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)