Wood missed for trees

Publication of the Annual Economic Survey, a day before the Union Budget, is a much-awaited event. Offering rare insights in the Government’s economic thinking and giving a snapshot of the Indian Economy, together with a SWOT analysis, every word of the Economic Survey is precious to serious students of economics. The spirit and thinking behind the Budget can be perfectly understood by perusing the Economic Survey, because both documents are drafted by the same set of economists.

The Economic Survey of 2016-17 summarised the desiderata for the Survey in the following words: “It (Economic Survey) must possess a rare combination of gifts …. No part of man’s nature or his institutions must be entirely outside its regard. It must be purposeful and disinterested in a simultaneous mood, its authors as aloof and incorruptible as artists, yet sometimes as near to earth as politicians.” Economic Survey 2016-17 went on to note that such was the popularity of the previous year’s Survey, that it had been pirated and was being sold on Amazon. Painstaking research, unbiased statistics and unmatched scholarship ensure that the Economic Survey remains of interest long after the corresponding year’s Budget is forgotten.

However, Economic Survey 2022-23 and Economic Survey 2023-24, which ignored hard realities, and stretched facts and logic to justify Government policies – were significant exceptions. This deleterious trend was reversed in 2024 with Economic Survey 2024-25 carrying forward the change; which cannot be said about the current Survey. Another noticeable trend is the increasing volume of successive Surveys, which often takes away the focus from real economic problems; Economic Survey 2014-15 was a slim booklet of 143 pages, Economic Survey 2015-16 weighed in with 162 pages; the 2020s saw the Survey gathering heft; Economic Survey 2024-25 had 480 pages; the current Survey beats them all with 739 pages.

While some of the earlier Surveys will be long-remembered for their insights like the Twin Balance Sheet Problem in Economic Survey 2015-16, or the highly original Eight Interesting Facts About India in Economic Survey 2016-17, or Tracking Development through Satellite Images and Cartography in Economic Survey 2021-22, the current Economic Survey, despite its volume, does not display acuity of such high order. Moreover, treatment of most topics is somewhat short on original thinking, and long on verbiage ~ with undue reliance on jargon to push the authors’ narrative. Most of the topics dealt with by the current Economic Survey remain identical to earlier Surveys; the first chapter ‘State of the Economy: Pushing the Growth Frontier’ examines the state of the Indian economy vis-à-vis the global economy.

The Survey does well to point out the trend of declining FDI across economies, coupled with an increase in AI-related FDI. A later chapter speculates on the likely consequences of an AI bubble burst. The Survey also focuses on the increasing use of ‘Economic Statecraft’ ~ the deliberate use of economic means to achieve strategic ends. The centrepiece of discussion on the global economy are the tariffs imposed by President Donald Trump. However, the Survey fails to mention that most countries, including India, and trading blocs, have worked around US tariffs, with no harm coming to the ‘tariffed’ countries. The first sub-heading ‘Global Economic Growth ~ Fragile and Diverging’ sums up the author’s view on the global economy, which is rather negative – putting too much emphasis on US tariffs. On the other hand, the Survey strikes an unduly optimistic note about the Indian economy, mostly based on the First Advance Estimates released by the MoSPI.

It is felt that the Survey could have tried to explain the C-grade ranking of the International Monetary Fund (IMF) for India’s national account statistics, with the IMF going on to observe that the data had “some shortcomings that somewhat hamper surveillance.” Indirectly, the Survey has acknowledged the inadequacy of national statistics by the Box ‘Strengthening India’s National Statistical System ~ From Data Generation to Data Readiness.’ It would have been better, had the Survey also certified the veracity of our existing national account statistics, and the measures required to upgrade them to international standards. The second chapter, ‘Fiscal Developments: Anchoring Stability Through Credible Consolidation,’ starts with the observation ‘fiscal resilience has been the outcome of deliberate and sustained policy effort rather than a natural and easy progression.’

