The Economic Survey 2017-’18, which will be released in Parliament on Monday ahead of the 2018-’19 Budget, will put the spotlight on the rural economy and agriculture, finance ministry officials said.
This indicates that the government is likely to shift its focus to rural development and the farm sector ahead of the next general elections, expected in 2019.
Over the last two years, the Narendra Modi government has been grappling with several manifestations of the country’s agrarian crisis and had to deal with several crashes of farm commodity prices, most recently when the plunge in potato prices in Uttar Pradesh earlier this month. The political fallout of this was evident in Gujarat last month where the Bharatiya Janata Party was given a scare during the Assembly elections as the Congress capitalised on the Patidar agitation, which had its roots in the region’s agrarian problems.
Change in format
Traditionally, the Economic Survey offered the government’s assessment of how the economy had fared in the preceding 12 months by summarising how economic and fiscal trends had played out. It made some projections about how the economy would move in the short and medium term and, at times, offered prescriptive suggestions.
But this structure was changed by the government’s chief economic adviser, Arvind Subramanian, with the survey for 2014-’15. Subramanian divided the document into two. The first volume explored various themes of economic development. The second volume reflected on the state of the economy in the traditional format.
The 2014-’15 survey made a pitch for giving cash to beneficiaries of social welfare schemes instead of material benefits. Subramanian described this as the “JAM trinity”, referring to benefits that would be linked to Jan Dhan bank accounts for the poor, the Aadhaar unique identity scheme and mobile phones. In the three years since, the Modi government has moved slowly along the JAM track, although it has been careful not to convert all social welfare benefits into cash transfers.
That survey also devoted attention to the trouble banks faced from mounting bad loans as well as the slowing investment as large companies became financially unhealthy, a theme Subramanian would return to the next year. It discussed possible strategies for the Make in India programme to encourage indigenous manufacturing, and how the economy could be reinvigorated by increasing investment in the railways. A proposed for establishing a national and integrated market for farm commodities was also mooted.
In 2016-’17, the survey again discussed the investment and banking gridlock, but explored other important themes too. One was providing a Universal Basic Income to all citizens, another was presenting a more favourable opinion about the consequences of demonetisation, which was announced in November 2016. However, the idea of the basic income was put aside by the government rather quickly.
Reassessing priorities
What was absent in these surveys was a clear focus on agriculture, the rural economy and employment. The emphasis on these themes in the survey for 2017-’18 means the government is likely to shift its focus to rural development and agriculture in the remaining period of its term, which ends early next year. In fact, Finance Minister Arun Jaitley recently emphasised that farmers would be the focus of the government.
The first volume of this year’s economic survey, like in previous years, will be a mix of policy advice and academic analysis. It might also provide economic logic for policy decisions the government is likely to announce through the Budget, such as a price support mechanism for farm commodities for which the Centre current provides a minimum support price but does not buy much of.