M A I N   N E W S

Sinha mum on key issues

A Budget is a major instrument of macro-economic policy. This year our country faces major challenges. For the third year in the row the growth rate in the economy has been declining. For the second successive year agricultural production has been stagnant. For many years industrial growth rate has been sluggish.

This year it is much lower than what it was in the previous year. Inflation was under control but the annual rate is now close to nine per cent. The only positive feature of the economy is the rapid growth of exports.

But that was because last year the world economy was doing well. Well, with the likely slowing down of the world economy, even in that positive factor there may be a question mark. So one expected that Finance Minister Yashwant Sinha would tell us what strategies he had in mind to go towards the nine per cent growth rate which the Prime Minister has been talking about.

What strategies he had in mind to achieve at least a 4 per cent growth rate in agriculture which the National Agriculture Policy has talked about. What steps he would take to create one crore jobs per year which the Bharatiya Janata Party has been talking about.

On All these points the Finance Minister has virtually nothing to say in the Budget presented today.

We welcome the measures to protect our farmers. Our farmers and industry needs the assurance that with the removal of quantitative restrictions (QRs), they will not be thrown to the world.

But, I doubt that the measures announced in the Budget will themselves be sufficient to tackle the agricultural malaise that prevails in our country.

The Finance Minister has talked about increasing the institutional credit to 24 per cent. If one sees the past four years, the growth rate of institutional credit to agriculture was declining. In the current year, Mr Sinha himself has mentioned that it will be no more than 15 per cent. What is the use of all this talk about the Kisan Credit Cards, when the rate of growth of actual supply of credit for farmers is going down.

Mr Sinha also talked about restructuring the food security system. But, I think that he has not thought of the consequences. Last year when this government tampered with the public distribution system (PDS) by changing prices of commodities for people living below poverty line (BPL) and above poverty line (APL), I had warned that this will boomerang and that has exactly happened.

Now they (government) want to dismantle the Food Corporation of India (FCI). They have been talking about decentralisation of procurement and distribution without thinking about the consequences. My fears are that everywhere this government acts in a half-hearted manner without thinking about the consequences. And I hope they will not tamper with the system of national food security.

However, I think the national system of food security does need modification. But it needs modification only after a great deal of thought. We should not do anything which will create in the farmers’ mind a new uncertainty. Most states have no credible mechanism for procurement. The Food Corporation of India, with all its imperfections, has built up expertise. Now we cannot overnight say that this system can be demolished.

Regarding import duties, we have to balance the interests of consumers with producers and wherever duty hikes are necessary to provide reasonable assurance to producers in our country, such tariffs should be imposed. The Government, I hope, will keep an alert mind that if the international situation warrants, they should be ready with prompt response. I think that the Indian farmers are not faced with undue uncertainty.

I am not at all happy about the state of development expenditure. For the fourth year in a row we have a situation where the Finance Minister says one thing during the time of presenting the Budget and reality turns out to be very different when they present the revised estimates.

I think the social sector, agriculture, rural development have got a raw deal in this year’s Budget. Social services have not received the allocation they deserved though great song and dance is being made by word’s about government’s concern for education and health.

But if you look at the allocation for capital investment or the allocation for social investment, in real terms there is hardly any increase.

As for the Defence outlay, I am in favour of ensuring that our armed forces are given whatever they need to effectively safeguard the country’s territorial integrity.

All in all in the short-term, I think the stock markets are going to be happy because the dividend taxes have been reduced.

The reduction in interest rates might also help some sections. But if the inflation rate goes up, the sufferers will be the ordinary people.

I hope the Finance Minister will be ready with a credible strategy of getting to a higher growth rate without getting into double digit inflation.

He has not outlined and he has simply assumed that inflation is no longer a problem.

(Dr Manmohan Singh is a former Union Finance Minister)

Oppn: it is anti-poor

It makes no reference to improving agriculture or employment generation,” said CPM leader Somnath Chatterjee. The burden had been on passed to the states which were under pressure. “Poor states and poor people are their targets,” Mr Chatterjee said.

