January 22, 2026

If the Economic Survey is taken as a summary of what happened in the last fiscal and a statement of intent on what is likely to happen in the next, then the 2014-15 version holds out a lot of promise. Although the author, Chief Economic Advisor Arvind Subramaniam, has said that he found the revised GDP figures puzzling and that the Indian economy is still recovering, he has pegged the growth rate in 2015-16 at anywhere between 8.1 to 8.5%.

Falling oil and commodity prices, combined with an inflation that has not been allowed to run away to stagflation, augurs well for the next year. The weather office has predicted a good monsoon, adding tadka to a dish that seems to be cooking well.

Now it is upon the government to usher in reforms on all fronts, provide the investment push in the short run and clear the hurdles for the private sector in the long run. The ES, though, says that the reforms are more likely to be of the mundanely important variety, rather than big bang, in the short run. This is sensible enough. We have too many hurdles in the Indian economy. Big bang reforms are not likely to yield impressive results if these hurdles are not removed. Hence, it is the smaller reforms that should have precedence.

We have a vicious cycle where our PSU banks are in very bad shape. This is mainly due to the fact that nearly 400 huge projects, involving awesome sums of money, have been stalled due to various reasons (Coalgate and environmental clearance being two major stumbling blocks). Banks have loaned money to these projects. They are not getting any interest, let alone the prospect of getting back the principal. Most of these projects are in the private sector and are unlikely to be viable anymore, even if they are cleared expressly. Money has gone down the drain and the government is not in a position to put in such sums in the PSU banks. The Survey recommends that there should be a four-pronged solution for banks: deregulation, differentiation, diversification and disinterring. The Survey also recommends instituting a mechanism for the government to jointly set the monetary policy goal along with the RBI.

The Survey reiterates the need for implementing GST soon and bringing about reform of direct taxes. It calls for minimum exemptions coupled with low rates and says that there should be predictability and simplicity in procedures, things that are always recommended but seldom incorporated as the CBDT mandarins like to confuse both the taxpayers and the minister.

The Budget tomorrow is expected to bring about many of the suggested reforms. Many, especially the impatient corporate sector, will find such reforms to be too little, too late. But the fact remains that rushing in for big reforms before preparing the ground for them by ushering in the smaller, but more vital, reforms would not yield expected results. They have to understand that the Budget is not the only time the government can bring in reforms. The Budget can lay the ground â€" the reforms will come later in the year.

Interestingly, as soon as the Economic Survey was made public, the stock markets started their steep climb, with the Nifty ending the day 1.85% higher and the Sensex 1.65%. Do the markets know something which ordinary folks like us have missed out? Or is it that the markets have factored in the good news of the Budget in advance and will fall tomorrow? Let us wait and watch.