January 31, 2017 TnH Global

Economic Survey points out three threats to India’s progress

the Economic Survey 2017, which was presented in Parliament today, has listed three challenges that might impede India’s progress—ambivalence about property rights and the private sector; deficiencies in the state capacity, especially in delivering essential services; and inefficient redistribution.

The survey highlights difficulties in privatising public enterprises, even for firms where economists have made strong arguments that they belong in the private sector. The survey points towards the need to further privatize the civil aviation, banking and fertilizer sectors. The survey points out that the capacity of the state in delivering essential services such as health and education is weak due to low capacity, with high levels of corruption, clientelism, rules and red tape.

“At the level of the states, competitive populism is more in evidence than competitive service delivery, the Survey adds. Constraints to policy making due to strict adherence to rules and abundant caution in bureaucratic decision-making favours status quo,” it says. According to the survey, redistribution by the government is far from efficient in targeting the poor. This is intrinsic to current programs because spending is likely to be greatest in states with better institutions and which will therefore have fewer poor.

The survey notes that over the past two years, the government has made considerable progress toward reducing subsidies, especially related to petroleum products. Technology has been the main instrument for addressing the leakage problem and the pilots for direct benefit transfer in fertilizer represent a very important new direction in this regard, the survey adds.

News Source: economictimes.indiatimes.com