Smoke, Mirrors and Behavioural Rabbits Coming out of the Hat: On the Economic Survey 2018-19
The Economic Survey is celebrating the forthcoming marriage of Big Data and Big Brother – and all of us citizens should be very, very scared.
Is the Modi government still in denial about the state of the economy? It would seem so, at least if the latest Economic Survey for 2018-19 is any indication. Consider the self-congratulatory tone in Chapter 1: “During the last five years, India’s economy has performed well. By opening up several pathways for trickle-down, the government has ensured that the benefits of growth and macroeconomic stability reach the bottom of the pyramid.”
Because of these rose-tinted glasses, the dark patches in the Indian economy are barely noticed, or mentioned only in glancing fashion. The decline in investment and savings rates, reflecting the impact of falling household physical savings and depressed corporate investment, barely figure.
A chapter on demographic transition warns about the possibility of India soon losing the demographic dividend, without mentioning that the collapse of employment over the past few years has meant that this dividend has been completely wasted already, even turning into a disaster. The pressing problems of agriculture are waved away as if a few minor fixes that will not involve much public spending can quickly resolve the agrarian crisis. Inequality finds no mention in the Survey, and the decline in public social spending is similarly ignored: it is as if campaigns like Swachh Bharat and Beti Bachao Beti Padhao were so remarkably successful that all our social problems are resolved, and we as a people no longer need good quality basic public services in nutrition, health education and the like.
What does the Survey portend for future economic policy of this government? The signs are not that promising. There is much enthusiasm for “nudge” policies that are increasingly propagated by the growing tribe of behavioural economists, policies that encourage people to behave in particular ways and engage in particular actions without infringing on their freedom of choice. The irony of it: a government that unilaterally imposed the draconian (and unnecessary) measure of demonetisation upon an unsuspecting population and caused great damage to people and the economy without achieving anything by this, has now discovered the virtues of persuasion rather than forceful imposition!
Nevertheless, the issue is really whether such nudges will be of much use for resolving the big issues of inadequate aggregate employment generation and growing youth unemployment; agrarian problems and the loss of viability of cultivation; falling savings and investment rates; stagnant exports and volatile capital flows. These are the real issues that confront the Finance Ministry today, and looking in other directions to talk about nudges is simply not going to cut it for really effective economic policy.
On investment, the usual trite solutions are trotted out, as if reforming labour laws will magically increase the viability of small enterprises, most of whom are unaffected by these laws anyway. On agriculture, similarly, there is really noting in response to the groundswell of farmers protests that rocked the country over the past year.
But the most chilling section, the one that really sends shivers down the spine, may well be the one on data. The Survey makes various nice-sounding noises about treating data as a public good, and then proceeds to suggest policies that will do precisely the opposite: turn individual personal data under the control of the government (for its monitoring, control and surveillance) and big companies (for it is no secret that the government is sharing individual data with private companies who are then profiting from that access). The Economic Survey is celebrating the forthcoming marriage of Big Data and Big Brother – and all of us citizens should be very, very scared.