Mr Mulayam Singh Yadav (Samajwadi) said multinationals had been given preference over domestic companies by way of tax concessions. Retrenchment of workers as a result of economic liberalisation would further increase unemployment with no provision for new jobs.

Farming community would be adversely affected following hike in power charges for farmers and lack of any provision for irrigation, he said, adding that it would only enable 5 per cent of the population to exploit the rest.

AIADMK leader P.H.Pandian said it would only benefit foreign investors and private sector at the expense of profit-making public sector units.

On downsizing of government, he said instead of abolishing a handful of secretary-level posts, “they should first downsize their Cabinet. The Budget will doom the economy.”

NCP leader Sharad Pawar said the Budget would “encourage recessionary trend” as there were no efforts to improve the investment climate or support sick industrial units.

RJD’s Raghuvansh Prasad Singh said the Budget was prepared “at the behest of the CII, FICCI and multinationals” and there was nothing for the poor and the unemployed.

“No step was suggested for unearthing black money. While there was a whopping amount of Rs 62,000 crore of non-performing assets of the banks, only Rs 800 crore has so far been recovered. As much as 30 per cent of the total NPA was owed to the public sector banks by members of the industry chambers,” he said.

Sarb Hind Akali Dal leader G.S.Tohra said unemployment caused by this Budget would “cause a big downfall in the society in the days to come”. He lamented that the subsidy granted to farmers, which was Rs 16,000 crore out of a total of Rs 2.5 lakh crore, would be further reduced.

Mr Abani Roy (RSP) said it was “pro-industrialist” Budget intended to onpass the Centre’s economic burden on to the states. He said the government announced its intention to continue with divesting the stakes of profit-making public sector units like Air-India and Maruti.

Describing the Budget as “anti-people,” the Left Parties today said the proposals had been prepared to outrightly benefit industrialists and the corporate sector at the cost of the indigenous agriculture and small-scale industry.

The Budget 2001- 2002 proposals would also lead to retrenchments, reduction in social security, and impingement on the rights of the labour class, they said.

Communist Party of India( CPI) national secretary Atul Kumar Anjan said the Budget had been prepared at the dictates of the World Bank and the IMF as could be seen in the context of lowering of the import duties and the concessions worth Rs 5,500 crore given to the corporate sector.

Anti-labour legislation had been introduced which would lead to massive retrenchments there in the name of downsizing the government had been no enhancement in the social sector. Huge doses of indirect taxes had been administrated which would ultimately be borne by the common man, he said.

Revolutionary Socialist Party MP Abani Roy described it as an administrative Budget which did not talk about employment generation.

Former Finance Minister Pranab Mukherjee said the Budget projected a slow growth as it failed to tackle problems in investment, agriculture and commerce.

“This is the fourth consecutive year that central plan has been lowered by four per cent to Rs 9,800 crore,” the Congress leader said adding that the Budget had lowered the fiscal deficit at the cost of capital expenditure.

The Budget, he said, failed to carry forward reforms in concrete terms, adding that hardly more than Rs 2,500 crore had been collected from various reform measures.

On disinvestment, he said if the government could not realise the proceeds in the past two years, what is the purpose of further disinvestment.

He decried the proposed downsizing measures in the Budget, saying, “The government must first downsize the Cabinet, which is one of the biggest in history.”

Samajwadi Party leader Mulayam Singh Yadav termed the Budget as a mere play of numbers, saying that it was intended only to mislead the people.

“The entire Budget is only geared to kill the poor, the farmers and the downtrodden,” Mr Yadav said in his reaction, adding that 95 per cent of the exercise was disappointing and the rest was “for the smart ones”. PTI, UNI

Maruti slashes prices

New Delhi, February 28
Maruti Udyog Limited (MUL), leader in the country’s auto industry, today announced a price reduction ranging from Rs 11,000 to Rs 42,000 for its vehicles in response to the Budget proposals.

The company said that it was passing the entire benefit of the tax reduction to the consumers with immediate effect.

The reduction would be Rs 11,000 for Maruti 800, Rs 42,000 for Baleno, Rs 16,500 for Alto, Rs 18,000 to Rs 19,000 for Wagon R, Rs 17,000 to Rs 18,000 for Zen and Rs 25,000 for Esteem. UNI