The Economic Survey confirms the apprehension of many that reforms are on hold and the government is compelled to embrace electoral populism.
NEW DELHI: Politics seems to be getting the better of economics in a repeat of 1993-94, when electoral reverses in the southern states and other political adversities forced the PV Narasimha Rao government to stall reforms and switch over to the “middle path”.
The Economic Survey, tabled in Parliament on Tuesday amidst tumultuous political developments against the UPA government, confirms the apprehension of many that reforms are on hold and the government is compelled to embrace electoral populism.
“We do not expect any major reform push in this year’s budget,” said a report by Goldman Sachs, the global investment agency, which has celebrated India’s economic dynamism in its BRIC report and hailed it as an emerging world economic superpower.
The survey is quiet on policy reforms and eloquent on the need to focus attention of “inclusive growth” and on “improving the effectiveness of government intervention in critical areas, especially in the social sector”.
“What strikes me about this survey is the complete absence of any advocacy for policy reforms unlike in previous surveys,” said economist Bibek Debroy. “It should have focused on the much-needed policies, regardless of whether those are politically expedient.”
Although the link between the Economic Survey and the budget has always been tenuous, there is little to be expected from the budget this year other than, perhaps, stepped up allocations on social sector programmes for health, education, and poverty alleviation, he said.
Goldman Sachs said, “We do not expect the budget to be a forum for any movement on much-needed reforms such as any further privatisation, labour reforms, pension reforms, financial sector reforms to develop the bond and derivative markets, and the removal of foreign direct investment caps in key sectors such as insurance. We do not expect any major changes in the tax system or any substantial reforms in subsidies.”
On the SEZ policy, the survey takes no particular position, merely enumerating the issues involved, such as land acquisition.
The change of track in is best illustrated by what the survey says about the subsidies. “Subsidies are an important fiscal policy tool for correcting market failures, particularly under-consumption of basic essentials such as food.”
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}
)
){kind=small}
){kind=small}
)
)
)
)
)
){kind=small}
){kind=small}
){kind=small}
){kind=small}
){kind=small}