The Survey has highlighted growing tax revenues and a shrinking fiscal deficit to buttress this conclusion. However, the Survey fails to mention that only by limiting expenditure in the last quarter have the fiscal deficit targets been met in the current year and earlier year, and tax collection targets are not likely to be met in the current year. Also, implications of the trend of Personal Income-tax collections consistently exceeding Corporate Income-tax collections have not engaged the attention of the authors. Then, the danger inherent in the rising debt burden with interest payments eating away 26 per cent of the budget should have been pointed out.

The Survey merely observes ‘… interest costs are expected to be contained through active debt management measures being undertaken by the Government, such as switch and buyback operations, and calibrated issuance across the yield curve. In parallel, sustained direct and indirect tax reforms are expected to strengthen revenue flows in the medium term, thereby directly reducing incremental borrowing requirements and, in turn, the interest burden as fiscal consolidation progresses.’ Probably, instead of indirect measures, an advice to the Government to be thrifty, and some suggestions to increase tax collections would have been in order. The fifth chapter, ‘Inflation: Tamed and Anchored’ examines the global and domestic trend of falling inflation levels.

The authors have attributed the decline in inflation to an effective monetary policy and a decline in food prices. Surprisingly, there is no mention, at all, of the cut in GST rates, which was the primary reason for inflation falling to historic low levels. The sixth chapter, ‘Agriculture and Food Management: Raising Productivity, Securing Incomes and Ensuring Food Security’ starts by acknowledging that ‘sustained agricultural growth is imperative for strengthening economic resilience, promoting rural prosperity, and ensuring food security’ and in an iteration of what was said in Economic Survey 2024-25, goes on to credit Government schemes like Pradhan Mantri Krishi Sinchai Yojana (PMKSY), Rashtriya Krishi Vikas Yojana (RKVY), Agriculture Infrastructure Fund (AIF), and Kisan Credit Cards (KCC) for enhancing agricultural productivity, encouraging crop diversification and increasing farm incomes.

Sadly, agriculture, which employs 46.1 per cent of our work force is a neglected child; the FM called agriculture the ‘first engine’ in the 2025 Budget, but true to recent budgetary trends ~ starved agriculture for funds. Also there is a counter view – index numbers show that growth rates of yield between 2014-15 and 2022-23 were marginally lower in food grain crops and non-food grain crops than between 2004-05 and 2013-14. Significantly, the source cited by the Economic Survey in support of its views is nothing official but ‘Ramesh Chand’s Presidential Address at 24th IASSI Annual Conference 10-12 October 2025.’ Secondly, except for a marginal rise in pulse cultivation there is no major evidence of crop diversification. Most importantly, though the Government claims a rise in farmers’ income, there is credible data that shows a stagnation, or fall in farmers’ real incomes in recent years.

The tenth chapter, ‘Environment and Climate Change: Building a Resilient, Competitive and Development-Driven India’ is a voluminous one, taking up forty pages of the Survey. The chapter closes by observing: “Taken together, the chapter highlights that India’s climate pathway is anchored in development realism,” whatever that means. The chapter mentions in detail various Governmental initiatives to mitigate climate change and pollution, but intentionally or otherwise, omits to mention manifestations of the problem in India, namely impossibly polluted rivers, unbearable heatwaves, floods all over India, landslides and floods in Himalayan States, and perennial winter pollution in North India, particularly Delhi.

Thus the Economic Survey goes on ~ a compendium of Government schemes and initiatives, and a justification of Government policies ~ far removed from the desiderata enumerated in earlier editions. Perhaps, the authors of the Survey should heed what Goswami Tulsidas wrote in the Ramcharitmanas half a millennium ago: “If influenced by greed or fear a guru praises his shishya unnecessarily, then dharma is destroyed, likewise if a physician does not tell the truth to his patient, then the body is destroyed, and if a minister does not give true advice to the King, then a kingdom is destroyed.”

(The writer is a retired Principal Chief Commissioner of Income-Tax)

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Wood missed for trees

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