Top quotable quotes from the Economic Survey 2011–12

After Kaushik Basu's reign, the Economic Survey has become a work of art, with its colourful text, diagrams/boxes that would make any consultant proud. However, this year's survey exceeded some earlier heights with so many quotable quotes that I just HAD to write this post. As usual, bold text is my contribution with normal text from the survey.

1. The fire fighting analogy when it comes to the economy, there is always a fire to fight. It is important to realize that if, however, all our time is spent fighting fires, it is likely that, in the long run, there will be more fires to fight because not enough time and effort would have been spent on research and development of non-flammable materials(Chapter II)
2. The implementation focus flawed micro-foundations can devastate the best of macro intentions.(Chapter II)
3. Explaining imprecise science Unlike some branches of economics, such as the theory of auctions, where economics provides hard and usable techniques akin to engineering principles, monetary and fiscal policies are part science and part intuition and common sense.(Chapter II)
4. Where admitting ignorance is bliss-there are domains of economics where even researchers working at the frontline do not have consensus solutions. In such areas, to pronounce with certainty is to display ignorance (Chapter II)
5. The antibiotics analogy to deficits While an expanded deficit can boost consumption and economic growth, this is medicine akin to antibiotics. It is very effective if properly used and in limited doses, but can cause harm if used over a prolonged period (Chapter II)
6. Game-changer is an excessively used term but Aadhaar has the potential for being a game-changer for the Indian economy. (Chapter II)
7. A financial crisis is like an early blockage in the piping system. To start with, we may be oblivious of it, but soon this leads to the taps going dry (Chapter II)
8. In the context of high bank credit and low bond market perse calling for new measures Nations have idiosyncrasies—some grow relying on services, some on industry.Every such special feature should not be an excuse for policy intervention. (Chapter II)
9. The fallacy of market price in PSU dominated sectors-think Coal India In a market where all dominant players are public-sector companies, ‘market price’ is not a very meaningful concept. It is easy for government to control state-owned companies through nods and winks  (Chapter II)
10. Who really benefits from MSP inability of a large number of small and marginal farmers to directly access the agriculture market puts a question mark on increases in MSP actually benefiting such farmers (Chapter VII)
11. Again critiquing the metrics-In a recent ranking of environmental performance (EPI 2012), India was placed 122 out of 132 countries.Like all such rating exercises, this one too has significant data and methodological problems (Chapter XII)
12. On the importance of green development:- converting (depleting) abundant ‘dirty’ coal into clean electricity will represent a valid choice, provided the distribution of such benefits is more skewed towards the energy needs of poorer, unconnected households, and not if it is to meet subsidized energy needs of richer households, whether in urban or rural areas (Chapter XII)

Insights from the Economic Survey 2011–12-Human Development, India & Global 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 13 and 14(normal text is from the survey, bold text is mine) which can be read at these links
http://indiabudget.nic.in/es2011-12/echap-13.pdf
http://indiabudget.nic.in/es2011-12/echap-14.pdf

Chapter XIV is first of its kind, attempting to place India among its global peers-both emerging and developed. A must read,

1. Avoiding the education loan bubble-this is a raging debate abroad and has reached India also, an interesting idea by ICL-the issue is whether this will lead to tax evasion eventually - A recently developed theoretical paper by the Indian Statistical Institute(ISI) deals with the impact of an ICL scheme in India, where the recipents repay the loan as an additional tax to the government, only in the event of success. In that case, when the agents fail, there is a lower bound to which their income can fall. The advantages of ICLs over subsidies and standard mortgage loans include fiscal advantages as they are self-financing; equity as ICLs can be targeted to benefit the poor; outcome orientation instead of outlay orientation of subsidies; and risk reduction for households. The risk borne by government is more than balanced by the positive spillovers from aggregate human capital accumulation, better socio-economic outcomes, and consequent tax base expansion and revenue increases.
2. India lags the BRIC nations in fiscal parameters-even though others are more energy surplus, still this is not a good sign 
3. Tectonic Shifts-When small economic crises crop up repeatedly over a relatively short period of time, policymakers in each country may treat each such episode as an independent event requiring independent action but, in reality, such ‘cluster crises’ may be a sign of some fundamental shift taking place in the global economy. Hence, faced with cluster crises, it is important to occasionally
   step back and take a more holistic view of the situation. There has been some research trying to do precisely that-for example, the skilled end of the labour markets in India and China is competing with its counterparts in industrialized nations and, as a consequence, its salaries are rising, resulting in growing inequality in these countries.

