Economic Survey: Key takeaways from CEA's address

Key takeaways from CEA KV Subramanian's presser

After Finance Minister tabled the Economic Survey in the parliament CEA KV Subramanian, the author of the survey, addressed a press conference, wherein he made a presentation about the economic survey. Here are the key takeaways:

1.Focus on private investment: Key takeaway is that investment is a must for an increase in growth. Increase in investment raises productivity and exports, he said during the presentation. Let private investment increase, this will make firms more productive, bringing jobs and increasing exports, making firms able to compete in international markets; this will increase demand and further investment, he added. The survey, on its part, states that pathways for trickle-down opened up during the last five years; and benefits of growth and macroeconomic stability reached the bottom of the pyramid.

2.Focus on growth: Amid the slowdown in the growth, the CEA’s presentation focussed a lot on providing impetus to the growth. We have grown well, but, we need to shift gears, he said during the presentation. “This survey makes a concerted effort to achieve the blueprint laid down by the prime minister. The key theme is shifting gears,” Subramanian said, adding that with this blueprint, we intend to achieve setting the economy on a virtuous cycle. Growth of GDP moderated to 6.8% in 2018-19 from 7.2% in 2017-18. Inflation contained at 3.4% in 2018-19. Non-performing assets, a pain point in the economy, as a percentage of gross advances reduced to 10.1% at end December 2018 from 11.5% at the end of March 2018.

3.Focus on investment: In a bid to boost growth CEA emphasised on the importance of boosting investment. The key takeaway is that investment is a must for an increase in growth. Increase in investment raises productivity and exports, he said. “As the economy started doing better, China started saving and investing more; India needs to learn from this and adopt a virtuous cycle,” he added. Growth in fixed investment picked up from 8.3% in 2016-17 to 9.3% next year and further to 10.0% in 2018-19.

4.Focus on behavioural economics: ‘Beti bachao, beti padhao’ has led to an improvement in sex ratio at birth. We can go from ‘beti bachao, beti padhao’ to badlav (change), CEA said in his presentation. Decisions by real people deviate from impractical robots theorised in classical economics, the survey claims. Behavioral economics provides insights to ‘nudge’ people towards desirable behavior.

5.Focus on demographics: Favourable demographics is a major plus for economic growth, according to Subramanian. In the next two decades, we will be able to avail the benefits of demographic change, which will allow us to grow in a sustained manner at 8%, he added. A sharp slowdown in population growth expected in the next 2 decades. Most of India to enjoy demographic dividend while some states will transition to aging societies by 2030s, according to the survey. National Total Fertility Rate expected to be below replacement rate by 2021. Working-age population to grow by roughly 9.7million per year during 2021-31 and 4.2million per year during 2031-41. Significant decline to be witnessed in elementary school-going children (5-14 age group) over the next two decades.