We've come a long way since '91, baby: Survey

The Economic Survey could, with only modest spin, be called the Election Survey. Its self-confident tone indicates that conditions are ripe to address the worries of voters rather than economists. The last thing finance minister Jaswant Singh will have on his mind tomorrow is the IMF or World Bank.
India is basically in good shape, the Survey says, resilient enough to take on all that Bush, Saddam and Blair can inflict upon an uncertain world. In the marathon race for economic development, we have many runners well positioned to break out of the pack and become global leaders. Let oil prices soar, let armies clash in fury in the Gulf, we will shrug these aside and keep moving ahead.
The Survey notes the contrast with 1991, when an earlier Gulf War drove India into bankruptcy. Today, foreign exchange reserves stand at record heights, and now exceed India''s entire issue of currency. In this sense, we now have more dollars than rupees. Which means the FM could easily seize the budget as an opportunity to announce an even greater degree of rupee convertibility.
In 1990-91, the year of the earlier Gulf War, India had a current account deficit of $9.7 billion that emptied its reserves. But in the first half of this year India had a current account surplus of $1.7 billion. Even if a Gulf War damages the global economy, says the Survey, India will be little affected because of its strong domestic economy.
The Economic Survey in recent years has often warned of perils ahead and the need for painful reforms. But not this time. The tone this year is bland and mildly self-congratulatory.
The Survey says we have many achievements and much resilience to our credit. We face global perils, as in 1991, but will sail through this hurricane even if others perish. Our ship is not the fastest, but can withstand storms.
In sum, this is a time not for belt tightening, but for celebrating our resilience, no doubt with some budgetary goodies for voters. Mr Jaswant Singh can hang a large sign outside his room saying “Men at work. Economists do not disturb.�
The Survey does, indeed, refer at many places to the need for reforms, but in softer tones than in the past. It says India still has to “address the three issues of infrastructure, regulatory and tax reform, and fiscal consolidation.� How interesting that the fiscal deficit has been pushed down to third place in this list. IMF, please note.
The Survey says that the interest rate continues to be below rate of growth of GDP. This is a sign of fiscal sustainability even though the ratio of debt to GDP keeps rising. Falling interest rates have reduced the cost of servicing the pubic debt.
The Survey also says that industry and services have picked up, with steel and cement showing considerable momentum. The IT sector continues to be buoyant.