Highlights of Economic Survey 2019-20

Economic Survey 2019-20 has projected economic growth at 6 to 6.5 per cent in fiscal year starting 01 April 2020. It has put current fiscal growth at five per cent and said the fiscal deficit target for current fiscal may need to be relaxed to revive growth. The survey, tabled by Finance Minister Nirmala Sitharaman on 31 January in both the houses of Parliament, called for more reforms for making it easier to do business in country. The Survey said India's target to achieve a five trillion US dollar economy depends on promoting pro-business policies, strengthening the invisible hand of the market and ease of doing business. The survey has given emphasis on entrepreneurship and wealth creation at the grassroots.  It said, about 1.24 lakh new firms were created in 2018, which is an increase of about 80 per cent from about 70,000 in 2014. Talking about creation of jobs and boosting growth, the Survey said, India has unprecedented opportunity to chart a China-like labour-intensive export trajectory. The survey emphasizes on creating jobs and growth by specialization in network products.

• India’s dominance   as   global   economic   power   for   three-fourths   of economic history manifests by design.
• Kautilya’s Arthashastra  postulates  the  role  of  prices  in  an  economy (Spengler, 1971).
• Historically, Indian  economy  relied  on  the  invisible  hand  of  the  market with the support of the hand of trust:
• Invisible hand  of   the  market  reflected  in  openness   in  economic transactions.
• Hand of trust appealed to ethical and philosophical dimensions.
• Post-liberalisation, Indian   economy   supports   both   pillars   of   the economic model advocated in our traditional thinking.
• Survey illustrates   enormous   benefits   accruing   from   enabling   the invisible hand of the market.
• Exponential rise in India’s GDP and GDP per capita post-liberalisation coincides with wealth generation.
• Survey shows  that  the  liberalized  sectors  grew  significantly  faster  than the closed ones.
• Need for  the  hand  of  trust to  complement  the  invisible hand,  illustrated by financial sector performance during 2011-13.
• Survey posits  that  India’s  aspiration  to  become  a  $5  trillion  economy depends critically on:
• Strengthening the invisible hand of the market.
• Supporting it with the hand of trust.
• Strengthening the invisible hand by promoting pro-business policies to:
• Provide equal opportunities for new entrants.
• Enable fair competition and ease doing business.
• Eliminate policies    unnecessarily    undermining    markets    through government intervention.
• Enable trade for job creation.
• Efficiently scale up the banking sector.
• Introducing the idea oftrust as a public good, which gets enhanced with greater use.
• Survey suggests that policies must empower transparency and effective enforcement using data and technology. Entrepreneurship and Wealth Creation at the Grassroots
• Entrepreneurship as  a  strategy  to  fuel  productivity  growth  and  wealth creation.
• India ranks third in number of new firms created, as per the World Bank.
• New firm creation in India increased dramatically since 2014:
• 2 %  cumulative  annual  growth  rate  of  new  firms  in  the formal  sector  during  2014-18, compared  to  3.8  %  during 2006-2014.
• About 24  lakh  new  firms  created  in  2018,  an  increase  of about 80 % from about 70,000 in 2014.
• Survey examines the content and drivers of entrepreneurial activity at the bottom of the administrative pyramid –over 500 districts in India.
• New firm  creation  in  services  is  significantly  higher  than  that  in manufacturing, infrastructure or agriculture.
• Survey notes that grassroots entrepreneurship is not just driven by necessity.
• A 10  percent  increase  in  registration  of  new  firms  in  a  district  yields  a 1.8 % increase in Gross Domestic District Product (GDDP).
• Entrepreneurship at district level has a significant impact on wealth creation at the grassroots.

Birth  of  new  firms  in  India  is  heterogeneous  and  dispersed  across districts and sectors.

• Literacy and   education   in   a   district   foster   local   entrepreneur-ship significantly:
• Impact is most pronounced whenliteracy is above 70 per cent.
• New firm formation is the lowest in eastern India with lowest literacy rate (59.6 % as per 2011 Census).
• Physical infrastructure   quality   in   the   district   influences   new   firm creation significantly.
• Ease of  Doing  Business  and  flexible  labour  regulation  enable  new  firm creation, especially in the manufacturing sector.
• Survey suggest senhancing ease  of  doing  business  and  implementing flexible labour laws can create maximum jobs in districts and thereby in the states.Pro-business versus Pro-markets.
• Survey says  that  India’s  aspiration  of  becoming  a  $5  trillion  economy depends critically on:
• Promoting ‘pro-business’  policy  that  unleashes  the  power of competitive markets to generate wealth.

(PIB)