Even more than usual, this year's Economic Survey has become a means for the government to attempt to advertise the "success" of its economic policies and to try and pretend that all is well even when some signs are clearly to the contrary. This is unfortunate, because the Survey was not actually intended to be reduced to an unwieldy publicity handout.
 
Rather, it is supposed to be a review of the major economic developments of the past year, as well as an overall consideration of the important economic processes and policies at work. As such, it becomes an important source of information not only for those who are currently interested or affected by the workings of the Indian economy, but also for later researchers who will be considering and analysing the economy.
 
But if the veracity or plausibility of the analysis which the Survey makes of the economy comes under question, then the Survey loses much of its relevance except as a simple compendium of recent data. This is especially marked in the current year's Economic Survey, which could almost be thought of as part of an official advertising campaign if it were not so badly written.
 
Instead of honestly describing the state of the economy and the material condition of the people, this year's Survey offers a paean to neo-liberal economic reform strategies, especially as practised by the BJP-led government in the past two years. To this end, the positive features of current economic conditions are not just emphasised but repeated over and over again, while the negative features are either hurriedly mentioned and then glossed over, or simply ignored.
 
This does more than to mislead those who are affected by the economic policies and processes in question. It also distorts the historical record for the future, and constrains the ability of analysts to arrive at a more realistic assessment of what has happened. Such an attempt to massage reality into shapes that suit the ruling powers has already been experimented with by this government in other fields of social science, such as history. In terms of economic assessments, while this tendency has been typical of almost of the "liberalising" governments of the past decade, once again the practice has been stretched to extremes by the current government.
 
The very ordering of chapters indicates the priorities of the government. Agriculture, the sector which continues to employ nearly 70 per cent of the workforce, and determines the level of food security of most of the population, is relegated to the later part of the Survey. It is wedged in between equally forlorn chapters on industry and infrastructure, which read as if they are covered for the sake of form, even though these sectors together determine the basic conditions of life for most citizens and are crucial to the development process. Critical issues of livelihood and material survival are given a few pages in the final chapter. The bulk of the Survey - covering all the early chapters - is devoted to those issues which are presumably seen as the most important by international investors : public finance, capital markets, inflation and the balance of payments.
 
Despite the valiant attempts at upbeat presentation in the Survey, the picture of the economy that emerges from a closer look at the data is bleak in several ways. Thus, agricultural growth is expected to decline by more than 2 per cent in the current year, despite a "normal" monsoon. More significantly, foodgrain production, which has barely grown at the same rate as population over the decade, is also slated to decline by 2 per cent.
 
The Survey seeks to attribute this poor agricultural performance to poor weather conditions, and inadequate or untimely rains in particular areas. What it does not stress is the role that could have been played by the significant deceleration of investment in agriculture, particularly over the second half of the 1990s. While public investment has declined quite sharply, private investment has not grown fast enough to prevent an overall deceleration. This belies the neo-liberal expectation that increasing agricultural prices is sufficient to encourage much more private investment (and therefore output) in agriculture.
 
The Economic Survey makes much of the apparent recovery in industrial production to 6.2 per cent growth in 1999-2000, seeing in it proof that the economy is turning around from the period of recession and is back on a growth track. But the evidence on the recovery thus far does not really warrant such optimism.
 
For one thing, while some items of industrial production have indeed shown an improvement in growth, capital goods production continues to decelerate in the current year. This, combined with a fall in the import of capital goods as well as slowdown in credit disbursement for investment purposes by financial institutions, suggests that investment is still depressed. Since investment rates (as a share of GDP) had already fallen sharply from the earlier average of 26 per cent to just 23.2 per cent in the previous year 1998-99, this suggests that the recovery is fragile and could easily be reversed.
 
There is another aspect that emerges from the cyclical behaviour of industrial growth, and that is how strongly it appears to be related to agricultural growth with a lag of one period. Thus, 1998-99 was a year of strong agricultural output growth, and the industrial recovery of 1999-2000 is seen as being related to this, through both demand and supply linkages.
 
But this implies that the relationship between agriculture and industry is back to the pattern observed earlier for the Indian economy, which was supposed to have been broken in the 1990s. If such a lagged relationship does still exist, then that is bad news as far as the potential for industrial recovery at present is concerned, because of the poor performance of agriculture in 1999-2000.
 
The area in which the Economic Survey does reflect relatively positive conditions is that of trade and the balance of payments, which have remained stable despite a deceleration in international trade, increasing oil prices and reduced capital inflows. Exports exhibited a slight recovery from the absolute decline of the previous year, while non-oil imports have been very low, perhaps reflecting the investment slowdown. But once again, software exports and remittance payments have shored up Indian balance of payments.