How much the world has changed since the Economic Survey last year and the one presented today can be gauged by their respective emphasis. Last year, it had spoken of the march towards a $5-trillion economy. This year, it is merely hoping to get back to the previous year’s level. A recession was inevitable as the Central Government decided to endure short-term pain in order to make long-term gains. The stringent lockdown saved at least one lakh lives and 37 lakh infections. It also gave the medical infrastructure vital breathing space to effectively brace for the pandemic and also to become the world’s first port of call for vaccines.
The survey is hoping for a V-shaped economic recovery. Shorn of all the jargon, the economy will take two years to reach and go past the pre-pandemic level. This, it says, is predicated on a far-sighted policy response. Some of that, such as the farm laws, is already in motion and the Budget will unveil a big part, especially the plan to virtually eviscerate PSUs and hand them over to the private sector, deemed more efficient and enterprising in economic management. Even otherwise, today’s blip in the stock market notwithstanding, corporate India has done well during the pandemic by shedding workforce and doesn’t need special nurturing.
To make up for the loss in revenue, the survey is asking the government to be more relaxed about debt and fiscal spending (counter-cyclical fiscal policy) which in turn can generate public expenditure to create demand and raise consumption. However, the situation is on the razor’s edge. Bad bank loans are set to rise; credit growth has been slow and capital expenditure sluggish. Moreover, hopes of 11 per cent growth are based on heavy and sustained foreign investments. The social unrest due to policy responses and prospects of a double-front war will claim a large share of resources. Add to it the continuing joblessness and, as the Oxfam report showed, the enrichment of billionaires even in a pandemic. The government has a challenge on its hands to ensure that economic growth also remains evenly spread.