M A I N   N E W S

Tough Budget ahead: President
Calls for phasing out subsidies
From T.V. Lakshminarayan
Tribune News Service

NEW DELHI, Feb 23 — A broad outline of the Union Budget, 2000, which was discernible in the President, Mr K.R. Narayanan’s Address to Parliament today, confirms that it is going to be a tough Budget.

Describing fiscal consolidation as the immediate challenge to the government, the President said: ‘‘If sacrifices have to be made for achieving this challenging goal, they are well-worth making because the long-term rewards of restructuring will benefit all Indians and will far outweigh the temporary costs.’’

Mr Narayanan also said in no uncertain terms that ‘‘subsidies on non-merit goods which are currently very high, have to be brought down and phased out.’’

Saying that the growing fiscal deficit continued to be an area of considerable concern, and it was the most challenging macro-economic management problem faced by the country, the President pointed out that deficit reduces public investment, crowds out private investment, raises interest rates and generates inflationary pressure.

Spelling out the concerns of the Union Finance Minister, he said the burden of interest payments continued to be large at above 4 per cent of the GDP, accounting for about two-thirds of tax revenue of the central government net of the states’ share. ‘‘As the interest burden on the government borrowing increases, it limits the ability of the government to expand health and education services and anti-poverty programmes’’, he remarked.

The President said for India to sustain accelerated growth with high employment coupled with modest inflation, there was a need to contain the growing fiscal deficit. There was a need to adopt measures to curb the rising trend of non-Plan expenditure, which required difficult decisions relating to the quality of government expenditure, downsizing the government, recovery of economic cost for goods and services and greater austerity in the government spending. The programme of disinvestment and restructuring of the public sector undertakings (PSUs) also needs to be accelerated and there was a need to modernise the tax system for improving the tax-to-GDP ratio.

‘‘If we achieve fiscal consolidation, then given our stable macro framework, India can truly hope to achieve growth rates of well over 7 per cent in the coming years”, he said.

Describing faster economic growth as a pre-condition for removing social and regional imbalances in development, he said the government was committed to accelerating the pace of economic reforms and to broadening their scope.

These reforms would cover agriculture, industry, public enterprises, fiscal consolidation and devolution, tax reform, financial sector reform and foreign investment policies. Most importantly, they would also cover policies for improving the performance of key infrastructure sectors — namely, power, roads, railways, ports, civil aviation, telecommunications and petroleum.

Since India was primarily a rural nation and most of the people depended on agriculture for their livelihood, development of agriculture, particularly in the rainfed and drought-prone areas where poverty is extreme, would be accorded high priority.

As the agriculture sector still employs about two-thirds of total workforce in the country, greater investment in agriculture, including agri-businesses, would be mobilised to enhance employment opportunities and create greater prosperity in rural areas. The government would shortly finalise the National agriculture policy to address these issues, he stressed.

Mr Narayanan said special programmes for the generation of productive wage employment in the rural areas, especially for creating permanent infrastructure assets and self-employment opportunities for the unemployed youth would be given greater thrust.

Referring to the medium-term economic agenda of the government, the President said there has been a distinct upturn in the economy. Economic growth in 1999-2000 was expected to be around 6 per cent. Inflation had also remained well under control during the current fiscal 1999-2000. Foreign currency reserves at over US 32 billion were also comfortable. There has been a general upward trend in stock indices, primarily due to the revival in the industrial sector.

‘‘To build on these clear economic strengths, we must seize the opportunity to deepen and accelerate the reform process’’, he said.

The President also made a special reference to the poor financial condition of the states.

Union Budget at 2 p.m.
Tribune News Service

NEW DELHI, Feb 23 — The Business Advisory Committee (BAC) of the Lok Sabha today decided that the Union Budget will be presented at 2 p.m., after the lunch break of the House on Tuesday, February 29.

Thus, the break from the colonial past, of the Finance Minister presenting the Budget at 5 p.m. (which coincided with 1200 Greenwich mean time) has been formalised. The break was initiated by Mr Yashwant Sinha last year, when he presented the Budget at 11 a.m. on February 20, which was a Saturday. Parliament is on recess over the weekends. Presentation of the Budget at 11 a.m. was possible last year as no question hour was scheduled for that day.

This year, the last day of February being a Tuesday, had last year’s timing been adhered to, then the question hour would have had to be suspended for the day.

Thus the BAC formalised the arrangement by specifying that the presentation of Budget shall take place after the lunch break, at 2 p.m.

Hence, the sanctity of the question hour and the heat generating Zero Hour has been maintained while making a break with the colonial past.

Narayanan endorses CRC
Tribune News Service and agencies

NEW DELHI, Feb 23 — The President, Mr K.R. Narayanan, today endorsed the Government’s decision to set up a broad-based Constitution Review Commission (CRC), saying it had become necessary to examine the experience of the past 50 years to better achieve the ideals enshrined in the Constitution.

Addressing a joint sitting of the Lok Sabha and the Rajya Sabha in the Central Hall of Parliament, marking the beginning of the 54-day Budget session, the President said the Constitution, which India adopted 50 years ago, had served the country well as it had inspired the spread of democratic consciousness in the society, empowering Dalits, adivasis, backward classes and women and making the system of governance more participative and progressive.

“While keeping the basic structure and salient features of the Constitution inviolate, it has, however, become necessary to examine the experience of the past 50 years to better achieve the ideals enshrined in the Constitution. The Government has, therefore, set up a broad-based Constitution Review Commission. The recommendations of this Commission would be presented before Parliament, which is the supreme decision-making body in Indian democracy”, he added.

The President’s speech, which was in fact a statement of the Government’s aims and objective, touched upon a whole gamut of subjects, including social welfare, international relations and economy.

