The central theme of this year’s Economic Survey is the “Agile approach”, implemented through India’s economic response to the COVID-19 pandemic shock, according to the Union Ministry of Finance. The Ministry further said that the preface of the Economic Survey states that the “Agile approach” is based on feedback loops, real-time monitoring of actual outcomes, flexible responses, safety-net buffers, and so on. The Economic Survey 2021-22 tabled by the Union Minister for Finance and Corporate Affairs Nirmala Sitharaman in Parliament on Monday, argued that some form of feedback loop based policy-making was 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 or external trade, infrastructure roll-out, delivery of various schemes, mobility indicators, to name just a few, read a press statement from the Ministry.
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 Survey states.
Planning matters in this framework but mostly for scenario-analysis, identifying vulnerable sections, and understanding policy options rather than as a deterministic prediction of the flow of events.
According to the ministry, the survey also notes that the previous Economic Survey briefly discussed this approach but it is a central theme for this Survey.
Another theme highlighted in the Economic Survey relates to the “art and science of policy-making” under conditions of extreme uncertainty. It is not just about the immediate disruptions and uncertainty caused by repeated waves of the COVID-19 pandemic, but also the longer-term uncertainty about the post-COVID world due to accelerated shifts in technology, consumer behaviour, supply chains, geopolitics, climate change, and a host of other factors. Not only are these individual factors difficult to forecast, but the impact of their interactions is also fundamentally unpredictable, the statement read.
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.
The Preface also takes a bird’s eye view of the “great deal of evolution” of the Economic Surveys presented since the first Survey in 1950-51, it added.
The Survey charted out many permutations and combinations in terms of language, statistics, formats, topics, length, scope, and prescriptions projected through the Economic Surveys.
The Economic Survey hoped that it would evolve in the next few years to include new kinds of socio-economic data in line with the emphasis on a feedback loop approach, it said.
Along with the sectoral chapters, this year’s Survey adds a new chapter that demonstrates the use of satellite and geo-spatial images to gauge various economic phenomena—urbanisation, infrastructure, environmental impact, farming practices, and so on, it added.