The Economic Survey is not only a source of data, it also indicates government thinking on reforms and policy issues. While this occurs implicitly in the survey's interpretation of economic developments, it is stated more explicitly in the issues and priorities section of the first chapter. This is not to suggest a link between the survey's pronouncements and policy changes, particularly in the budget, which follows immediately. The survey is about what ought to be done, not what can be done. The macroeconomic environment is benign, although this was largely inherited, and barring inflation control, there is little the government can directly take credit for. Understandably, the survey takes credit, particularly because 8.5 per cent growth in 2003-04 was followed by 6.9 per cent in 2004-05 and this recovery was broad-based. Reference is made to high global oil prices, deficient monsoon and the tsunami. However, it is possible that adverse growth effects of the last two are exaggerated. The more interesting point is whether improved growth performance in 2003-04 and 2004-05 is cyclical, or whether there is an increase in the trend rate of growth from 6 per cent to 7 per cent. As evidence towards the latter, the survey cites increase in savings rate to 28 per cent, increase in investment rate to 26.3 per cent and the current account deficit in the first six months of 2004-05 (after three years of surplus). But the point is also made that the national common minimum programme promise of 7-8 per cent may not be sustainable without further reforms, the latter including higher investment rates and not reductions in the capital/output ratio alone.
For the most part, there cannot be disagreements with the survey over the pending reform agenda ' improvement of public finances and fiscal consolidation, tax reform (though not through higher rates), investments in agriculture and allied activities (as opposed to price support and input subsidies), simplified procedures and entry/exit for business, reform of distortions in capital markets, physical infrastructure and larger foreign investments and increased expenditure on universal education and healthcare.
However, there is scope for disagreement on the survey's identification of these as areas for public expenditure. It argues physical infrastructure is not necessarily a classic public good and scope exists for private sector involvement, including through public-private partnerships. There are questions about efficiency of public expenditure in physical infrastructure. If that is valid, there is no reason why that argument should not be equally true of public expenditure on social infrastructure. The survey acclaims the rural employment guarantee as means of building rural infrastructure, particularly in backward districts. Any government document must perforce swear by the NCMP. The survey has always been a means of distancing what is rational from what the government does. A trend of making the twain meet was begun last year and unfortunately, this year's survey follows suit.