If Surveys were policy

Every year, the finance minister presents the pre-budget Economic Survey to Parliament on the day before the Budget. In years past, one source of value to this document was that it provided the most up-to-date data on the various subjects it addressed; now, that function is almost entirely redundant. In the last few weeks, the government has already released advance estimates for GDP growth for the current year, which earlier used to be released on March 31; an assessment of the balance of payments scenario by the Economic Advisory Council; and the Reserve Bank of India's quarterly assessment of the economy. The finance ministry itself has started publishing a mid-year review of the economy, which in format is a mini-version of the Survey. So, what the Survey has to say does not come as anything new. What it does is to validate the generally positive assessments of the other institutions, so that one can take some comfort in knowing that the Budget is going to be based on relatively buoyant assumptions. But, is there more to the Survey than this?

Unlike the Budget itself, this is a document by and of the finance ministry and reflects the thinking and priorities of the minister and his key advisers. But past experience has shown that the policy exhortations in the Survey are not a guide to what the Budget will contain. Nevertheless, over the years when the reform process was perceived to have been held hostage by endless political wrangling, the Survey provided annual reassurance that the finance ministry had not lost sight of the reform agenda. This function has become more important in the current coalition context, because of the numerous cross-currents on economic policy that the alliance partners have generated. Even if it amounts to little more than wishful thinking, there is some value in knowing that in government after government, the finance ministry sustains its championship of reforms.

In this Survey, three issues stand out on the ministry's list of priorities. One is the relatively detailed reference to India's "demographic dividend" ""the huge increase in the proportion of young people in the working age. This is obvious even to the casual observer and has major implications for both the government and the private sector. While the Survey emphasises this dividend as a major driver of an accelerating growth rate, just as it has been in other countries over the decades, it is rather lukewarm on what is required to put this enormous resource to productive use. Efficient labour markets will be critical, but labour market reforms warrant only a passing mention. Perhaps reformist aspirations had to yield to political realism.

The major focus of the priorities statement is infrastructure""power shortages are discussed in detail. For the hopeful, this may be a sign of major initiatives on power sector reform. The way forward has been debated at length, including the kinds of inducements that the Centre can use to gain co-operation from the states. On this single platform may stand a path-breaking Budget. The other issue, which finds pointed discussion, is the pricing of petroleum products. The Rangarajan Committee's recommendations, which broadly call for rationalisation of the duty structure and the elimination of subsidies on LPG and kerosene consumed by those above the poverty line, appear to have the endorsement of the finance ministry. We will know shortly if this carries any weight with the rest of the Cabinet.