same time has warned about the risks of a second-dip recession in the industrialised nations that could impact "our nascent recovery". The observations made in the Economic Survey this time appear to be more realistic than the last survey.
It talked about the speed with which the economy has gathered after being hit by the global recession. The Economic Survey projected GDP will grow by 8.5 per cent in 2010-11 and breach the nine per cent mark in 2011-12.
The Economic Survey recommended a gradual rollback of the stimulus — the steps taken to boost the economy at the time of the global financial meltdown. This will help cut fiscal deficit, which is at a 16-year high.
It, for the first time, raised concerns about increased capital flows into the country at a time when interest rates in the advanced countries are at historical lows. The Economic Survey said the issue is whether these inflows are in excess of the domestic absorptive capacity or whether this could lead to the economy overheating. Already countries like Brazil have put a tax on the inflow of hot money to prevent the formation of a bubble.
The survey acknowledged that inflation, particularly high food prices, was a concern. However, it was hopeful that the food prices may have peaked in December and would now start to moderate.
The Economic Survey was in favour of a complete revamp of the public distribution system. It asked the government to be realistic about the inefficiency which exists in the system and suggested a coupon system to support the poor for subsidising their food and fertiliser needs. The survey was against government controlling the prices of kerosene and diesel, which result in high subsidies and unmanageable under-recoveries by state-run oil marketing companies. In the cases of diesel and kerosene the survey suggested the government look for alternatives to insulate the poor from sharp fluctuations in international oil prices.
The Economic Survey also expressed doubt about whether small and marginal farmers are getting the benefits of a sharp jump in the support prices of various crops. It was also against a complete ban on futures trading in commodities.
In another reform measure the Economic Survey was of the view that there is a need to weed out the overlapping of different Central and state programmes for SCs, STs and other backward classes. The survey also said that despite an increase in government outlays, the benefits do not always reach the intended target groups due to leakages and discrepancies.
The survey raised the routine reforms, which it has been suggesting for years now but which could not be implemented due to lack of political consensus. These include liberalising FDI in health insurance, rural banking and higher education.