Economic Survey cautions against cronyism as an obstacle to the $5 trillion GDP goal

Citing examples of 2G spectrum scam, the Chief Economic Advisor has cautioned the government against policies that favour a few firms over the larger welfare of all. The Economic Survey favours pro-business policies and cautions against pro-crony policies that lead to wealth erosion.

Delving on how cronyism erodes wealth, the Survey says some incumbent firms may receive preferential treatment, thereby affecting resource allocation in the economy.

"When opportunities for crony rent-seeking exist, firms shift their focus away from growth through competition and innovation towards building political relationships, thus undermining the economy’s capacity for wealth creation," the Survey reads.


Citing the example of wilful defaulters, the Survey says that every money lent to wilful defaulter constitutes an erosion of wealth.

Making a case for auction of public resources, the Survey says that a director's income tends to go up on discretionary allocation of resources whereas the opposite happens if the resources are allocated through auction.