News Brief
Economic Survey 2021-22: Supply-Side Reforms By Modi Government Were Distinguishing Feature Of India’s Covid-19 Response
Swarajya Staff
Jan 31, 2022, 05:31 PM | Updated 06:19 PM IST
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
While the countries around the world, especially the developed nations, focused on demand side measures to alleviate the economic stress induced by Covid-19 lockdowns and travel restrictions, India’s response was slightly different. One of the distinguishing features of the government’s toolkit to tackle the problem was supply-side reforms, notes the Economic Survey 2021-22 tabled in the Parliament today.
This consideration was driven by two factors. One, the policymakers realised that while lockdowns and restrictions squeezed demand, there was disruption and breakdown in supply chains too.
Second, the government realised that ‘the post-Covid world will be impacted by a wide variety of factors – changes in technology, consumer behaviour, geo-politics, supply-chains, climate change and so on‘ and all these factors will play out in unpredictable ways with each other. ‘Therefore, the post-Covid economy will not be merely a re-inflation of the pre-Covid economy. Simply building it back with demand measures is not a solution,’ the Survey notes.
So India’s strategy, as far as supply-side measures were concerned, was to initiate reforms that improve flexibility and innovation to deal with the unpredictable post-Covid world.
So it went about launching factor market reforms, deregulating sectors like space, drones, geo-spatial mapping, trade finance factoring, etc and also started process reforms in telecommunications sector.
Legacy issues like retrospective tax were finally resolved while the government also focused on privatisation, monetisation and building physical infrastructure.
Additionally, the definitions of Micro, Small, Medium enterprises were revised, distinction between manufacturing and service MSMEs was removed and registration process was simplified, all of which is expected to help these firms expand economic activity.
To improve the resilience of the economy, the government focused on boosting social infrastructure such as tap water, toilets, basic housing, insurance for the poor, etc.
Under Atmanirbhar Bharat, many sectors were provided support with clear targets for increasing production that will ensure that India becomes self-reliant to a great extent by creating supply chains at home. ‘The focus on economic resilience is a pragmatic recognition of the vagaries of international supply-chains,’ the Survey states.
Save & read from anywhere!
Bookmark stories for easy access on any device or the Swarajya app.
Support Swarajya's 50 Ground Reports Project & Sponsor A Story
Every general election Swarajya does a 50 ground reports project.
Aimed only at serious readers and those who appreciate the nuances of political undercurrents, the project provides a sense of India's electoral landscape. As you know, these reports are produced after considerable investment of travel, time and effort on the ground.
This time too we've kicked off the project in style and have covered over 30 constituencies already. If you're someone who appreciates such work and have enjoyed our coverage please consider sponsoring a ground report for just Rs 2999 to Rs 19,999 - it goes a long way in helping us produce more quality reportage.
You can also back this project by becoming a subscriber for as little as Rs 999 - so do click on this links and choose a plan that suits you and back us.
Click below to contribute.