Tomorrow’s being an interim Budget, there will be no customary Economic Survey today. The Economic Survey, more than anything else, presents the government’s narrative on the economy. That, however, has not prevented the government from laying down its narrative on the economy ahead of its last Budget before the general elections. The chief economic advisor (CEA)’s office, on Monday, released a document called “Indian Economy: A Review”, which does precisely that even though the CEA has emphasised that it is not to be confused with the Economic Survey (which will come out in July).
What does this document tell us about the Indian economy during the 10 years of the Narendra Modi government? It argues that the period has been marked by important reforms, some incremental, others game-changing, which have brought the Indian economy to the cusp of long-term sustained growth in the ballpark of 7%. Barring geopolitical disruptions, the report says that the Indian economy may reach the $7 trillion GDP mark by 2030 and is well placed to realise the government’s objective of India becoming a developed economy when it completes 100 years of Independence in 2047. The document also argues, in a subtle way, that even though GDP growth rates have been higher in the pre-Modi period, the current performance is qualitatively better as it comes in the backdrop of a slowdown in global growth. At the same time, the document also argues that most international agencies are underestimating India’s growth potential. Much of this is fair.
To be sure, the document is not just a set of assertions. It also celebrates what can be described as the government’s basic economic philosophy. This is best understood as supply-side interventions to boost material and human infrastructure, an expansion of the welfare net to cushion the livelihoods and living standards of the poor and a commitment towards inflation control that extends beyond the realm of monetary policy interventions.
Does all this mean that there are no problems with the Indian economy? Uneven recovery is a major problem for the economy and some of the assertions in the document such as private consumption being robust need to be taken with a pinch of salt. It remains to be seen whether the interim Budget goes with this reality or the narrative that all is fine with the Indian economy.
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