Touching on the programmes relating to conservation development and management of land resources, the President informed that the Government would bring all the programmes and schemes and institutional infrastructure relating to land in rural areas, under the control of the newly created Department of Land Resources in the Ministry of Rural Development.

Mr Narayanan said the Government would soon set up a National Commission on Children to promote and channelise all efforts in the government and non-government sectors to achieve their all-round development and to unleash their creative energies both now and when they grow up.

He said a “Sarva Shiksha Abhiyan” to ensure that every child in the age group of six to 14 goes to a school, or an education guarantee centre, or a “back to school camp” by 2003 programme would be launched.

Mentioning the Government’s efforts to uplift the status of women in society, the President referred to the impending Women’s Reservation Bill and the Department of Women and Child Development’s proposal to come out with a National Policy for Empowerment of Women. The Indira Mahila Yojana would be made more effective and expanded to 450 more blocks.

He also informed that the Government would take a decision soon on the report of an Expert committee set up to study a proposed pension scheme for old age security. He said the Government had formulated a national policy on older persons and established a National Council for Older Persons to focus on problems faced by senior citizens.

Referring to the super cyclone that struck Orissa in October-end, the President said the Government had set up a high-powered committee to prepare a natural disaster management plan.

Speaking in the backdrop of the controversy over the Gujarat Government’s decision to allow members of the RSS to join the Government, the President said the Government was fully committed to preserving and strengthening the secular ethos of the country.

He said the Government stood by its promise to create the states of Uttaranchal, Vananchal and Chhattisgarh.

The President indicated that the general Budget would be ‘harsh’, warning that the growing fiscal deficit needed to be contained to move on to a higher growth rate of over 7 per cent.

Giving policy prescriptions, Mr Narayanan said the tax system must be modernised to improve the tax-GDP ratio and added that the government would accelerate the public sector disinvestment programme.

The President said a host of new measures including legislations on strengthening the Telecom Regulatory Authority of India, privatising the coal sector and expediting debt recovery mechanism were on the anvil as part of the medium-term economic agenda of the government.

On the defence front, the President attacked Pakistan’s military regime for stepping up cross-border terrorism and declared that India was prepared to meet any challenge to its territorial integrity and asked Islamabad to reverse its policy of hostility.

He voiced concern over the “marked increase” in cross-border terrorism in the months following the military coup in Pakistan, which was targeted especially at security forces.

The millennium’s first address by President to the joint sitting of Parliament was marked by noisy scenes of protest by Shiv Sena members, who displayed saffron banners and demanded restoration of voting right to Shiv Sena Chief Bal Thackeray.

As Mr Narayanan rose to make his address, several Shiv Sena members sprang to their feet flourishing long saffron-coloured banners in an unprecedented show of their demand.

Narayanan focuses on Russia
Tribune News Service

NEW DELHI, Feb 23 — The continuing importance of Moscow in New Delhi’s world view was reflected in the President, Mr K.R. Narayanan’s Address to the joint session of Parliament today.

While the importance of relationship with the United Kingdom, Germany, Japan and France were dealt with in one paragraph in the speech, an entire paragraph was devoted to Russia: “India looks forward to the consolidation of her time-tested, comprehensive relations with the Russian Federation into a strategic partnership. We await a visit to India by the President of the Russian Federation and the signing of the declaration on strategic partnership between our two countries”, the President said.

The address coming less than a month before the US President Bill Clinton’s visit, saw India looking forward to a broad-based and multi-dimensional expansion of bilateral relations.

Mr Narayanan pointed out that the government has continued to engage the USA in a serious dialogue on security, non-proliferation and disarmament issues predicated on India maintaining a credible minimum nuclear deterrent. A significant outcome of this dialogue is the decision to set up a joint working group to deal with cross-border terrorism, which is a menace to the whole world.

“We expect that President Clinton’s visit to India next month will pave the way for a broad-based and multi-dimensional expansion of our bilateral relations”, the President said.

The President also referred to the 50th anniversary of the establishment of diplomatic relations with China and in this context said that he was looking forward to his state visit to that country in May this year.

Pakistan found wide mention in the President’s speech as he mentioned the marked increase in Pakistan-sponsored cross-border terrorism.

“For its part, the government is fully alert to all threats to India’s external and internal security. We are prepared to meet any challenge to our territorial integrity and to our open, democratic way of life,” he said.

He hoped that Pakistan would reverse its policy of hostility towards India so that normal relations could be restored.

The President also praised the brave jawans and officers of the Indian Army who were standing guard along the LoC in the Kargil and other sectors.

“It is a tribute to the courage, determination and dedication of our forces that they have withstood freezing temperatures of minus 40 degrees Celsius and below and the hardship of patrolling snow-bound heights. It is due to the valour and skill of our soldiers that our frontiers are secure from enemy forces”, he said.

The President said the Subrahmanyam Committee, appointed by the Government to inquire into the events and circumstances that formed the backdrop to Pakistan’s armed incursion into Kargil and other parts of the LoC, has submitted its report and this would be tabled in Parliament during this session. The government is committed to take all necessary follow-up measures after a thorough scrutiny of the committee’s recommendations, he said.

Mr Narayanan spoke about the contribution made by the defence scientists and defence production units and disclosed that they had added two major successes to their list of achievements.

The short-range, quick-reaction-time surface-to-air missile, Trishul, and the remote-controlled Nishant has been successfully flight tested, he said.

Mr Narayanan pointed out that production in ordnance factories in the first nine months has been higher by 33 per cent, compared to the corresponding period last year.

On Afghanistan the President said the return of peace and tranquillity in Afghanistan was important for the stability in the region. He said it was only through the setting up of a broad-based government in Kabul, truly representative of all ethnic groups and the cessation of Pakistan’s interference, that peace could be restored in Afghanistan.