Something as large and complex as an entire economy is difficult to explain in just the one document. This was rather Hayek's point, that we just cannot have enough information, cannot collate it in any useful time period, to be able to plan said complex economy. Still, it is useful to have survey's of what is going on even if only to try to focus minds on whichever problems we should be trying to fix next. So it is with India's Economic Survey, the best picture we get of what the government thinks is going on out there.
Given the complexity of the economy the document itself is therefore complex--perhaps the best use of it is for us each to pick out the bits that we think important rather than trying to provide a balanced view of the whole. That balance would be best achieved by reading the whole thing individually. My two favourites are how we seem to have Milton Friedman right about inflation again and the underlying importance of a thorough reform of India's farming.
The survey also said inflation was expected to remain below the Reserve Bank of India's medium-term target of 4 per cent through to the end of March 2018. Retail inflation cooled to 1.54 percent, its lowest level in more than five years.
OK:
Monetary aggregates decelerated significantly following the withdrawal of legal tender status of specified bank notes on November 9, 2016. As of 31st March 2017, currency in circulation contracted by 19.7 per cent whereas reserve money contracted by 12.9 per cent.
Oh my, fancy that. Milton Friedman told us that inflation is always and everywhere a monetary phenomenon. Here we have a fall in the money supply and a fall in the inflation rate. Of course, no one event proves a theory, not even one of Milton's, but this does not disprove it which is that scientific method, a theory stands until evidence shows that it is wrong.
The other snippet I think important is about farming:
The Economic Survey cautions that anxiety reigns because a series of deflationary impulses are weighing on an economy, yet to gather its full momentum and still away from its potential. These include: stressed farm revenues, as non-cereal food prices have declined; farm loan waivers and the fiscal tightening they will entail;
As I've pointed out several times around here this concentration upon the agricultural sector is the very evidence we need to insist that India still has a long way to go. In the rich nations agriculture is perhaps 1 to 5% of the workforce and of GDP, in India it's still near half of the people and 15% of GDP. This tells us two things, firstly, that Indian agriculture is hugely less productive than the rest of the economy, secondly, that the economy just isn't that developed. Sure, we can all think up existential or theoretic reasons why agriculture could or should stay as a large portion of a developed economy but that's just not the definitions we use. Advanced just does mean that agriculture is a small, near insignificant, part of the economy, we're all off doing something else than standing around in muddy fields.
India's Economy Survey is a complex document so we can all get to mine through it to find support for our pet causes. But interesting that we at least haven't disproved Milton Friedman on inflation, no?
