Economic Survey 2010-11 is bulkier than last year’s survey with over 450 pages. Chief Economic Advisor Kaushik Basu has tried to offer something more. In an interview, Basu says how he tried to do things differently. Excerpts:
How is this Economic Survey different from previous years’ surveys?
The broad format is the same. It would be unfair to users to alter that and have them scrambling for information in unusual places. But there is a lot of new stuff. We have a brand new chapter on services. We also have plenty of new material on climate change and environment. And, we report on a serious research done in the ministry on the economic ranking of governments — in contrast to people or even nations. This can be useful in deciding how much say which government should have at international fora. These are just a sampler. There is much more that is new but I will leave it to you to discover by reading the survey.
What was the thinking behind having a new chapter on services?
We thought it was high time to celebrate India’s phenomenal success in services by having a separate chapter on the services sector. Data on this are not always easy to find, but we hope that the very appearance of the chapter will spur on the generation of data.
The mid-year analysis projected gross domestic product (GDP) growth at 8.75 per cent. But recent forecasts say it will be 8.6 per cent.
That is not bad forecasting, is it? Also recall that the 8.6 per cent figure is merely an estimate and may well be different when all the dust settles. And who knows our forecast may yet come exactly right.
What should be the monetary policy stance, given the concerns on falling industrial growth?
I should point out that our IIP performance was poor in November. The seeming low growth in December, however, should not mislead us. Unlike in November, this was driven largely by the base effect. The index performed well on its own. We have over the year seen a remarkably talented handling of monetary policy by the Reserve Bank of India. It has enabled us to bring the inflation rate down while not hurting growth. What happens in the future will depend on the IIP performance but also on where inflation settles at the end of this financial year.
With crude oil prices rising, what would be prescribe?
When international crude prices rise, we really have little choice. Either consumers will have to take it in the form of higher prices or we finance this with subsidies, in which case the general inflation will rise. We have, of course, given this a lot of thought but can talk about it when the time comes; and hope that the time won’t come.