Economic Survey to focus on four reforms

How to reduce cost of land, labour and capital to tackle a sharp slowdown in investment will be a key prescription of this year’s Economic Survey to be presented in Parliament on July 4, a day ahead of the Union Budget for 2019-20.

The survey — the first to be authored by Chief Economic Advisor Krishnamurthy Subramanian — is also expected to suggest technological reforms in banking space that uses data and analytics to screen borrowers and monitor them on a real-time basis.

A source close to the development told DH that land, labour, capital reforms aided by robust banking and financial system will unleash second generation reforms in the next five years of Prime Minister Narendra Modi government.

“On land reforms, we need to look at the compensation part. The cost of money for businesses is equally important. Half of the investment woes are over once you fix these two,” he said.

“Why does an ‘AAA’-rated borrower pay lower interest on the money he borrows than a ‘BBB’-rated borrower? It is because the probability of default is much lower with AAA-rated borrower. So, we have to fix the problem of default. Introducing technology to banking reforms will solve that,” the source said.

According to him, these four reforms will be quite like the JAM (Jandhan, Aadhaar and mobile) Trinity of 2014-15 which ushered in a data revolution in the country and helped reduce leakages in social sector subsidy schemes. The then CEA Arvind Subramanian had introduced JAM Trinity in his Economic Survey of 2014-15, which helped change the financial landscape of India, bringing the poor into the digital mainstream.

A flagship annual document of the finance ministry, the Economic Survey often provides policy perspective to the Union Budget after reviewing the state of economy in the past 12 months. It serves as a policy guide to the government.

The survey is likely to suggest the government on creation of land banks and digitisation of land records. The other focus areas will be rapid improvement of sectors such as manufacturing, which has a significant contribution in creating jobs.

Subramanian's first Economic Survey comes at a time when India's economic growth fell to 5.8% in January-March quarter of 2018-19, its slowest pace in the past five years, while unemployment rose to a 45-year high of 6.1%.

Measures will also be suggested on tackling agrarian distress and slowing demand and consumption in rural India.