The salient feature about this year’s Economic Survey is the reforms agenda that it has mooted. Ranging from the need for agricultural modernisation to strengthening of the debt market, the Survey has suggested a series of reforms which will catapult India into the 21st century. And the marker of that will be its integration with the global economy. The Survey brings out the policy dimensions and complexities of the management of economic policy in such a situation.
Take, for instance, inflation management. The Survey has suggested supply management within the domestic economy, fine-tuning Indian interest rates with global benchmark interest rates as well as management of funds flows. Overall, India’s policy matrix has become much more complicated and complex than before and the Survey brings out these different facets of India’s policy matrix.
The basic challenge is to sustain growth in the face of inflation, particularly in the context of global food price inflation. The Survey has pointed out agricultural modernisation as one of the critical requirements for meeting this challenge. We also see a thrust on de-bottlenecking land availability, particularly in the urban areas. Today, land prices are soaring and these high valuations add considerably to the business cost. Undertaking reforms that would result in greater supply of land for all purposes is therefore a strong anti-inflationary move and Ficci fully supports such measures.
I am of the firm belief that India’s potential growth rate is much higher than what we are seeing today. We have registered an average annual growth rate of 8.8% over the last four years and can do much better. What we need is another dose of far-reaching structural reforms and de-bottlenecking in different areas of the economy. This year’s Economic Survey has prescribed just that.
Be it allowing private entry into coal mining, decontrolling sugar, fertiliser and drug sectors, raising the foreign direct investment (FDI) cap in insurance sector to 49%, allowing greater foreign equity in retail trade or completing the process of selling 5% to 10% equity in profit-making non-navaratnas, each one of these measures suggests a break from the past and can alter the scenario in the respective sectors. If the government takes up these and other similar policy prescriptions, then we will certainly see some more zing being added to the India growth story.
Another notable feature is the new approach that we see towards FDI.