Lavender Economic Survey says growth has bottomed out, pegs GDP for FY21 at 6-6.5%

The pre-Budget Survey said for wealth to be distributed, it first has to be created and called for looking at wealth creators with respect.

The Economic Survey released on Friday has projected economic growth will rebound and hit 6%-6.5% in the next financial year starting April 1, saying growth has bottomed out.

The Survey printed in lavender colour suggested counter-cyclical measures including relaxing fiscal deficit. To clarify, counter-cyclical measures during an economic slowdown include increasing government spending and tax cuts. 

The 6%-6.5% growth expected in 2020-21 is in comparison to a projected 5% expansion in 2019-20.

Weak global growth impacting India as well as an investment slowdown had led to growth dropping to a decade low in the current fiscal, the Survey put together by Chief Economic Advisor KV Subramanian noted, adding the 5 per cent growth projected for 2019-20 is the lowest it could fall for now.

Like it was mentioned earlier, the Survey this year has been printed in lavender colour  - the same colour as that of the new 100-rupee currency note, the oldest circulating currency note in the country.

Some of the highlights

Respect wealth creators

The pre-Budget Survey said for wealth to be distributed, it first has to be created and called for looking at wealth creators with respect.

Onion economics have failed

It said government interventions seem to be ineffective in stabilising prices of commodities such as onions.

Time to 'Assemble in India for the world'

For boosting growth, it called for new ideas for manufacturing such as 'assemble in India for the world' which will create jobs.
 
To further make it easier to do business, the Survey called for removing the red tape at ports to promote exports as well as measures for easing the start of business, register property, pay taxes and enforcing contracts.

It also called for improving governance in public sector banks and the need for more disclosure of information to build trust.

In all, the Economic Survey advocates 10 new ideas that benefit markets as well as the economy. According to the back-to-the-basics Survey, these were:

* The idea that wealth creation benefits all

* There Survey placed an emphasis on stock markets, underlining that markets enable wealth creation

* Cronyism is a no-no, according to the Survey that showed how returns of connected "companies" have fallen in recent years

* The Survey emphasises the importance of encouraging grassroot entrepreneurs to create wealth

* Stresses that pro-business policies give equal opportunity

* Calls for ending 'anachronistic' government interventions, like needless attempts to stabilise onion prices when they shoot up

* Says a manufacturing push through "Assemble in India for the world" can generate four crore jobs by 2025 and eight crore jobs by 2030

* The Chief Economic advisor also notes that India continues to lag in ease of starting a business, registering property, payment of taxes and in enforcing contracts. 

It takes 18 days and 10 cumbersome procedures to set up a business, the Survey noted, and 45 documents for a restaurant in Delhi to obtain a license.

In contrast, a gun can be bought with just 19 documents.

It also cited the example of New Zealand where it takes only half a day and a single form to set up a business.

* The struggling bank sector was not missed. The Survey stressed the need to scale it up, noting that India ranked rather lowly in the list of countries with banks featuring in top 100.

* Thalinomics to drive home the "improved welfare of the common person"

The Chief Economic Advisor ended his survey with thalinomics. "Using the annual earnings of an average industrial worker, we find that affordability of vegetarian Thalis improved 29 per cent from 2006-07 to 2019-20 while that for nonvegetarian Thalis improved by 18 per cent," he stated. Agree?