- By Ankit Agrawal
Title
VOLUME 1
It attempts to capture ideas that-
Encapsulate “economic freedom and wealth creation”,
Provides evidence based economic analyses of recent
economic developments.
VOLUME 2
It reviews recent developments in the major sectors
of the economy.
It is supported by relevant statistical tables and
data.
Thiswould serve as the ready reckoner for the existing
status and policies in a sector.
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BLUE SKY
THINKING
A classic Tamil language text
Thiruvalluvar
IMPORTANCE OF WEALTH CREATION
For more than three-fourths of known economic
history, India has been the dominant
economic power globally.
Economic dominance over such long periods
manifests by design, and not by
mere chance.
• Despite such a “rich” tradition of emphasizing wealth
creation, India deviated from this model for several decades
after independence.
• However, India returned back to these roots post economic
liberalisation in 1991.
• The exponential rise in India’s GDP and GDP per capita
coincides with wealth generation in the stock market.
Cumulative annual growth rate
BENEFITS FROM WEALTH CREATION TILL NOW
• India’s “tryst” with socialism.
• There is a direct correlation b/w increase in the
entrepreneur’s wealth over a decade (31Mar-2009 to 31-
Mar-2019) with the benefits that accrued to several other
stakeholders including employees, suppliers, government.
Higher tax collection benefits
the citizens
WEALTH CREATION THROUGH
THE INVISIBLE HAND OF MARKETS
• Wealth creation and economic development in several
advanced economies has been guided by Adam Smith’s
philosophy of the invisible hand.
• However, scepticism about the benefits accruing from a
market economy still persists in India.
• In fact, our traditional economic thinking has always
emphasized enabling markets and eliminating obstacles to
economic activity.
Kautilya,
“The root of wealth is economic activity and lack of it brings
material distress. A king can achieve the desired objectives
and abundance of riches by undertaking
productive economic activity”.
Kautilya advocates economic freedom by asking the King to
“remove all obstructions to economic activity”
• A key contributor to ancient India’s prosperity was internal and
external trade.
• Two major highways Uttarapatha (the Northern Road) and
Dakshinapatha (the Southern Road) and its subsidiary roads
connected the sub-continent.
• Ports along India’s long coastline traded with Egypt, Rome, Greece,
Persia and the Arabs to the west, and with China, Japan and South
East Asia to the east.
• Much of this trade was carried out by large corporatized guilds akin
to today’s multinationals.
• The overarching theme of Economic survey is wealth
creation.
• The evidence since 1991 shows that enabling the invisible
hand of markets, i.e., increasing economic openness,
has a huge impact in enhancing wealth.
• Evidence presented shows clearly that sectors that were
liberalized grew significantly faster than those that remain
closed.
This is not surprising as the market economy is
based on the principle that-
Optimal allocation of resources occurs when
citizens are able to exercise free choice in
the products or services they want.
THE BREAKDOWN OF TRUST IN THE EARLY YEARS
OF THIS MILLENNIUM
• In a market economy too, there is need for state to ensure a
moral hand to support the invisible hand.
• Markets are liable to debase ethics in the pursuit of profits
at all cost.
• Trust contributes positively to access of both formal and
informal financing
Along these lines, the Survey introduces
“trust as a public good that gets
enhanced with greater use”.
In economics, a public good is a good that is both non-
excludable and non-rivalrous. (Street Lighting)
Trust also has the characteristics of nonrival consumption i.e.,
the marginal cost of supplying this public good to an extra
citizen is zero.
It is also non-rejectable i.e., collective supply for all citizens
means that it cannot be rejected.
But unlike other public goods, trust grows with repeated use
and therefore takes time to build
- By Ankit Agrawal
Title
