The survey brings out the adverse impact of the global economic crisis. It admits that the overall growth rate has fallen to 6.7 per cent in 2008-2009. In particular, the fall in agricultural growth rate by 3.3 per cent and that of manufacturing by 5.8 per cent is alarming. It also admits that per capita consumption has seen a sharp decline from 6.9 per cent in 2007-2008 to 1.4 percent in 2008-2009, reflecting a big squeeze in the purchasing power of the people.
But what are the prescriptions? At a time when the world is reverting back to various forms of regulation of the financial sector, the Economic Survey suggests opening up of crucial sectors of the economy to FDI and deregulation of the financial sector in the name of “revisiting economic reforms”. This includes FDI in insurance, banking, defence and even in the sensitive retail trade sector, which will directly hit the livelihood of crores of families. It also proposes to mobilize as much as Rs. 25,000 crores per year from sale of PSU shares. In contrast the Economic Survey fails to make any assessment, leave alone suggest measures to address, the human dimensions of the economic slowdown such as huge job losses, growing unemployment and declining incomes. Clearly the economic policy establishment has failed to draw any lessons form the global financial meltdown.
This becomes even more apparent when the Survey discusses such an important issue as rising prices of essential commodities and food security. It actually proposes a reduction in food subsidy for PDS outlets and introduce the failed system of food coupons. It also suggests further cuts in subsidies for gas cylinders suggesting it should be limited to only six to eight cylinders per family per year.
On the other hand the Survey is generous in its suggestions to give further tax concessions to corporates by doing away with several taxes such as FBT, STT, CTT etc. Thus it wants to shift the focus of revenue mobilization away from tax mobilization to selling off public sector assets. At a time when countries across the world are moving away from fiscal fundamentalism, a completely irrational proposal to introduce a new version of the FRBM Act with a zero fiscal deficit target is also contained in the survey.
Many of the proposals made in the survey, which are inimical to the interests of the people and the country were part of the UPA reform agenda for the last five years, which could be to a certain extent prevented by the interventions of the Left Parties. Any attempt by the UPA Government to revive the discredited neoliberal agenda of subsidy cuts, financial liberalization, disinvestments and privatization would be met with stiff resistance.
