ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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More of the Same

The Economic Survey, Volume II is innovative but once again within a narrow reform agenda.

The Economic Survey 2016–17, Volume II was released,unconventionally, much after this year’s union budget. It has succeeded in filling in for the absence so far of asystematic commentary on the state of the economy by official bodies like the Reserve Bank of India (RBI) and the Ministry of Finance, particularly after major events such as demonetisation, the roll-out of the Goods and Services Tax (GST), and agrarian unrest. The volume deploys data transparently to buttressthe analysis and propositions advanced. This transparency islaudable as it enables alternative interpretations. The decision to release data in electronic form is also welcome. However, in many important respects, alternative assessments portray a somewhat disappointing picture of the economy. Evidently, the Economic Survey is inspired by an economic philosophy that does not accommodate distributional goals in the process of designing and executing reforms.

The delineation of the GST structure’s key benefits, hidden or otherwise, is convincing, except for the apparent neglect of the question of the autonomy of state governments. The analysis of inflation, especially since March 2014, is credible. There has been a fundamental shift in the international oil market. Improvements in shale oil and gas technology have affected the market power of the Organization of the Petroleum Exporting Countries (OPEC) that will mean lower and steadier prices for now. Also, the lower prices of renewable energy will constrain energy prices. The other factor in this low-inflation syndrome concerns the decline in domestic food prices. Rationalised minimum support prices (MSP) with effective procurement in high-production, irrigation-intensive states (Punjab, Haryana, Uttar Pradesh (UP) and recently, Madhya Pradesh) are said to have contributed to stability in cereal production. Whether these would be permanent features of food management is a moot question as there have been instances over the last decade and a half when public agencies have had to disgorge food stocks in the open market as the carrying costs of stocks had become too burdensome. For the present, the survey’s assumption that the new approach to food management is showing positive signs seems valid.

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Updated On : 24th Aug, 2017
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