There are three objectives for India that are echoed through much of the Survey. First, India has to revive growth, and that growth has to provide more decent jobs for the many millions who will join the labor force, even while reducing poverty. Second, India needs to shift from consumption to investment, that is, increase our savings especially government savings and household financial savings, even as we also increase corporate and infrastructure investment. Third, India needs macroeconomic stabilization - to bring down inflation, the fiscal deficit and the current account deficit. There are commonalities between some of these objectives, as also apparent tensions. For example, rebalancing towards investment can potentially raise growth as well as alleviate supply constraints, reduce inflation, and thus achieve macro stabilization. On the other hand, fiscal consolidation is often thought to be detrimental to growth in the short-run. However, this tension may only be apparent. Macroeconomic rigour may, in fact, lead to growth; cutting wasteful subsidies may reduce market distortions, shrink excess consumption, and increase confidence about government finances, all of which can help growth, even in the short-run. The survey starts with an analysis of the causes of the recent slowdown. A number of factors are responsible. First, the boost to demand given by monetary and fiscal stimulus following the global financial crisis was large, even though the economy was already reaching the limits to its potential growth before the crisis. The resulting recovery from the crisis was strong and final consumption grew at an average of over 8 percent annually between 2009-10 and 2011-12. One consequence was strong inflation, and a powerful monetary response that also slowed consumption demand. Second, starting in 2011-12, corporate and infrastructure investment started slowing both as a result of policy bottlenecks as well as the tighter monetary policy. Unfortunately, even as the economy slowed, it was hit by two additional shocks: a slowing global economy, weighed down by the crisis in the Euro area and uncertainties about fiscal policy in the United States, and a weak monsoon, at least in its initial phase.

More Details about ECONOMIC SURVEY 2012-13

General Information  
PublisherOxford University Press
Publish YearJanuary 2013