Economic Survey 2020-21 Reiterating the old ‘vision’

Written:- By Partha Sarkar

Economic Surverys are mostly valuable for their data sets and policy prescriptions which the government of the day may or may not follow given their political compulsions. It is this ‘vision’ – the narratives set and the jargon peddled that is primarily of interest and broadly show the direction the government wants to take. Lately this has become more important as data sources have multiplied and we may add that data from a government which has played fast and loose with data has become suspect. Being that as it may we give a look at the many issues that the Finance Ministry has concentrated on this year – the year of the pandemic.

The opening bars of this symphony to the credit of the government is a chapter titled – “Saving Lives and Livelihoods Amidst a Once-in-a-Century Crisis”. The irony of the title of the opening chapter cannot be lost on anyone knowing the facts or experiencing the same. The government bumbled its way through the pandemic  and policy prescriptions were treated as gala ‘events’ – the thali-tali ruckus. That a lockdown was announced suddenly and in an unplanned manner without a modicum of support from the government for the poor was brought home to us in the form of the migrants treading back home and the government dealing with it in a most callous manner. It finds no mention! As far as livelihoods were concerned – the government argued in its covid package after package that putting money into the hands of the poor something which governments did the world over was no option. It argued that with supply being affected it would create no appreciable demand. It was held that it would not lead to any appreciable economic activity. That a government which in its economic survey congratulates itself on a ‘humane’ response should be viewing things in this manner shows its right wing credentials of being oblivious to the state of the poor and the privation it had to undergo with the lockdown. Instead it doled out a measly ration to the poor and put an equally meagre amount in the hands of poor women. So its self-congratulatory tone is not only deplorable, it shows the usual self congratulatory attitude of the government amid failures and how it lives in denial – whether it be of the unemployment problem or the slowdown prior to the pandemic or in matters of security.

It is in keeping with this tone of denial that it paints a rosy picture of the economy in the near future. In its covid packages it had come up with policy prescriptions for the medium to long term using the term “apada mein avsar” (opportunity in adversity)! Now at least the economy survey does stress on the need to deal with a fiscal stimulus as a bridge to the glorious future that was being laid down in the form of privatisation , the pro-corporate farm laws and so forth. In the words of the survey – “To ensure that the economy remains in good health to avail the full benefit of these significant reforms, the “economic bridge” to the medium and long-term has to be created. Only an active fiscal policy – one that recognises that the risks from doing too little are much more than the risks from doing too much – can ensure that this “economic bridge” is well laid out. After a period of denial we are led to the belief in the need for a fiscal stimulus to push the economy. Perhaps quite late in the day the wisdom has dawned that the “apda” had to be dealt with before talking of “avsar”. (an ‘avsar’ which will perhaps show some growth skewed heavily in favour of the corporates)

All the same the hubris with which the government says this fiscal stimulus will lead to the return to pre-covid levels in 2 years is doubtful. While the Survey’s projections almost matches the IMF’s at 11/11.5 percent of real GDP growth  in the coming financial year still the rating agency CRISIL shows that growth will not reach pre-covid levels even till 2024 and would be around 12 percent below it. So much for the dream of a 5 trillion dollar economy in new India. After all the government was indulging in hyperbole even then as economists pointed out. The Survey talks of a V-shaped recovery – a quick rebound from the trough of 2020-21 but that puts it into doubt. Anyway there has been no talk of a K-shaped recovery taking place with the upper percentile incomes increasing and bottom ones going down

with job losses and consequent income losses. Instead we find a discussion on inequality and growth which focuses on alleviation of absolute levels of poverty rather than relative ones which would significantly raise the quality of life of the masses. It finally approves of the by now heavily discredited ‘trickle down theory” according to which higher growth leads to significant income increases of the masses. So the preoccupation with growth would remain – K-shaped recovery or whatever. Already nutritional and educational status of the poorer households has suffered as other surveys have brought to our notice.

Instead of tackling inequality upfront the Survey keeps reiterating the jargon and dogma of neo-liberal economics. The survey focuses on so-called bare necessities such as  drinking water accessibility, sanitation, housing etc. and applauds the Jal Jeevan mission, PMAY-G etc. It talks of urban employment as a means of increasing incomes for the rural poor and in a way gives credence to the understanding of the farmers, especially the small and marginal ones that the farm laws against which they are fighting would lead to their ousting from agriculture. It applauds the farm laws and says it would help small and marginal farmers a lot!

The Economic Survey applauds the insurance based health system of Ayushman Bharat though insurance-based health systems are deemed to be both costly and give poor outcomes. It is only a financialisation of the health sector to the detriment of quality public health service. Though investment in health is recommended the onus is given to the states who have been deprived of funds by the present regime . It also seeks to give a fillip to corporate health systems instead of the predominant single-payer system widely prevalent now when most OPD consultations are done in the private sector. It notes that “most well-functioning health systems are structured as oligopolies purchasing from oligopsonys instead of individual consumers purchasing from individual providers”. Corporatisation of the health sector is an ill-advised move which would lead to poor outcomes. To oversee this it proposes setting up of a regulator for the health sector. Regulators are set up when sectors are privatised and they play into the hands of the corporates as our experience in telecom, power etc. have shown.

As the tenor of the recent Economy Survey portends the coming budgets would very likely keep up with the neo-liberal ideas though they have been discredited beginning with the financial crisis of 2008 and more so during the course of the pandemic.

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