The Economic Survey 2010-11, while gung-ho about the potential for GDP to grow by nine per cent in 2012, qualifies repeatedly that this growth is predicated on various factors, domestic and external, that could put pressure on this growth, if not derail it. The government can ignore these ifs and buts at its own peril and at the risk of social
and political unrest. Inflation, the failure to meet infrastructure targets and shortage of skilled manpower to service a burgeoning economy, on the domestic front, and the still fragile recovery in the developed economies and the new political crises in oil-producing North Africa and West Asia, are the main threats to sustaining the remarkable growth rate in India. This is not to belittle the achievements of the economy on various fronts — from the services sector to the manufacturing sector, exports and employment and social services. Even agriculture has seen a turnaround though this is primarily due to a good monsoon as the bulk of farmers depend on rained crops. It is not a heartening fact that a $1.5-trillion economy has to depend on the rains to keep it ticking. Agriculture creates purchasing power in the hands of rural India, where the vast majority of India still lives, and this enables the growth of industry and manufacturing as these new buyers come into the market. Agriculture is pivotal to a more balanced growth of the economy, but this fact has still to sink into the minds of planners and others who guide our economy on its growth trajectory.
Unfortunately, the Economic Survey has not projected any new ideas or direction, though in the chapter on agriculture it has suggested the need for a second technological revolution that could primarily increase production. This was not in the survey of 2009-10. This is particularly imperative because of the fall in productivity or yield per acre. India has numerous agricultural and crop research institutes, such as the Indian Council of Agricultural Research, 15 state seed corporations, etc. They should be made accountable for coming out with straight line (family-owned) seeds that can be used again and again, which could help farmers increase productivity. This is the need of the hour, and not BT or genetically modified seeds. It has called for the creation of more farms to fork food supply chains that would incentivise farmers with higher prices and simultaneously lower consumer prices. In this context, commerce minister Anand Sharma’s message to foreign giant retailers to build infrastructure like warehousing, cold-storage and food-storage infrastructure before lobbying for permission to set up retail outlets in India is a great idea.
The survey has rightly raised the red flag on the infrastructure sector where targets are lagging seriously behind schedule, particularly in power, roads, ports, new railway lines and doubling of railway lines. It has pointed out that rapid reduction of infrastructure deficit holds the key to competitiveness in an increasingly globalised economic environment. The survey has lauded the increased expenditure on social services as a proportion of total expenditure from 21.1 per cent in 2005-06 to 25.2 per cent in 2010-11. But it said it was necessary to ensure this allocation results in outputs, and outputs in outcome. One has seen how the callous implementation of the remarkable Mahatma Gandhi National Rural Employment Guarantee Scheme by the state governments defeated the purpose of creating lasting assets.
The message from the survey is that India has everything going for her as long as the government tackles weaknesses like inflation, infrastructure and the huge shortage of employable skilled labour that would make the demographic dividend more plausible and profitable.