforms: Economic SurveyChief Economic Adviser Arvind Subramanian addresses mediapersons in New Delhi on Friday. Mukesh Aggarwal

India in ‘sweet spot’, time for big bang reforms: Economic Survey

Pegs growth at 8% | Wants renewed investment, rationalised subsidies28 Feb 2015 | 2:47 AM

NEW DELHI: The bar just got higher for the Modi government’s first full Budget on Saturday as the Economic Survey has called for big bang reforms given that the Indian economy is in a “sweet spot”.

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Sanjeev Sharma

Tribune News Service

New Delhi, February 27

The bar just got higher for the Modi government’s first full Budget on Saturday as the Economic Survey has called for big bang reforms given that the Indian economy is in a “sweet spot”.
Citing the political mandate for reform and change, the Economic Survey for 2014-15 presented in Parliament  by Finance Minister Arun Jaitley today projects the economy to grow by over 8 per cent next fiscal with a double-digit growth rate likely in coming years.
Coming a day before the Budget, the survey like in the past has identified the problems plaguing the economy but it remains to be seen if the government can follow through on the tough prescriptions offered in the document.
The survey noted the macro-economy is stable, reforms have been launched, deceleration in growth has ended, the external environment is benign and the challenges to other major economies have made India the cynosure of eager investors.
Buoyed by the reform-oriented outlook, the stock markets rallied by 475 points, the biggest gain since January 15.
The survey indicated that a clear political mandate for reform and a benign external environment now is expected to propel India on to a double-digit trajectory.
Chief Economic Adviser Arvind Subramanian, the author of the survey, was, however, candid to admit that the document is written without the constraints of politics hinting that the Finance Minister will have many more pulls and pressures to contend with in framing the Budget. The survey has focused on two broad themes — creating opportunity and reducing vulnerability — which encompass the key challenge faced by the government to attain the fundamental objective of “wiping every tear from every eye”. Calling for bold steps to leverage the political mandate, the survey has suggested measures that signal a departure from the past to address key problems like ramping up investment, rationalising subsidies, creating a clean tax policy environment and accelerating disinvestment.

It has also highlighted areas such as reforming labour laws, building infrastructure and enabling connectivity to reduce cost of doing business in the country. "Several reforms have been undertaken and more are on the anvil. The introduction of the GST and expanding direct benefit transfers can be game-changers," it added.
The Economic Survey taking into consideration the change of base year by the Central Statistics Office of the National Accounts series from 2004-05 to 2011-12, states that growth at market prices for 2015-16 is expected to be 8.1-to 8.5 per cent. Subramanian pointed out that notwithstanding the new estimates, the balance of evidence and caution counsel in favour of viewing India as a recovering rather than surging economy.
"In the short run, growth will receive a boost from lower oil prices, from likely monetary policy easing facilitated by lower inflation and lower inflationary expectations, and forecast of a normal monsoon," the survey said.
Calling for kick-starting investments, the survey has commented that while private investment must remain the primary engine of long-run growth, public investment, especially in the Railways, will have to play an important role at least in the interim, to revive growth and to deepen physical connectivity. What the previous NDA government did for roads, the present government can do for railways, it said.

 

Major observations

  • Implementation of Goods and Services Tax (GST) and other tax reforms will boost GDP, exports
  • Reforms in Indian Railways’ structure, commercial practices and technology
  • Need for balance between ‘Make in India’ and ‘Skilling India’. Rural penetration of IT services to drive the Make in India mission
  • JAM Trinity — ‘Jan Dhan Yojana’, ‘Aadhaar’, ‘Mobile’ — to help transfer of funds to poor without leakage
  • 4Ds — Deregulation, Differentiation, Diversification,      Disinter (better bankruptcy laws) — to boost the banking sector
  • Eliminate exemptions in countervailing duties (CVD) and special additional duties on imports to prop up domestic industry
  • Create National Common Market for agricultural commodities
  • Revive public investment to improve investment climate
  • Liberalise FDI in retail to bridge investment and infrastructure deficits

 

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Towards a single market

Economic Survey rules out big-bang reforms


Militarising for future

The approach is right but no clarity on costs

Words that are put forth

CITY FOCUS

‘VIP raj’ soars to a new high at city airport

‘VIP raj’ soars to a new high at city airport

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NoThe accused being produced in a Patiala court on Friday. Tribune photo: Rajesh Sachar

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Can’t push Centre to implement Swaminathan report: Dhankar

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British PM vows to hunt down ‘Jihadi John’

British PM vows to hunt down ‘Jihadi John’

28 Feb 2015 | 1:43 AM

LONDON: British Prime Minister David Cameron vowed on Friday to use all means at his disposal to hunt down militants such as “Jihadi John” after the killer was unmasked as a Kuwaiti-born computer programming graduate from London.

Skill development key for Make in India objective, says report

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28 Feb 2015 | 12:56 AM

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NoSouth Africa’s AB de Villiers hits a boundary during their World Cup match against West Indies in Sydney on Friday. REUTERS

Amazing Batsman

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It all comes down to hard work for AB

28 Feb 2015 | 2:46 AM

 SYDNEY: AB de Villiers smashed West Indies bowlers from pillar to post for the quickest 150 in ODIs on Friday but the South African skipper said only hard work earns a batsman the right to dominate in such a fashion.

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Against India, UAE hoping against hope

28 Feb 2015 | 2:46 AM

 “My boys are amateurs and semi-professionals,” says Aaqib Javed, the United Arab Emirates (UAE) coach.

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