Insights from the Economic Survey 2011–12-Energy, Infrastructure, Communications,Sustainable Development and Climate Change

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 11 and 12 (normal text is from the survey, bold text is mine) which can be read at these links
http://indiabudget.nic.in/es2011-12/echap-11.pdf
http://indiabudget.nic.in/es2011-12/echap-12.pdf 

1. Aviation debt burden:-The airline industry in India suffers from huge debt burden - close to US $ 20 billion (estimated for 2011-12). Half of this debt is aircraft related and the rest is for working capital loans/ payments to airport operators and fuel companies..the working group on Aviation formed in Dec11 recommended..fare structure should be reviewed by airlines so as to cover the
   cost of their operations. The Working Group also decided that an economic regulatory framework may be formulated with regard to excessive/predatory pricing by 31 May 2012.
2. Essence is that Coal India sucks! Also, the remark about pricing policy coming when TCI threatened to sue GOI, is interesting. Coal India Limited (CIL) dominates the domestic coal scenario. Its near monopolistic position has often resulted in supply bottlenecks,delays in development of new coal fields and, i n a d e q u a t e   emp h a s i s   o n   c o s t   r e d u c t i o n s   a t operational levels. Coal pricing is also a crucial issue. CIL being the dominant producer of coal in the country has to adopt pricing policy which is transparent, credible, and based on global norms. There is perhaps need to introduce competition in this sector..the power of e-auction is evident from the facts that  During April-December 2011, CIL offered 39.0 MT and sold 33.5
   MT of coal through e-auction. The average price was 74 per cent above the notified price. Similarly during April-December 2011, SCCL offered and sold 4.1 MT of coal through e-auction, with average sale price being 113 per cent more than the notified price during the same period.
3. Despite land issues etc, private sector still managed to add promised capacity in power but the public sector faltered...
4. Forest cover has been preserved and has grown in past20yrs as per satellite data! . India is one of the few developing countries where forest cover has increased over the last 20 years and continues to increase, although a slight dip is reported in the latest data for 2011
5. Even adjusting for PPP incomes and relative energy abundance, our diesel prices are too low-Other things being equal, countries that export oil (such as the Middle Eastern ones) or are relatively diversified, energy- abundant countries (such as Canada and the United States) can afford to keep domestic prices lower than energy-insecure countries (such as India). The evidence shows that just such a predicted relationship indeed holds. But even accounting for this, diesel prices were already 20 per cent below predicted levels for India in 2010; the divergence has since doubled as global oil prices have surged 45 per cent (from US$ 80/barrel Brent prices in 2010 to US$ 120 currently), while domestic price adjustments have not followed

Insights from the Economic Survey 2011–12-Industry & Services

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 9 and 10 (normal text is from the survey, bold text is mine) which can be read at these links
http://indiabudget.nic.in/es2011-12/echap-09.pdf
http://indiabudget.nic.in/es2011-12/echap-10.pdf

1. Tremendous potential in waste recycling. 
2. Profits obtained by squeezing workers-if we sum up the wages% and profit% , it is nearly constant, and not even interest has so much influence on profits.
3. A holistic view of the infra sector in a single table..note that FY12 is for YTD'Dec11, also that our storage capacity is declining across the years! Either someone goofed up or something is seriously wrong in the sector..