Surveying ideas for India

Economic reforms are not, or not just, about overcoming vested interests; they are increasingly about shared narratives on problems and solutions. Economic Survey builds on this idea

is not a glib mantra, it is India’s unavoidable future. That requires shining the spotlight on the states and on India as a union of them. We discuss themes of convergence of income and health outcomes across states, state finances and mobility of goods and people across states.

We also provide analytical narratives of the performance of those states — the “other Indias”, remote, rich in natural resources and more reliant than others on redistributive transfers — that tend to be crowded out as worthy objects of research and analysis by the successful peninsular states. There are implications for the design of transfers that future finance commissions may wish to draw upon. The chapter on cities points clearly to broadening the dynamism-laden competition between states to encompass the cities: India needs not just competitive federalism but competitive sub-federalism as well.

For the first time, the Economic Survey has embraced Big Data. We mine this data to shed new light on the flow of goods and people within India. With some immodesty, we claim that this Survey produces the first estimate of the flow of goods across states within India, based on analysing transactions-level data provided by the Goods and Services Tax Network (GSTN). We also claim that this Survey furnishes exciting new evidence on the flows of migrants within India, based on detailed origin-destination passenger data provided by the Ministry of Railways and on a new methodology for analysing the census data.

The striking findings are that India’s internal integration is strong, and substantially stronger than conventional wisdom believes. For example, we estimate that eight to nine million Indians migrate for work every year — almost twice as much as current estimates. Similarly, India’s internal trade is as extensive as that in other large countries, puncturing the popular perception of trade being thwarted by a barrier-riddled India.

But these results point to a central paradox: There is ostensibly a free flow of goods, people and capital across India and yet, income and health outcomes are not converging. Across international borders, we see strong evidence of convergence, with poorer, less healthy countries catching up and becoming less poor and more healthy. So, the Indian paradox is doubly confounding: Thicker international borders that are more impervious to the equalising flows of factors of production lead to convergence, but the supposedly porous borders within India perpetuate spatial inequality.

C R Sasikumar The Survey produces new estimates of the effectiveness of targeting of major current programmes, contrasting the wedge between the number of poor in a district and the amount of funding it receives. This leads naturally to a discussion of providing a Universal Basic Income (UBI) that has emerged as a raging new idea both in advanced economies and in India. We discuss this idea as a conversation that the Mahatma might have had with himself, concluding that it merits serious public deliberation.

Last year’s Survey said that it is ideas for India — and for bettering India — that matter, not their provenance or paternity. That is more true this year because we have drawn upon an even more diverse set of authors, within India and abroad, from public and private sectors, from academia and civil society. It is also an honour that this year’s Survey has a contribution from the honourable minister of finance. And this year, we have no fear of the Survey being judged by its cover, which breaks ground with its creative design. This year’s Survey is also different since it has been compiled in just one volume. The detailed review of the year gone by that was covered by the companion volume will now appear later in the year as a standalone document.

There has been a lot of recent discussion on the role and contents of the Economic Survey. What should the Survey aspire to? The answer is clear, offered by arguably the greatest economist, John Maynard Keynes. What he described as the essential ingredients for the master-economist easily extend to those for the master-survey. Paraphrasing Keynes: “It must possess a rare combination of gifts .... It must draw upon mathematics, history, statesmanship, and philosophy — in some degree. It must understand symbols and speak in words. It must contemplate the particular, in terms of the general, and touch abstract and concrete in the same flight of thought. It must study the present in the light of the past for the purposes of the future. No part of man’s nature or his institutions must be entirely outside its regard. It must be purposeful and disinterested in a simultaneous mood, its authors as aloof and incorruptible as artists, yet sometimes as near to earth as politicians.”

Over three years, the Survey has probably fallen short of those lofty standards. But they have been — and must be — the aspiration for this and all Surveys to come.

The author is chief economic adviser to the Government of India THE IMPACT OF a malfunctioning judicial system on critical aspects of the economy is of major concern. A market-based capitalist system can operate efficiently only if judicial processes ensure a fair, effective and speedy disposal of disputes and provide a robust basis for enforcing regulatory compliance and consumer protection. It must be evident to all that the Indian judicial system does not serve these goals.

With a pendency of 59,000 cases in the Supremecourt(sc),overfourmillioninhigh courts (HC) and a mind-boggling 25 million in subordinate courts, the judicial system is virtually dysfunctional: In this state, it simply cannot serve the needs of modern India trying to integrate with the global economy. The enormous pendency engenders corruption and rent-seeking that, at times, even stain the highest levels. The Indian judiciary, if not soon reformed, will become a huge drag on our economic progress.

In the above context, the new chief justice J.S. Khehar would do well to focus on three crucial aspects. One, reduce pendency by rapidly filling vacancies in the high courts. Two, make all judicial appointments, starting with HC judges, as transparent, objective and merit-based as possible. Three, improve the relationship with the executive because it is imperative that various branches work in tandem rather than at loggerheads if India has to progress.

The outgoing chief justice, T.S. Thakur, had made several public statements, some rather emotional, on existing vacancies in HCS and the SC; he implicitly held the government of India (GOI) responsible for this unacceptable situation. But these assertions perhaps do not reconcile with the facts on the ground. First, the number of judges in position has practically remained the same over the years with 648 judges in position in November 2016, as compared to the previous highest of 639 in January 2014 and 630 in January 2010. Second, if the new positions created over the last three years are discounted, the number of HC vacancies in 2016 are lower at 258 than 443 in the previous year — vacancies at present are in fact lower than in any year since 2008. Third, as many as 173 new positions of HC judges have been created between 2014 and 2016 — as compared to a mere 20 between 2009 to 2013.

Apparently, the Modi government, cognisant of the huge backlog, tried to reinforce the judiciary since it took office. Therefore, it can hardly be its objective to thwart appointments to fill existing vacancies. However, it is indeed a pity that positions remain unfilled — the reason seems to be that the GOI and the SC have been unable to reconcile their differences over the modalities of appointing new judges.