×
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

Economic Survey: Too optimistic in a time of uncertainties

Economic Survey should have highlighted difficulties
Last Updated 31 January 2022, 20:18 IST

The Economic Survey 2021-22, presented to Parliament on Monday, offers a rather rosy picture of the Indian economy. Economic growth is projected at 8-8.5% for the coming fiscal, signalling in the headline that the nation is almost out of the woes of the past two years when the pandemic has brought untold misery on the common citizens. The Survey tells us that the GDP may have moved to a slightly higher level than that seen pre-pandemic. With the third wave waning, India should settle in for some all-round uptick. This should be good news. Except that it is too good to be playing out exactly as the Survey or the government might want us to believe.

Consider the point that a “strong rebound” in revenues in April-November 2021 means that the government has the fiscal space to comfortably meet its targets for the year while maintaining fiscal stimulus with higher capital expenditure. This is a broad brush on a short-term change that shows revenue growth on a low base. It may not be easily extrapolated to a reading of long-term good health of the economy. As it is, the nation is confronted with persistent high inflation that has stayed above the mandated average of 4% for a long time now. This comes at a time when inflation across the globe is rising and brings with it the threat of imported inflation and the complexities of managing that in an economy that has already been suffering. There is also much talk about high-frequency indicators in the Survey, some examples being tractor, auto and car sales, e-way bill generation, Nifty/Sensex, and the like. But these could be more in the nature of highly volatile indicators that can give a snapshot of the immediate mood. They do not give any assurances on a longer-term perspective on growth. It is good to measure them for the present. It is difficult to draw conclusions on the direction of the economy based on them.

The optimistic readings come at a complex time with a host of uncertainties, as the Survey has itself pointed out – further debilitating pandemic-related economic disruption, the state of the monsoon, withdrawal of global liquidity by major central banks, oil prices staying in the range of $70-75/bbl, and global supply chain disruptions. In sum, the Survey reflects the voice of a government that has been quick to claim credit, make the right noises, and present a picture of achievement, when a more conservative approach might be useful and required. When driving on a difficult road, it is better and safer to look out for, even highlight, the roadblocks and the red flags and the slippery paths.

ADVERTISEMENT
(Published 31 January 2022, 19:01 IST)

Follow us on

ADVERTISEMENT
ADVERTISEMENT