Economic analysis of India 2019 (OCED Economic Survey)- A summary

What is OCED?

The Organisation for Economic Co-operation and Development (OECD) organizes independent research and produces statistics to analyze policies to improve economic and social equality in the world. There are currently 38 member countries. It provides a platform as well as a rough figure for the governments of different countries to work together to find solutions to global and regional problems.

The Survey was discussed at a meeting of the Economic and Development Review Committee (EDRC) on 7 October 2019. In this report, I have highlighted the key findings of the report.

Key Findings

•There is scope to raise more personal income tax revenue to finance much-needed investment in infrastructure and higher public spending on health and education and to adhere to the set target on public debt to GDP.

• It is advised to raise more tax revenue by removing the tax expenditures that mostly benefit the rich, freezing nominal personal income tax brackets, and improving compliance.
• The government deficit to GDP has declined but various public spending programs are partly financed off-budget. Contingent liabilities are looming.
• Improve transparency on off-budget transactions and contingent liabilities, e.g. by creating an independent fiscal council.
• Inflation targeting, combined with lower oil prices and partial deregulation on the food market, have brought down inflation, which is now below target.
• Monetary policy transmission remains incomplete. Monetary policy should remain accommodative as long as inflation is set to remain comfortably close to the target.
• Reduce the spread between administered rates on small savings and market rates to improve monetary policy transmission.
• Corruption has declined but remains high. The lack of a comprehensive legislation for public procurement, consistent across levels of government, is an issue.
• Resolution delays under the Insolvency and Bankruptcy Code are frequent.
• Continue to open more benches and employ more and better trained professionals in commercial courts.
• Financial risks, in particular non-performing loans in public banks, have declined but remain high. Some non-banking financial companies, partly financed by banks, suffer from an asset-liability mismatch.
• Closely monitor asset quality of non-banking financial companies.

Labor guidelines are mind boggling and debilitate firms to develop and make quality jobs.

Employment creation has been slow and most positions are in the informal sector without a formal agreement and government-backed retirement inclusion.

• Labour-intensive exports are lingering behind.
• The populace's health status lingers behind the normal expansion in income. Public spending on medical services remains beneath 1½ percent of GDP. The quantity of specialists and medical attendants is low by global guidelines, specifically in rural regions.
• Tariffs hurt all the more low-income families and burden trade competitiveness. Indeed, even without any a multilateral economic alliance, India would profit from a decrease in exchange taxes.
• Resolution delays under the Insolvency and Bankruptcy Code are incessant. It is advised to keep on opening more branches and utilize more and better prepared experts in business courts.
• The majority of the Indian population is exposed to high outdoor and indoor pollution.
• Energy utilization per capita is low and will increment consistently.
• The Insolvency and Bankruptcy Code, implemented in 2016, forces a quicker acknowledgment and goal of insolvencies and rates up the redistribution of assets from declining firms and businesses to additional promising ones.
• By and large, it took about seven ages for the posterity of a low-pay family to arrive at the average income in the last part of the 2000s (OECD, 2018).
• Wealth is heavily concentrated, and the richest 1% of Indians hold over half of India’s wealth.
• Electricity was available at each village in 2018, and a large portion of India have acquired access to power beginning around 2000 (International Energy Agency, 2017). Improved access to power lessens the time spent gathering fuel (wood or cow fertilizer). Clean cooking fuels lessen the consumption of solid fuels, a significant danger for persistent obstructive pulmonary sicknesses.
• Government deficit to GDP has declined but various public spending programmes are partly financed off-budget. Contingent liabilities are looming.
• Corruption has declined yet stays high. The absence of a thorough enactment for public acquirement, reliable across levels of government, is an issue.
• Female labour force participation is low.