Growth with inequality in economic survey

Source: The Hindu

Syllabus: GS – 2 ; Welfare schemes for vulnerable sections of the population by the Centre and States and the performance of these schemes

Synopsis: It looks like the Economic Survey focuses on wealth creation instead of reduction of income disparity.

Introduction

The Economic Survey for 2020-21 reviews the developments in the Indian economy during the current financial year. The important highlights from the economic survey were:

• The economic survey highlighted the policy achievements of the government in handling the economy throughout the pandemic in over 700 pages.
• The survey declares that India established a globally unique model of strategic policy-making in controlling the COVID-19 pandemic. According to the survey, this helped the economy to recover quickly from its harmful impact.
  • The approach used: India used graded public health measures to transform the short-term trade-off between lives and livelihoods. This would save both lives and livelihoods over the longer term.
• India has successfully flattened the curve. Not only that India also managed to avoid the second wave of infections so far. (The second wave of infections can be seen in Europe and the US).

What are the problems in the predictions of the economic survey?

The survey claims that India turned the crisis into an opportunity to strengthen its long-term growth. This is not true because the ongoing farmers’ protest, struggles in small and medium-scale industries and informal sectors portray the impact of the crisis.

• First, the survey is predicting that the economy is presently experiencing a V-shaped recovery. It would allow GDP to grow estimated nominally at 15.4% in 2021-22.
  • In order to achieve this level of growth, retail inflation must be moderated significantly to an average of 4.4% or less over the 12-month period through March 2022.
• Second, the survey predicted the growth considering other factors such as a rapid roll-out of the COVID-19 vaccines and a recovery in demand in the services sector.
• But the economic survey is not able to provide a true calculation of the on-ground economic situation. The survey ignores important factors such as the extent of unemployment (the level of joblessness in rural areas).
  • Massive unemployment resulted in the return of millions of urban casual workers last year during the lockdown.
• Third, growth was prioritised in the survey. Not the inequality in tackling poverty. It is important to tackle poverty because the pandemic has worsened the gap between the rich and the poor.