Preface

For second year running, the Economic Survey was written under the cloud of the Covid-19 pandemic. These have been difficult times for the world economy. It is not just about the immediate disruptions and uncertainty caused by repeated waves of the pandemic, but also the longer-term uncertainty about the post-Covid world due to accelerated shifts in technology, consumer behaviour, supply-chains, geo-politics, climate change and a host of other factors. Not only are these individual factors difficult to forecast, the impact of their interactions are fundamentally unpredictable. The theme of this Economic Survey, therefore, relates to the art and science of policymaking under conditions of extreme uncertainty.

The default mode of policy-making in India and most of the world has traditionally been to rely on a pre-determined “Waterfall” approach – an upfront analysis of the issue, detailed planning and finally meticulous implementation. This is the framework that underpins five-year plans and rigid urban master-plans. The problem is that the real world is a complex and unpredictable place buffeted by all kinds of random shocks and unintended consequences. The response of traditional economics was to create ever more detailed plans/regulations, and elaborate forecasting models despite more than adequate evidence that this did not improve outcomes. In his Nobel Prize acceptance speech, economist Friedrich Hayek dubbed this "The Pretence of Knowledge".

This Economic Survey sets out to explain the alternative "Agile" approach that informed India’s economic response to the Covid-19 shock. This framework is based on feed-back loops, real-time monitoring of actual outcomes, flexible responses, safety-net buffers and so on. Planning matters in this framework but mostly for scenarioanalysis, identifying vulnerable sections, and understanding policy options rather than as a deterministic prediction of the flow of events. The last Economic Survey did briefly discuss this approach, but this time it is a central theme.

Some form of feedback loop based policy-making was arguably always possible, but the Agile framework is particularly relevant today because of the explosion of real-time data that allows for constant monitoring. Such information includes GST collections, digital payments, satellite photographs, electricity production, cargo movements, internal/external trade, infrastructure roll-out, delivery of various schemes, mobility indicators, to name just a few. Some of them are available from public platforms but many innovative forms of data are now being generated by the private sector. Short-term policy responses, therefore, can be tailored to an evolving situation rather than what a model may have predicted.

The same recognition of uncertainty informs the longer-term supply-side strategy: the combination of policies that encourage economic flexibility through innovation, entrepreneurship and risk-taking on one hand, and simultaneously invests in resilient infrastructure, social safety-nets and macro-economic buffers on the other. Thus, it is hoped that readers will be able to see the links between seemingly disparate policies ranging from deregulation, process simplification, privatization, foreign exchange reserves accumulation, inflation-targeting, housing-forall, green technology, the Insolvency and Bankruptcy Code, health insurance for the poor, financial inclusion, infrastructure spending, direct benefit transfers and so on. They are all about protection from or taking advantage of an uncertain future.

As readers would have noticed, this Economic Survey has shifted from the two-volume format of recent years to a single volume plus a separate volume for statistical tables. In this context it is worthwhile looking at a brief history of the document. The Survey was first published in 1950-51 and was initially part of the Budget documents. The document was less than 50 pages in the 1950s and contained a brief outline of economic developments of the previous year. For example, the Survey of 1957-58 had just 38 pages. It was primarily descriptive and contained little in the way of analysis and policy prescriptions.

From 1958-59, the length of the survey started increasing with the introduction of more charts and tables. A Hindi translation also seems to have been initiated around this time. The ambition of the document increased significantly in the sixties. The Survey of 1962-63 was divided into two parts where the first part focused on broader economic x developments while the second part gave a basic analysis of different sectors. The following year, the Economic Survey was separated from the budget and was presented a day earlier as a stand-alone document. This was the first Survey that saw the introduction of a statistical appendix. The sixties also saw several experiments with the format. In some years, the sections were done by themes such Recession and Measures of Revival, Control of inflation, and Food Shortage. In other years, it was done by sectoral sections such as Industry, Agriculture and Prices.

By 1970, the length of the Economic Survey had already crossed 150 pages with a detailed list of tables. The format was further refined in the seventies and eighties with sections being transformed into chapters. This is the phase that developed the format that is broadly recognizable today. The 1980s saw a consistent rise in the length of the document with the introduction of new chapters. By 1990, the length of the Economic Survey had reached close to 250 pages including the statistical appendix.

The Indian economy went through a major crisis and subsequent reforms in 1991, and the Economic Survey of 1991-92 was eagerly awaited. This was the first survey that was brought out in two volumes although the first volume was a short booklet of 27 pages that highlighted the macroeconomic problems facing the country while the second volume reviewed the various sectors in detail. In subsequent years, the survey reverted to one volume with a few modifications in the number of chapters. The beginning of the 21st century saw another transformation of the Economic Survey with introduction of better graphics and brighter colors. The length of the survey, meanwhile, crossed 380 pages by the early 2000s.

In 2007-08 and 2008-09, in the middle of a global financial crisis, an analytical chapter was added about the country’s medium-term challenges and macro-economic prospects. From here onwards, more thematic chapters were included each year. In 2011-12, document was 485 pages spread over thirteen chapters and the statistical appendix. In 2013-14, the statistical appendix was separated out and published as a separate volume. In the following year, the Survey was presented as two volumes: Volume 1 had a number of chapters addressing topical policy concerns, while Volume 2 carried the traditional Economic Survey along with the statistical appendix. This format was continued till last year with the length of document steadily going up. Moreover, an attempt was made in the last three Surveys to ensure that the Volume 1 chapters adhered to a broad theme rather than appeared as stand-alone papers. The Economic Survey 2020-21 consisted of 335 pages in Volume 1, 368 pages in Volume 2 and a statistical appendix of 174 pages - a total of 877 pages!

As one can see, the Economic Survey has gone through a great deal of evolution over the decades. The two volume format did allow space for bringing in new ideas and themes but, at almost 900 pages, it was also becoming unwieldy. It was also felt that the thematic chapters of Volume 1 were not adequately linked to the sectoral chapters of Volume 2. Therefore, this year’s Survey reverts to a single volume plus a separate volume for the Statistical Appendix. Along with the sectoral chapters, a new chapter has been added that demonstrates the use of satellite and geo-spatial images to gauge various economic phenomenon – urbanization, infrastructure, environmental impact, farming practices and so on. The idea of having a separate volume for the statistical appendix is to give it a distinct identity as the one-stop source of authentic data. It is hoped that it will evolve in the next few years to include new kinds of socio-economic data in line with the emphasis on a feedback loop approach.

The publication of the Economic Survey is a team effort. It is only possible because of inputs from Ministries and institutions across the Government of India, industry bodies, think-tanks and individual experts. The officers and consultants of the Economic Division, Department of Economic Affairs, put in months of effort to write, compile, and edit the document. Doing it in the middle of a pandemic added special constraints. Nonetheless, we hope that the readers will find this year’s document to be a lucid and insightful assessment of the country’s economic trajectory.

Sanjeev Sanyal Principal Economic Adviser Ministry of Finance Government of India  

The Economic Survey and the Statistical Appendix can be accessed through the following URLs: