Survey: Return to realism
The GDP growth numbers it quoted were sobering because, the Economic Survey argued, of the sharp decline in fixed investment. The Survey admitted that, in spite of years of attempting to fix the “twin balance sheet problem” of indebted corporations and overstretched banks, a solution still appeared distant. The Survey also pointed out this was “the second time in a decade” that PSU banks were suffering a bad loan crisis, which highlighted the continuing need for fundamental reforms.
A decentralised approach — allowing and empowering banks to take decisions on stressed loans — appeared to not be working. The Survey said that the time was therefore ripe to look at a “public sector asset rehabilitation agency” that could take decisions that were proving politically intractable otherwise. The agency, the Survey said, would have to be independent, take decisions on a commercial rather than a political basis. Even then, “establishing the market price of distressed loans is difficult and would prove time-consuming”.
On the question of welfare delivery, the Survey took on the contested question of a Universal Basic Income or UBI. It said that the time was ripe for “serious discussion” of the UBI, and calculated that if middle-class subsidies such as subsidies for LPG and aviation fuel and personal income-tax exemptions were abolished, then it could pay for a UBI of ~3,240 a year to all Indian women.
Recognising the fiscal implications of adding a UBI on top of existing welfare schemes, the Survey suggested any pilot of the idea offer UBI “as a choice to beneficiaries of existing programmes” to see what Indian citizens prefer. It warned, however, that working out how the fiscal burden of any UBI would be shared between the Centre and the states could be as complex as the long-running GST negotiations.
Overall, the Survey warned that unless shifts in the vision of development were articulated and embraced, the Indian economy would lose the chance to move to a high-growth trajectory. The time available for this shift was not infinite. The Survey calculated that additional GDP growth due to demographic factors would peak in the 2011-20 period and decline thereafter. The Survey’s basic argument was that, if India is to take advantage of its demographic dividend, and recover from demonetisation, it must move more swiftly.