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Economic Survey 2020: Excessive govt interference stifles market

The economic survey forecasts India's GDP growth at 6-6.5 percent for FY21.

January 31, 2020 / 05:36 PM IST

The Economic Survey 2019-20 has said that excessive intervention by the government in the market may stifle economic freedom and create “deadweight loss”.

The survey said that while there is a case for government intervention when markets do not function properly, excessive intervention, especially when the market can do the job of enhancing citizens' welfare perfectly well, stifles economic freedom and creates deadweight loss.

This loss is also the loss created by the wasted chance of creating a consumer and producer surplus and reduces wealth creation by not allowing efficient allocation of entrepreneurial resources and energy to productive activities thereby promoting economic dynamism.

The survey 2020 forecasts GDP growth at 6-6.5 percent for FY21.

With challenges on the economic front expected in FY21, the survey said the government may need to relax the fiscal gap target for FY20 to revive growth. It also said that there is a need for counter-cyclical fiscal steps to boost demand.

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Moneycontrol News
first published: Jan 31, 2020 01:43 pm
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