M A I N   N E W S

Former PMs join issue
Vow to fight economic policies
From S. Satyanarayanan
Tribune News Service

New Delhi, February 27
In a virtual re-emergence of the third front, three former Prime Ministers and leaders of the Left parties today took part in a rally here and pledged to unitedly fight against the economic policies adopted by the Vajpayee-led NDA government at the Centre.

Spearheaded and organised by former Prime Minister and chief of Samajwadi Janata Party (Rashtriya), Chandra Shekhar, the rally at the Ramlila grounds had former Prime Ministers V.P. Singh and I.K. Gujral, CPM general secretary Harkishan Singh Surjeet, CPI general secretary A.B. Bardhan, besides others, including JD (Secular) leader Madhu Dandavate, as its participants.

While former Prime Minister H.D. Deve Gowda could not make it due to the acid attack on his wife recently, Samajwadi Party chief Mulayam Singh Yadav sent a letter supporting the initiative undertaken by Mr Chandra Shekhar.

“I don’t know if this is the beginning of the third front or the fourth front but it is a united cohesive action against the policies of the government,” Mr Chandra Shekhar told newspersons, soon after the four-hour-long rally, when questioned whether the rally could be dubbed as the re-emergence of third front.

While Mr V.P. Singh asserted that Mr Chandra Shekhar was their leader, Mr Bardhan sought to make light of the leadership issue, saying, “It is not the question of leadership. We are all unitedly struggling against anti-national and anti-poor policies of the NDA government.”

Pledging to unitedly fight against what they called “anti-farmer”, “anti-labour” and “anti-poor” economic policies pursued by the NDA government, the leaders while addressing the rally made a scathing attack on the Congress and the BJP for initiating and pursuing, respectively, an “unmindful” economic policy under the garb of economic liberalisation and globalisation.

Making an open appeal to all parties, which are opposed to the NDA government’s economic policies, to join hands, Mr V.P. Singh charged the Congress and the BJP with showing one upmanship in pursuing an “unmindful” economic policy.

Strongly criticising the Congress for first signing the WTO proposal and now shedding “crocodile tears” for the plight of farmers, Mr V.P. Singh said, “If it (Congress) has guts, let it seek an open written apology for signing the WTO agreement.”

Mr Gujral, cautioned that unless people unitedly struggled against the “wrong economic policies” pursued by the Centre, multinational companies, capitalists and other big industrialists would continue to thrive at the cost of the poor.

Accusing the NDA government of virtually allowing external interference in economic affairs of the country in the name of liberalisation, Mr Chandra Shekhar warned “if economic interference is allowed then there can be political interference too.”

Left party leaders Surjeet and Bardhan warned that unmindful economic liberalisation and disinvestment would spell doom for the poor people and the farmers, while benefiting MNCs and big Indian industrialists.

Budget may spare common man
T.V. Lakshminarayan
Tribune News Service

New Delhi, February 27
It is unlikely that the Budget 2001 to be presented by Finance Minister Yashwant Sinha tomorrow will be harsh on the common man.

Though there is a general perception of a tough Budget being presented to reverse a slow down in the economy witnessed in the current fiscal, the FM is constrained on account of political compulsions — the Assembly elections in five states just two months from now and expected opposition from some of the NDA partners, protagonists of swadeshi in the BJP, agricultural lobby, trade unions, small scale sector, not to speak of the Opposition.

If the Railway Budget is any indication of things to come, the general Budget will avoid putting any burden on the common man by increasing excise levies on items of daily consumption. Similarly the FM may not like to annoy individual tax payers, particularly the salaried class and pensioners by increasing rate of income tax or surcharge. There is expectation that he may make some gestures in the form of adjusting income slabs so that the highest tax rate at 35.1 per cent, inclusive of surcharge, is applicable to income slabs of more than Rs 150,000. There is also a view that he may give some sops to senior citizens, particularly those above the age of 75, for example exempting medical expenses from the income.

Mr Sinha will set a precedent when he presents the Budget proposals for 2001-02 tomorrow morning but it remains to be seen whether he breaks new path in carrying the second generation of reforms forward.

Saddled with a less than satisfactory 6 per cent economic growth rate, fall in indirect tax collections, a devastating quake in Gujarat, and poor disinvestment proceeds, Mr Sinha will have to do a tight rope-walk.

The Budget will not be an exercise to raise resources alone. The Finance Minister will have to find ways to spur activity in the sectors of agriculture, industry, particularly manufacturing and give further fillip to the services sector.

The only silver lining in the otherwise gloomy scenario is that the fiscal deficit is unlikely to go out of hand. The Budget for 2000-01 envisaged a fiscal deficit target of 5.1 per cent of the GDP as against 5.5 per cent in the previous year. This is mainly due to better revenue receipts and lower growth in expenditure in the current year.

On the resources side, the Finance Minister has little flexibility to tinker with taxes. With the recent Gujarat surcharge, direct tax rates are as high as 35 per cent. Of the estimated Rs 200,000 crore plus revenue from taxes, direct taxes contribute around Rs 80,000 crore while indirect taxes account for around Rs 120,000 crore. In the previous fiscal tax revenue contributed to nearly 70 per cent of the total revenue receipts.

The Finance Minister is expected to bring some changes in the indirect tax policies in the budget for 2001-02 and this includes streamlining customs and excise duty rates. A new special excise duty to garner funds for development in Gujarat and a special import duty to give protection to the domestic industry against imports are on the cards.

Simultaneously peak rate customs duty is expected to fall as quantitative restrictions on more than 700 items go in accordance with the WTO agreement.

Mr Sinha has already told industrialists that his package on indirect taxes will not disappoint them.

On the direct taxes side, the recent 2 per cent surcharge on account of Gujarat quake has already pushed the maximum slab to around 35 per cent, which is bordering on the unacceptable in the new liberalised regime.

In his efforts to broadbase the tax structure, Mr Sinha is expected to bring in a whole lot of services into the tax net. At present a uniform 5 per cent service tax is levied on 26 operations. The services sector contributes more than 40 per cent to the country’s GDP but its contributions to the tax revenue is only 1.6 per cent.

Other indications about the Budget proposals are that it will include measures to accelerate privatisation of the competitive segment of the public sector, minimise wasteful expenditure with the help of a Fiscal Responsibility law and recommendations of the Expenditure Reforms Commission and attempt to further prune subsidies.

In this regard the government has talked about reforming the existing control systems governing the fertiliser, petroleum and sugar sectors.

Another area which will draw the Finance Minister’s attention is interest costs. The government has said that the administered interest rates on pension and provident funds must take account of the inflation rates, the effective term of the deposits and available tax exemptions. He might try to benchmark the interest paid on small savings instruments against equivalent market instruments.