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Thursday, March 15, 2012

Insights from the Economic Survey 2011–12-State of the Indian economy

The newspaper editions of tomorrow and dayafter will be filled with analysis and insights as people try to decipher the numbers and read the tea leaves, for both the Economic Survey and the Union Budget. However, this blogpost aims to capture the nuggets mentioned in the 14 chapters of the budget(which I did read today!), and does not claim to be exhaustive given the huge data overload! Anyways, here goes for Chapter I(normal text is from the survey, italicized text is mine) which can be read at this link http://indiabudget.nic.in/es2011-12/echap-01.pdf
  1. As the Survey said With agriculture and services continuing to perform well, India’s slowdown can be attributed almost entirely to weakening industrial growth. Unsurprisingly, manufacturing and agriculture did poorly, but what is surprising is that despite the perception of welfare state(NREGA etc), the community/social/personal growth has been low at 5.9% vs 12%(FY10)
  2.  Indian services, such as information technology (IT) and financial services,have done very well over the last two decades and the services sector, having been largely outside of the tax net, did not have to interact much with the state machinery and was also less affected by infrastructural handicaps since a lot of services do not need freights and ports. This suggests that the manufacturing and industry can be helped by improving the infrastructure and lessen the need for
    interfacing with administration. While the survey praises the National Manufacturing Policy for doing this, one needs to watch whether this will just be a still born effort like the SEZs
  3. An analysis of the trends during 1980-2011 shows that although lower in HDI ranking, India has
    performed better than most countries in terms of average annual HDI growth rate. This is very interesting, given that HDI rankings mentioned in media are oft followed by a critique! 
  4. Broad-based economic and social development is ultimately the answer for greater environmental
    sustainability. Economic pricing of energy and other resources will be key to switching to a more
    sustainable development path. This is like Maslow's hierarchy where upper needs like sustainability are met only when development happens. Pricing is key to wise usage to avoid the tragedy of the commons among other things

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