oppn parties The Economic Survey Brings Good News

News Snippets

  • JNU students march against the steep hike in fees, keep HRD minister Ramesh Pokhriyal stuck at the venue of the convocation
  • USFDA says Cytotron, an anti-cancer kit developed by Bengaluru based Rajah Vijay Kumar, is a "breakthrough device" for treating liver, pancreatic and breast cancers
  • Car sales show a minuscule uptrend after declining continuously for 11 months
  • Industrial output contracts by 4.3% in September, the worst decline in 8 years
  • Centre defends abrogation of Article 370 in the Supreme Court, says the power under it was used by the President six times previously
  • Legendary singer Lata Mangeshkar admitted to hospital with lung infection, put on ventilator
  • Shiv Sena MP Arvind Sawant quits as Union Minister
  • National Security Advisor Ajit Doval met the leaders of both Hindus and Muslims in Delhi on Sunday to ensure peace and harmony is maintained after the Ayodhya verdict
  • Tipu Jayanti passes off peacefully in Karnataka
  • 10 dead as Cyclone Bulbul leaves destruction in its wake in West Bengal
  • Shefali Verma breaks Sachin's 30-year old record by scoring an international fifty at 15 years and 285 days
  • Former Chief Election Commissioner T N Seshan dies at 87
  • India beat Bangladesh by 30 runs to win the 3rd T20 and clinch the series 2-1. Deepak Chahar becomes the first Indian to take a hat-trick in T20s and returns the best bowling figures of 6/7
  • Centre removes SPG cover of the Gandhis. However, they will still get Z-category security
  • CJI Ranjan Gogoi will have a meeting with UP chief secretary and DGP of the state in his chamber ahead of the verdict on the Ayodhya land dispute next week
India Commentary wishes all its readers a very Happy Guruparab
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The Economic Survey Brings Good News

By Sunil Garodia

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Writes for a number of publications.
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.