'Social indicators not improving fast enough'

ECONOMIC SURVEY 2005-06\ COMMENT: Sumant Sinha

It is remarkable that the economy has grown by an average 8% over the last three years. We would be hard-pressed to find another such period in our economic history.

What is even more remarkable is that this growth has not come at the expense of a macro-economic imbalance, that is it is not "borrowed" growth. All the macro-economic indicators are mostly benign.

Unfortunately, most infrastructure indicators such as power generation, coal mining, growth in electricity, gas and water supply are lagging behind.

In addition, our social indicators do not seem to be improving fast enough as reflected in the slow improvement in education and health indicators, as well as by our unchanged position in the human development index.

The Survey talks about the National Rural Employment Guarantee Scheme (NREGS) as being the solution to a number of poverty alleviation issues but adds "if efficiently implemented".

It also talks about a number of other anti-poverty schemes. So we need to wait and see what is the likely additional expenditure to be incurred on the NREGS.

If we are to take advantage of India's "demographic dividend", creating jobs will be critical. The Survey does say that labour reforms therefore will be a critical reform area. Oil pricing is another area that is leading to distortions in the economy and needs to be rectified.

The Survey also highlights the dangers of fiscal slippage as a result of the Sixth Pay Commission. It is silent on subsidies. The key risks to future growth are, however, highlighted.

Another risk area not mentioned is the monsoon and its impact on agri-culture. How much of what has been mentioned here is actually implemented via the upcoming Budget remains to be seen.