The economic survey for 2019-20 is giving a lot of positive signs to the contrary, which is a general perception about the country’s economy. The special point of this economic survey is that it shows the confidence of the government about the economy. At the same time, this survey also gives a framework to further increase this confidence. Due to this, the government has set the expectation that the growth rate in the next financial year will be between six to six and a half percent. However, for the current financial year, it has currently accepted the same growth rate as given by the Central Statistical Organization.
If we go into the detail of the data, there are many indications that the estimate of five percent growth in the current financial year can be improved later. The way electricity consumption figures are available now, they indicate that this electricity can be used to increase productivity, which is currently not recorded in the growth rate figures. As such, informal sector figures make their presence felt much later. Apart from this, employment statistics are also saying that the picture is changing. The number of new accounts of provident funds in the organized sector has been opened so far during this year, it shows that the situation in the employment sector is not that bad. We can see similar signs in the data of money supply.
Another figure that needs to be paid attention to is the savings amount deposited in banks. It states that people who have money are also not spending for some reason, and they want to keep that money deposited in banks for the time being. When we look at the GDP figures, we find that the biggest shortfall has come in the manufacturing and construction-industry sectors. Similarly, if we look at the home-building industry, many projects are still stuck, and new projects are not getting started very much. People in this area see a risk and do not want to invest soon to buy a house.
Similarly, the automobile industry is also seeing another type of crisis. The industry is moving from BS-4 standard to BS-6 standard. More vehicles of BS-6 standard are not available in the market right now, so instead of buying the old model, buyers are preferring to deposit money in banks. This means that within a month or two, when new models start to hit the market, these customers will also go out of their homes to shop. Similarly, if the government managed to end the crisis of trapped projects in the real estate market and the confidence of the home buyers in this market once again, then the growth rate here may be back on track. It is also important to pay attention to the stuck construction projects because the amount of money is stuck in them on a large scale. And then ultimately the expenditure incurred by the people will only offset the current economic slowdown.
This time the Economic Survey also shows concern about two things. One is what we call ‘crony capitalism’. This is particularly the case of the bank’s trapped debt, which has been said that if the money was invested in productivity, the economy would have been much better. The second concern is also related to this to some extent, which is about the stress of the financial sector. The government also wants to create an index so that accurate assessment of the health of the financial sector can also be done regularly. Seriousness about this index is very important. Along with this, it is also important that the regulation of this area be given serious attention. Regulation itself will build confidence in the financial sector.
The model that the Economic Survey talks about for the next ladder of development is actually China’s model. That is, export based development. It can happen, but it will depend on many things. The biggest among them is the economic condition of the world. This is an important factor in the increase and decrease of exports. Furthermore, it also depends on what is the quality of our products? How much are we investing on research and development of products?
Obviously, for this, we have to pay special attention to education, skill development and training, etc. With this, another most important thing is to increase production capacities, for which we have to pay special attention to our infrastructure. Infrastructure is among the ten things that have been most emphasized in the Economic Survey. It is already being said that the government will have to focus more on starting various infrastructure projects this time than the financial deficit. Apparently, the entire matter is now referred to Finance Minister Nirmala Sitharaman. From her budget presented in Parliament today, it will be known how she uses the signals from the Economic Survey.