Blue-sky visions (Economic Survey gives ideas, implementation is another thing)

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 Blue-sky visions (Economic Survey gives ideas, implementation is another thing)

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• Blue-sky thinking : The Chief Economic Advisor (CEA) Krishnamurthy Subramanian has tried to bring "blue-sky thinking" in the Economic Survey for 2018-19. He wants India to embrace a "world that is in constant disequilibrium" and to adapt to it.
• Richard Thaler's work : The CEA refers to Thaler's work in behavioural economics that asked for a "nudge" to address big issues like gender equality, tax compliance, savings etc. This is new.
• A sustained growth rate of 8% : The idea is to try to get an 8% growth rate so that India can ultimately become a $5 trillion economy by 2025. And that begins by assessing where India stands today.
• Confidence that the worst is behind : The CEA assumes that we have hit rock-bottom in investments. That is the main driver for jobs and demand, and from here, it can only improve. The huge mandate for BJP means it can actually do things that "push the animal spirits of the economy". 
• 2019-20 prospects : The growth rate will be 7%, but consumption will be crucial for it, and rural economy is not doing well especially due to monsoon problems. (Large parts of Western and Southern India are reeling under a drought)
• Fiscal challenges : The target of 3% FD by 2021 is tough to achieve.

1. Slow growth will mean poor revenue collections
2. Shortfall in GST collections and poor revenue buoyancy in 2019-20
3. Resources needed for PM-KISAN, Ayushman Bharat etc.
4. End of Iran oil purchases and rising costs

• Novel ideas : Govt. must trigger a self-sustaining "virtuous cycle" of savings, investments and exports. Data must be presented as a "public good". Cost of capital must go down. Policy must remain consistent. MSMEs to be nourished. Labour laws be made flexible. 
• Implementation is the key : The Economic Survey's ideas will be only as good as their implementation!
• Summary : The Economic Survey for 2018-19 lists out policy prescriptions to turn India into a $5 trillion economy by 2025, but implementation will remain the key.

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