Extraordinary recommendations of Economic Survey

Stunning recommendations in Economic Survey 2010-2011

1. PDS leakage

Jha and Ramaswamy, using the NSS expenditure survey of 2004-05, report an overall diversion of 55 per cent of the grain meant for the poor. No matter where the exact figure lies between 40 and 55 per cent, the fact of the matter is the leakage that currently takes place is far too high.

Once we give a legal guarantee to people about the food that they are to receive, if we try to deliver on this promise using our current delivery mechanism, we shall have to send twice the targeted amount of grain towards the targeted population.

2. Direct cash Transfer for Poor

We may as a first step try this on one product, such as kerosene, by handing over the subsidy to the poor in the form of a smart card; and letting them buy kerosene from the market at market price. This will improve targeting and cut out corruption. It is true that the poor may misuse some of these subsidies on non-essentials, but it is surely better for the poor to do so than for the shopkeeper to do so using the subsidy meant for the poor.

3. Corruption & Ethics

To cut down on corruption and pilferage, we have to design policies in such a way that there is no incentive for ordinary citizens and the enforcers of the law to cheat. 

For India to develop faster and do better as an economy, it is therefore important to foster the culture of honesty and trustworthiness.  

4. Progress in Human development

According to HDR 2010, the HDI for India was 0.519 in 2010 with an overall global ranking of 119 (out of the 169 countries), shows that although lower in HDI ranking, India has performed better than most (including very high and high human development) countries in terms of average annual HDI growth rate. India with an HDI improvement rank of 6 (1980- 2010) has performed much better than most comparable countries.

5. Inequality [social and economic among population]

India's Gini index was more favourable than those of comparable countries like South Africa (57.8), Brazil (55), Thailand (42.5), Turkey (41.2), China (41.5), Sri Lanka (41.1), Malaysia (37.9), Vietnam (37.8), Indonesia (37.6), and even the USA (40.8), Singapore (42.5), Hong Kong (43.4), Portugal (38.5), and Poland (34.9) which are otherwise ranked very high in human development.

Higher relative inequality in urban areas. Lower inequality was seen in rural areas of Assam (0.197), Meghalaya (0.155), and Manipur (0.158) than in Kerala (0.341), Haryana (0.323), Tamil Nadu (0.315), and Maharashtra (0.310). Similarly, lower inequality was seen in urban areas of Arunachal Pradesh (0.243), Jammu & Kashmir (0.244), Meghalaya (0.258), and Manipur (0.175) than in Chattisgarh (0.439), Goa (0.405), Kerala (0.400), and Madhya Pradesh (0.397). 

Disparities in cereal consumption are less marked than disparities in total consumption expenditure, whereas greater disparities exist in consumption of durable goods than in total consumption.

6. Inclusive Growth 

Of the Government’s lynchpin for economic policy, namely ‘inclusive growth’, the country has done very well on ‘growth,’ but needs to press more on the peddle for ‘inclusion’.

Instead of treating the overall per capita income as a target, we should aim to enhance the growth of the per capita income of the bottom 20 per cent (what is called the quintile income) of the population.

At least economic survey showed some courage towards inclusive development and provided straight forward recommendations.

Source : Economic Survey