Economic Survey Key Themes – Wealth Creation, Trust & Markets

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🟠 Topic 91: Economic Survey Key Themes – Wealth Creation, Trust & Markets


📌 Introduction

The Economic Survey is the annual flagship document of the Ministry of Finance, presented a day before the Union Budget. It analyses the economy’s performance over the past year and provides policy recommendations for future growth.

The Economic Survey 2019-20 introduced three critical pillars for achieving sustained economic growthWealth Creation, Trust, and Markets — rooted in India’s economic history, global best practices, and empirical evidence.


🔹 Theme 1: Wealth Creation

📖 Concept

Wealth creation is fundamental for economic growth, poverty alleviation, and employment generation. Wealth creation in India has historically been driven by:

  • Pro-business policies that incentivise entrepreneurship.
  • Efficient markets that allocate resources optimally.
  • Innovation and technological advancements.

Key Elements of Wealth Creation

Element Role
Entrepreneurship Drives innovation and jobs
Ease of Doing Business Reduces regulatory burden
Investment in Infrastructure Boosts productivity
Market Liberalisation Attracts FDI and promotes competition
Wealth Creators as National Assets Entrepreneurs recognised as economic drivers

Historical Lessons from Indian Economic History

✔️ Ancient India thrived as a wealth creator through trade, craftsmanship, and global exchanges (Indus Valley, Silk Route).
✔️ Post-independence, socialist policies limited entrepreneurial freedom.
✔️ 1991 LPG Reforms unleashed private sector potential.


Wealth Creation – Key Sectors

Sector Wealth Creation Drivers
Agriculture Agri-tech, FPOs, export orientation
Industry Manufacturing competitiveness
Services IT, tourism, financial services

Chart: Pillars of Wealth Creation (WordPress HTML)


🔹 Theme 2: Trust in the Economy

📖 Concept

Trust between the government, businesses, and citizens is crucial for wealth creation. Policies must foster an environment where entrepreneurs, investors, and consumers trust that:

  • Rules will be predictable and stable.
  • Contracts will be enforced.
  • The government will act fairly and transparently.

Components of Trust

Component Description
Policy Certainty Predictable regulations
Judicial Efficiency Timely contract enforcement
Transparency Access to government data
Ease of Compliance Simplified processes

Role of Judiciary & Regulation

✔️ Strong enforcement of contracts increases investor confidence.
✔️ Reducing regulatory uncertainty attracts long-term investment.
✔️ Corporate governance reforms enhance market trust.


Case Study – Insolvency & Bankruptcy Code (IBC)

  • Enhanced trust by resolving NPAs quickly.
  • Improved credit discipline.
  • Boosted India’s Ease of Doing Business ranking.

🔹 Theme 3: Markets as Wealth Creators

📖 Concept

Markets, when competitive and efficient, drive optimal allocation of resources, foster innovation, and create wealth for society.


Benefits of Competitive Markets

Benefit Impact
Efficient Resource Allocation Resources flow to productive uses
Innovation Incentive Firms innovate to compete
Consumer Choice Better products, competitive prices
Employment Generation Expanding industries create jobs

Importance of Free Markets in India

✔️ From socialist controls to liberalisation, markets have driven India’s growth story.
✔️ Reducing entry barriers and promoting competition enhances wealth creation.
✔️ Well-regulated capital markets mobilise savings into productive investments.


Reforms Promoting Market Efficiency

Reform Area
Goods & Services Tax (GST) Unified national market
Decriminalisation of Company Law Reduced compliance fear
Faceless Tax Assessment Minimised harassment
Start-up India Easier business entry

Case Study – LPG Reforms (1991)

  • Dismantling License Raj allowed: ✔️ Entry of private players. ✔️ Competition-driven efficiency. ✔️ Rapid wealth creation across sectors (IT, telecom, FMCG).

🔹 Combined Framework – Wealth Creation, Trust, and Markets

✔️ Wealth Creators need policy support (Ease of Doing Business).
✔️ Trust enhances investment climate (Policy certainty, contract enforcement).
✔️ Markets drive innovation (Competition, efficient pricing).


Graphic Representation (Summary)

Pillar Focus Example Reform
Wealth Creation Entrepreneurship & Investment Start-up India
Trust Policy Certainty & Judicial Reforms IBC 2016
Markets Competition & Efficiency GST

🔹 Way Forward

✔️ Foster pro-business environment to promote entrepreneurship.
✔️ Ensure policy stability and contract enforcement to build investor trust.
✔️ Strengthen competition laws to ensure level playing field.
✔️ Enhance digital infrastructure for market access.
✔️ Promote financial inclusion to broaden market participation.


📚 Practice MCQs


1️⃣ Which of the following was highlighted in the Economic Survey 2019-20 as a key pillar for economic growth?

Options:
(a) Wealth Redistribution
(b) Trust in the Economy
(c) Import Substitution
(d) Population Control

Tap here for Answer
Answer: (b) Trust in the Economy

2️⃣ According to the Economic Survey, competitive markets contribute to:

  1. Efficient resource allocation
  2. Innovation and product improvement
  3. Employment generation

Options:
(a) 1 only
(b) 1 and 2 only
(c) 1, 2, and 3
(d) None of the above

Tap here for Answer
Answer: (c) 1, 2, and 3

3️⃣ Which of the following enhances Trust in the Economy, according to the Economic Survey?

Options:
(a) Policy Uncertainty
(b) Timely Contract Enforcement
(c) Bureaucratic Delays
(d) Frequent Tax Changes

Tap here for Answer
Answer: (b) Timely Contract Enforcement

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