The Economic Survey of 2020-21 has focussed on the key themes, areas of concern, and lines of action that are relevant to India’s current primary goal of navigating its way out of the Covid-19 pandemic and on to a higher growth trajectory, for restoring its position as one of the world’s leading major economies.
The primary focus is naturally on healthcare, both to improve individual health outcomes for all, as well as to ensure robust and resilient safety nets for communities against the recurrence of similar episodes. The Survey has provided a pointer towards the evolution of national healthcare policy by emphasizing the benefits of enhancing public healthcare spending from the present levels of around 1% of GDP, to around 2.5%-3%; which has the potential to decrease out-of-pocket expenditure for the common man from the presently unsustainable levels of 30% to around 65%. The Survey has gone on to recommend the creation of a regulator for the healthcare sector for ensuring a more sustainable synergy between public and private healthcare provisioning, as also the reduction of information asymmetries that tend to work to the detriment of healthcare beneficiaries. The Survey has also emphasised the need to provide deep focus on augmenting telemedicine reach across the country on the back of recent learnings from the experience of dealing with the Covid-19 pandemic.
The Survey recognizes that containment of the pandemic is the necessary foundation for boosting India’s growth trajectory and goes on to suggest areas of focus for economic revival. On the process front, a key recommendation is to simplify and deregulate the economy, while investing in more sensible and robust supervision and oversight, appropriately leavened by transparency and ex-ante accountability. The Survey also celebrates India’s rise in the global innovation charts, while pointing out that the private sector’s commitment to R&D is sub-par, as well as the need to improve institutional capacity and innovation inputs for ensuring better business sophistication and product quality.
The ramping up of India’s infrastructure stock is currently a vital necessity, not just for enhancing people’s ease of living, but also for incentivising greater inward investment and absorbing a greater proportion of the 12 million young people that are added to the national employability cohort year-on-year.
The agriculture, food management, and rural development sector which has shown resilience to the pandemic has been brought into focus, particularly on the back of the government’s recent efforts to improve farmers’ access to modern markets, ramp up rural marketing infrastructure, as well as to energise producers’ organisations in domains ranging from fish production to dairying.
Given that nearly 60% of the country’s population depends on agriculture and related occupations, imparting vibrancy to these sectors will need to be a central plank of any strategy for boosting national economic growth.
While the Survey shines the spotlight on recent actions taken by government to improve the investment climate and the ease of doing business, as well as the upsurge in foreign investment flows, it also rightly focusses on improving lifestyles and livelihoods for those at the bottom of the pyramid—particularly in terms of what the Survey designates as the ‘bare necessities’—access to water, housing, sanitation, the micro-environment and other facilities. For ensuring equitable growth, the primary emphasis of development strategy naturally needs to be on the overwhelming mass of people working in the unorganised and informal sectors which constitute around 93% of the total workforce.
One of the lasting learnings from this crisis is the need to evolve a more wholesome and sustainable equilibrium with our physical environment, and the Survey reflects this compulsion by emphasizing the primordial importance of the Sustainable Development Goals (SDGs). The Survey hints at the need to mainstream the Environmental, Social and Governance (ESG) approach into enterprises and businesses, as well as government policies and programmes.
The International Monetary Fund’s recent World Economic Outlook of January 2021 has projected India to grow at 11.5% in FY22, making it one of the fastest growing major economies in the world, and the Survey celebrates this note of high optimism for India’s economic prospects. There are widespread expectations that the ensuing national Budget as well as consequential government polices and programmes will take forward some of the seminal themes and concerns that have been highlighted by the Survey.
Views are personal. The author is Partner and Head, Infrastructure, Government and Healthcare, KPMG in India.