Tuesday, August 5, 2014

Today's Editorial 05 August 2014

                      A bigger role for Economic Survey
Source: By Renu Kohli: The Financial Express
Each year, the government tables the Economic Survey for the year gone by. This comes a day before the presentation of the new financial year’s budget in Parliament. The Survey, a comprehensive sector-wise assessment of the economy, lists out major issues and priorities confronting the government with proposals for change. The shelf-life of the Survey, or the interest it generates is, however, just a few hours; rather disproportionate to either its range or volume, or for that matter, the resources invested in it. This is because the Survey quickly gets eclipsed by a major event, the forthcoming year’s budget, which follows so closely on its heels. The timing alone, therefore, leaves the document to the fate of a parliamentary ritual with which the government is duty-bound to comply.

Why should the report be met with such a fate? Is timing the real issue, or as many would argue, its content? Whatever may be the case, the poor correlation between what the Survey says with the content of the following budget indicates the document has little sway over policy in its present form and location. The publication of the Economic Survey, it seems, has become an exercise in parallel rather than being complementary to budgetary proposals.

If parliamentary compliance is a must, can the report then be reduced to a brief summary of macroeconomic and sectoral developments? That this voluminous document has such a short lifespan and zilch influence surely calls for rethinking if the endeavour is entirely superfluous or if it could be better-utilised? Can a new role be found for the Economic Survey, putting its ideas and solutions on the matters it prioritises to the worthwhile benefit of the polity at large? This column explores such a function.

Over the years, different Economic Surveys of the government have talked about policy issues in various dimensions. Yet, a very few of its contents have actually figured meaningfully in the debates in Parliament; the latter is solely centred upon the budget that appears the very next day. The media too forgets the Survey after reproducing it the next day, hence generating little response or discussion. The current pattern therefore makes the report’s publication a rather redundant exercise; one that serves no useful function.

Perhaps it could then be pared down to the bare essential: A macroeconomic assessment, which is geared to the macroeconomic framework underpinning the budget and upon which the fiscal policy for the next year is predicated. In such a remodeling, the Economic Survey would somewhat resemble RBI’s macroeconomic developments document on which hinges the formulation of monetary policy.

Another suggestion is to re-tailor the Economic Survey’s role and gear it towards generating political debate and discussion on contemplated policy changes or directions. The eventual goal of such a restructuring would be to forge a political consensus in these regard; the changes, including those requiring legislation, would then feature in the forthcoming budget. But this requires distancing the Economic Survey from the budget so as to provide ample space and time for Parliamentary discourse. Thus, the report could possibly be published with, say, a two-month lead vis-à-vis the budget. The Survey would then acquire relevance insofar as its proposals would be debated at length in Parliament; they would arguably reflect in the budget next, giving fiscal policy a valid direction; and there would be lesser surprise and uncertainty overall simply because contentious matters would have been resolved, minimising reversibility risks or alternately, these wouldn’t carry through to the budget.

Consider for example, any foreign direct investment (FDI) proposal; whether a first-time deregulation, further relaxation of limit, or any other tweak to existing legislation. Several such initiatives have often eluded political consensus in the past; indeed, sometimes these have been frozen for long periods of time. A cogent, intellectual articulation of any such reform, with empirically quantified gains and losses supporting the utility or urgency of reform is something the Economic Survey ought to undertake and capably execute. A demonstrated exercise on these lines would form a substantive base for Parliament discussion and debate. The government of the day as well as the opposition could then argue at length on either side of the proposals, offering their own suggestions or counterpoints to further enrich the quality of public policy formulation.

A broader political participation will also force greater responsibility upon the government and its bureaucracy as well as the opposition parties. In the former case, the onus would be upon the Survey to argue and demonstrate its case, uplifting it from its current tendency towards academic, textbook-solution orientation to a more applied, hands-on policy prescription that is more solidly rooted in political economy, making it more valid a document than at present; government ownership would increase too from the strengthened linkages between economics and politics. On its part, the opposition will have to respond in equal measure to well-reasoned public policy arguments with academic underpinnings, forcing greater care and responsibility when opposing or suggesting reform.

By far, the most valuable contribution would be better information and analytical insights, essential inputs to quality discussions on issues, especially those that have become obstruction points in the process of growth: Matters like coal privatisation, land acquisition, mining, environment, forests and tribal concerns especially come to mind in this regard; these are changes that involve balancing interests of multiple stakeholders, managing conflicts between new, formal institutions that are to be designed for markets to function better vis-à-vis existing informal ones. Such matters have found rather superficial and insufficient space in political discourse in the past; solutions or policy choices have often not found political or local acceptance, sometimes even sparking conflicts; while the polity as a whole has been rather negligent of collective exploration of paths to enhance the country’s growth potential. With the Economic Survey transforming into a fount of substance on vital economic issues, its influence would well ripple beyond Parliament—on to various media spaces, for instance, paving the way for more informed discussion and responses at large. Last, but not the least, with a transparent, structured discussion initiated by the Survey in Parliament, there would be clearer assignment of obstructive political pressure points too!

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