A nudge for policy towards economics
Economic Survey illuminates, now to use it.If you look upon the Economic Survey as a guide to policy, the latest iteration may not be the manual you sought. But as a detailed snapshot of the state of various aspects of the Indian economy and possible policy choices, the Survey is a delight. It flaunts its ‘blue sky thinking’ of disequilibrium economics and seeing jobs, growth, investment, savings and exports as being interconnected, rather than elements of separate silos as a paradigm shift. Politicians may be nudged into more ‘economist-think’, which may do a world of good for policymakers usually floundering with meeting targets et al. The Survey’s principal flaw is the failure to prioritise fixing the financial system, which has ceased mediating capital in large volumes to long gestation projects, among policy challenges. Ideally, ideas for filling the void of a missing source of long-term capital should have received priority. But then, this is a government that has made a virtue of non-scheduled policy announcements. So, we remain hopeful.
The Survey breaks new ground in marshalling insights from behavioural economics (see edit below) for possible use in bringing about policy compliance. GoI needs to follow up on this front. Its emphasis on data and data analysis is timely and welcome. However, for it to make effective use of the troves of data in its possession, it must develop the capacity for advanced data analytics and make it widely dispersed within the government system. Further, an effective data law to protect privacy at the individual level, and make data available for training algorithms for developing artificial intelligence (AI), has to be put in place. The Survey is spot on, on the need to overhaul the country’s legal infrastructure, and the need to remove policy disincentives for small enterprises to grow into large ones. The associated challenges of overhauling labour laws receives due attention, that of developing State capacity to enforce the law, not so much.
On energy, while the Survey’s insights are unexceptionable, it glosses over the principal challenge: mustering the political will to stamp out power theft. But, on the whole, it’s a welcome torchlight, to be used to proceed forward.
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