Finance Minister Nirmala Sitharaman, (Photo: Getty Images)
Every Economic Survey is an assessment of the Union Government’s record of economic policymaking first even as it is pitched as a factual record of the state of the economy. The 2021-22 Economic Survey is no different. The document tries to put forward the government’s perspective. Given the extraordinary conditions that have prevailed for the last two years, there is no reason to disbelieve the message even as there are plenty of questions at hand.
The question at the top of all economic observers of India is that of growth. The Survey gives an air of assurance on this score when it says that “India’s GDP is projected to grow in real terms by 8.0-8.5 per cent in 2022-23.” When compared to the estimated 9.2% growth for 2021-22, this will be a credible performance. But here’s the caveat: In the same breath, the Survey says that, “This projection is based on the assumption that there will be no further debilitating pandemic related economic disruption, monsoon will be normal, withdrawal of global liquidity by major central banks will be broadly orderly, oil prices will be in the range of US$70-$75/barrel, and global supply chain disruptions will steadily ease over the course of the year.” The trouble is that none of these conditions can be said to persist with great confidence, let alone certainty. This injects a great deal of uncertainty in the growth projection for 2022-23.
More interesting is the Survey’s analysis of what can be done to fix another looming problem: Inflation. The list of supply-side interventions (listed on page 194) tick all the right boxes: these include, changing crop production patterns by shifting away from wheat and rice; long term contracts with countries like Myanmar, Malawi and Mozambique for the supply of pulses and; creation of transportation and storage infrastructure for perishable commodities.
This issue is interesting and is linked to agriculture sector reforms that were attempted boldly by the government but had to be taken back in the face of sustained agitation. The section of the Survey that deals with food management (page 258) shows the huge and negative consequences of continuing with a business as usual attitude. Food subsidy jumped to Rs5.41 lakh crore in 2020-21 from just above Rs1 lakh crore in 2019-20. Even if one takes a large part of this jump due to “cleaning up” of messy food accounts, the fact remains that food production—largely wheat and rice—remains a hugely expensive and draining proposition for the government. One can read between the lines in the Survey that it is high time the system was reformed. But that seems to be a forlorn hope after recent events.