Finance Minister Nirmala Sitharaman will table the Economic Survey in Parliament on January 31, 2020.
Here's a lowdown:
What is the Economic Survey?
The annual Economic Survey is usually presented a day before the presentation of the annual Budget. It serves as the official report of the economy.
What does it contain?
It gives a detailed account of the state of the economy, prospects and the policy challenges. It carries sectoral overviews and comments on reform measures that are required. The survey’s outlook serves as a marker about future policy moves.
Who drafts the Economic Survey?
The Economic Survey is authored by Chief Economic Adviser Krishnamurthy Subramanian and his team.
What about projections?
The survey puts out economic growth forecasts, giving out detailed reasons why it believes the economy will expand faster or decelerate.
What are the key things to watch out for in this year's survey?
Here are four things to watch out for in the pre-Budget survey:
The Survey's gross domestic product (GDP) growth projections for 2020-21 and estimates for the current year (2019-20) will be among the most tracked pieces of statistics as it would offer cues on how quickly the government expects the economy to accelerate to a faster lane.
The Central Statistics Office's (CSO's) first advance estimates, released earlier this month, projected that India will likely grow at 5 percent in 2019-20, far slower than the 7 percent growth that the Survey had projected in July last year.
Are there signs of the Indian economy bottoming out? Are there are green shoots of recovery that can be spotted in the broader economy? When will the Indian economy likely to hit a sweet spot again, cantering past China to regain its lost status as the world's fastest growing major economy? The Economic Survey will contain answers to these questions.
Where are the jobs?
The central long run question confronting India is the need to create jobs. A productive job is the best form of inclusion. An unrelenting Opposition has spared no punches in pinning down the Modi- government's failure to create enough opportunities to the armies of young people who join the queue of hopefuls every year.
How many workers will industry and services have to absorb in the next decade? How many will they absorb if they continue creating jobs as they have in the past? Could the demographic dividend turn into a demographic curse as some have argued? The Economic Survey 2019-20 will likely have answers to these questions.
Goods and Services Tax
India signalled the launch of Goods and Services tax (GST) in a grand midnight event in Parliament on July 1, 2017 with its impact on prices and businesses playing out over months in an economy characterised by multiple pain points.
GST has consolidated an untidy patchwork of local and central duties such as VAT, central excise, special additional duties, cesses and service tax into a single levy –GST — that seeks to make tax administration more efficient, bring in transparency, remove red tape and turn India into a common national market by removing fiscal barriers among states.
GST rates of several goods and services have been changed several times already over the last 31 months.
How far are we from reaching a steady state on GST? The Economic Survey 2019-20 will likely contain an insightful commentary.
Nudge theory, behaviourial economics
Last year, the survey favoured detailed application of "behavioural economics" and "nudge theory" as an instrument of change in India where social and religious norms play a dominant role in influencing behaviour.
This is based on the premise that decisions made by real people deviate from the impractical robots theorized in classical economics.
"Drawing on the psychology of human behaviour, behavioural economics provides insights to 'nudge' people towards desirable behavior," says the Economic Survey.
Quoting the success of popular Government schemes in recent times like Beti Bachao, Beti Padhao and Swachh Bharat Mission, the Economic Survey says that these schemes have successfully applied behavioural insights to enhance policy impact.
This year's Survey is expected to contain a chapter on a newer idea that needs to be brought on to mainstream policy practice from textbooks.
Are such recommendations binding?
The government isn't bound to follow these recommendations and they only serve as a policy guide. The Economic Survey, in the past, has favoured policy moves that come into conflict with the official line of thinking of the government in power. These do not necessarily serve as pointers to what to expect in the Budget. On many occasions, policy changes recommended in the Economic Survey have not found a place in Budget proposals.