Survey Throws Up Political Challenge
Its sensible ideas demand strong political will
The Economic Survey is evolving from its past avatar as a narration of what has been and a wild stab at what ought to be into a lively discussion of policy . This is welcome. There is a downside, however: it bears the imprint of one man, the chief economic adviser, rather than of institutional consensus. It will take strong administrative and political leadership for the vision emanating from one location to guide the conduct of the entire government. Provided the vision enjoys buy-in from the political leadership, in the first place.The Economic Survey is upbeat, inevitably , on growth sans inflation and raising public investment without wide departure from the accepted path of fiscal discipline.It strikes new ground in focusing on the budgetary bounty routinely paid to the well-off, suggesting a way for the government to prune spending without pain for the poor.If the government does slash subsidies for the rich on gold, savings, air travel, rail travel, cooking gas, kerosene and electricity , it would both enhance fiscal space and defy the label of champion of the sui ted and booted. As would focus on re juvenating the rural economy . The su ggestion to extend direct cash trans fers using Aadhaar to fertiliser subsi dy and other government benefits wo uld also call for a huge amount of poli tical capital. Marshalling the well-understood metaphor of Chakravyuha -the battle formation you can enter but not exit -to discuss the urgent need for an exit policy is simply brilliant. The caution on engaging the World Trade Organisation with greater reciprocity is well taken.
While the Survey is quite clear about the need for India to adopt a goods and services tax (GST), it is welcome that it does not make the GST the basis for better tax collections in the near future -the political consensus on the tax remains as amorphous as ever. While discussing India's fiscal capacity, the Survey could have taken into account India's developed information technology capability , out of line with other countries with a similar per-capita income. But it is welcome that the Survey points out that a more gradual fiscal consolidation will do no harm.
While the Survey is quite clear about the need for India to adopt a goods and services tax (GST), it is welcome that it does not make the GST the basis for better tax collections in the near future -the political consensus on the tax remains as amorphous as ever. While discussing India's fiscal capacity, the Survey could have taken into account India's developed information technology capability , out of line with other countries with a similar per-capita income. But it is welcome that the Survey points out that a more gradual fiscal consolidation will do no harm.
Source: Economic Times, 27-02-2015
