Economic Survey 2020 India: "India's aspiration to become a USD 5 trillion economy depends critically on strengthening the invisible hand of markets together with the hand of trust that can support markets," according to the Economic Survey 2019-20, authored by Subramanian.
Economic Survey 2020 India: With corporates complaining of witch-hunt over business decisions, the government’s Chief Economic Adviser Krishnamurthy Subramanian on Friday came out in support of wealth creators saying pro-business policies must lend support to them. He emphasised that the government should take more measures to make it easier to do business in the country. “India’s aspiration to become a USD 5 trillion economy depends critically on strengthening the invisible hand of markets together with the hand of trust that can support markets,” according to the Economic Survey 2019-20, authored by Subramanian.
The invisible hand needs to be strengthened by promoting pro-business policies to provide equal opportunities for new entrants, enable fair competition and ease doing business, eliminate policies that undermine markets through government intervention even where it is not necessary, it said. It must enable trade for job creation and efficiently scale up the banking sector to be proportionate to the size of the Indian economy, it added. Introducing the idea of “trust as a public good that gets enhanced with greater use”, the survey suggests that policies must empower transparency and effective enforcement using data and technology to enhance this public good.
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The survey said the exponential rise in India’s GDP and GDP per capita post liberalisation coincides with wealth generation in the stock market. The sectors that were liberalised grew significantly faster than those that remain closed. Quoting from Tamil book Thirukural– ‘Make money – there is no weapon sharper than it to sever the pride of your foes.’ — the survey said it advocates wealth creation through ethical means.
During much of India’s economic dominance, the economy relied on the invisible hand of the market for wealth creation with the support of the hand of trust. “Specifically, the invisible hand of markets, as reflected in openness in economic transactions, was combined with the hand of trust by appealing to ethical and philosophical dimensions,” it said.
The survey said that wealth created by an entrepreneur helps the country’s common citizens as tax revenues enable government spending on creating public goods and providing welfare benefits to the citizens. It also suggested that the government should promote pro-business policies that provide equal opportunities for new entrants as it strives to become a USD 5 trillion economy.
The survey said that evidence since 1991 shows that enabling the invisible hand of markets(increasing economic openness) has a huge impact in enhancing wealth both in the aggregate and within sectors. Stating that sectors that were liberalised grew significantly faster than those that remain closed, the survey said this is not surprising as the market economy is based on the principle that optimal allocation of resources occurs when citizens are able to exercise free choice in the products or services they want.