The Economic Survey of India

I thought I’d share the link of the economic survey of India which I found from the union budget website.

This year’s survey is unique in many ways, first of which it being freely available online .

http://indiabudget.nic.in/es2016-17/echapter.pdf

They have for the first time employed Big Data analysis on many interesting data fronts for e.g. Railways passenger ticketing data to accurately understand migration and GSTN data to understand internal trade patterns. This will help us understand post GST trade scenarios as well.

Sadly, there is a lot of propagandist commentary in the Economic survey particularly on the subject of Demonetization and GST, without providing statistical evidence of the impact .

Some of the learning I can share :

• Migration is reducing – while the agricultural sector is receding : signaling at lower employment in the real estate(construction) sector
• Credit rating agencies hypocrisy and unprofessional-ism is apparent in the Credit/GDP and ratings performance between India and China. India compared to China is less dependent / causative on credit growth. India’s GDP growths seems to stemming more from Re-investment of profits or savings.
• India’s demographic dividend will peak much later, with a healthier ratio compared to similar productivity economy. Although there is going to be plateau peaking beginning at year 2025 – making it economy redefining moment for India.
• India’s economic performance far more self reliant and internal. Robustly poised to handle external shocks and strong foundation for economic growth.
• The economic survey acknowledge over-indebtedness of the corporate sector and refinancing & writeoff as a legitimate consideration. In my personal view I find this is deplorable and dangerous. Corporate sector debt is in dangerous shape with interest coverage ration less than 1 . It is the worst in the world currently. PSU Banks have been to blame for their prudence. I guess sales people overpowered the credit department in their hurry and excitement. These banks are slated to become the greatest welfare scheme in the country!
• Even after including the demonetization losses (rather gains) , the overall money supply has come down while interest rates have come down .Indirect taxation has still risen due to still buoyant consumer confidence. This is a surprising and good sign, though demonetization has hit consumer sentiments just recently.
• Oil prices will rise. Costs will come under stress. Inflationary economy will come back. Good for businesses, bad for consumers.
• Universal Basic Income is being touted as strong social welfare scheme. It will have negative effect on productivity, result in poor availability of labor – fodder for a dangerous youth pool in coming years. Govt. moving away from performing welfare duties to provide welfare allowances in the long term. Also the allocation is wrongly skewed. Tax money deployment seems inefficient and juvenile.
• Probably the longest and drab chapter is on demonetization , which provides no concluding remarks or evidence of current success. Worth skipping – nothing new there.
• Migration trends are not too surprising with the usual source and destination states being same. The volume has grown over the past decade phenomenally but now tapering. The big data analysis of railways has thrown a huge surprise of migration from Gujarat to TN being a significant to the overall number. Reasons are unknown.  Overall outtake for us – housing requirements are rising, people will not live in homes they own – and their relationship with their residences will be unemotional.
• There is strong rhetoric of urban expansion and increased influence of urban centers on Indian economy. Cities seem to be the place to target for extracting future growth . Rural India’s growth will come more from covering availability and reach gaps and not so much increased economic activity.