* Focus on that virtuous cycle
At a time when the economy is gripped by a consumption slowdown, the Economic Survey talks about raising the investment rate and the saving rate to lift India to the next level of economic growth.
The Survey pores over the explosive economic growth achieved by China in the last four decades. “China has relied primarily on savings and investment with consumption decreasing significantly as a share of GDP. China remains an investment-driven economy even today with its investment and savings rates reaching about 45% of GDP even in 2017.”
Investment has been termed as a ‘key driver’ of economic activity which perpetuates the virtuous cycle of savings, investment, exports and growth.
“Investment, is the key driver that drives demand, creates capacity, increases labour productivity, introduces new technology, allows creative destruction, and generates jobs.”
For the demand for the excess capacity created, the Survey recommends a renewed focus on pushing up exports.
* The case for a healthy India
The behavioural insights from the Swachh Bharat Mission can be used for laying the foundations of a healthy India. A healthy India means more labour productivity which translates into more savings and more investment.
According to the Survey, the financial savings to the poorest household due to behavioural change induced by Swachh Bharat Mission exceeded the financial costs by 2.4 times.
A UNICEF study found that “on an average, every household in an open defecation free village saved about `50,000 per year on account of financial savings due to lower likelihood of disease from using a toilet and practicing hand washing”.
* Reform the lower judiciary
The pendancy of cases at the lower judiciary level which leads to delay in contract enforcement is hampering India’s further growth on the ease of doing business index. The Survey talks about fixing this gap within the lower judiciary through various means like increasing the working hours, improving the administration of courts and using technology to speed up the clearance in India’s lower judiciary.
* VIP privileges if you are a top taxpayer
The Survey recommends incentivising top tax payers of the country. This includes VIP-like privileges such as expedited boarding privileges at airports, fast-lane privileges on roads and toll booths, special “diplomatic” type lanes at immigration counters, etc.
The Survey suggests that the highest taxpayers over a decade could be recognised by naming important buildings, monuments, roads after them.
This can improve compliance among tax payers.
* A Detroit for EVs in India
The Survey visualises creating a Detroit for EVs in India. The Survey says, “EVs hold enormous potential for India not only because it is environment friendly but also because India can emerge as a hub of manufacturing of EVs generating employment and growth opportunities. It may not be unrealistic to visualise one of the Indian cities emerging as the Detroit of EVs in the future.”
* Double down on reducing policy uncertainty
The message from the Chief Economic Advisor is that the policymakers should double down on their efforts to reduce the scope of any uncertainty in economic policy mnaking as it affects investor sentiment.
The Survey recommends tracking the economic policy uncertainty index a priority for the government.
* Deregulate labour laws
The Survey recommends easing of labour laws to spur job growth. The deregulating labour law restrictions to help create more jobs. “Deregulating labour law restrictions can create significantly more jobs, as seen by the recent changes in Rajasthan when compared to the rest of the states,” the Survey said.
* Infants, not dwarfs, need more care
The Survey says that the government should foster the growth of large firms which employ more than 100 people instead of focusing on smaller firms with less than 100 workers. The rationale is that the share of smaller firms in overall job creation and prodcuctivity is negligible comapred to large firms which account for around 90 per cent of overall productivity and three quarters of job creation.
* Make Behavioural Economics an important pillar of policy making
The Survey takes insights from various government schemes which rely heavily on behavioural change. The voluntary giving up of gas subsidy in order to provide gas connection to poor households encapsulates the impact of behavioural economics. The Survey recommends setting up a “Behavioural Economics” unit in Niti Aayog and a “Behavioural Economics” audit for every government programme.
* Data revolution
The Survey recommends using public data to revolutionise development in the country. Since data is the new oil, the Survey says that data should be made a public good.
Data “of the people, by the people, for the people” must become the mantra for the government, which needs to view data as a “public good” and make necessary investments, Economic Survey said.