M A I N   N E W S

Objectives lack clarity

IT is a Budget with a lot of good intentions but the programmes are so dispersed that it is very difficult to evaluate because the objectives are not clearly stated. The overall macro-framework in which Finance Minister Yashwant Sinha is working is not spelt out.

As I see it the most important problem of Indian economy is to get out of this slowdown of economic activity. This is not just this year’s scenario, but it has persisted for the past five years. After 1996-97, every year the growth rate has been declining. And until last year the world economy was booming. We failed to take advantage of this global phenomenon. So, if you want to address the problem of slowdown we have to go to the causes of this slowdown.

The investment and savings rate in India has been falling in the last five years. When I left the Ministry of Finance in 1995-96, the public sector savings rate was 2 per cent of the GDP. Now it is minus 2 per cent. If the Finance Minister did nothing, but go back to the situation where I left it then the savings rate will go up by 4 per cent and the fiscal deficit of the Centre and the states will be manageable and it will not be a problem.

But the overall objectives are not clear. During the Ninth Five Year Plan, which is ending this year, the overall rate of growth will be no more than 5.5 per cent while the target was 6.5 per cent. Now the government is saying that in the Tenth Five Year Plan we are aiming for a growth rate of 8 per cent. How do you go to this level. I know, you cannot achieve it in one day. But what is the strategy and how does this Budget take us in that direction?

In the same way, the biggest problem for this country is to generate one crore jobs. The Economic Survey has pointed out that the growth of employment has slowed down in the 90s. So, how are we going to create more jobs? I think these things are not fixed. Even if you look at it in a narrow perspective, the problem of our country today is sluggish industrial growth and investment famine. There are certain tax incentives visible in this Budget here and there but a coherent mission statement to tackle this malaise is missing.

If you say there are some good intentions then it is there. But what is this Azadi to farmers? Last year the Finance Minister had announced with fanfare a decentralised scheme of procurement... If that scheme of procurement had been implemented then the farmers of Haryana, Punjab, Andhra and Western Uttar Pradesh would have been ruined, because they wanted to dismantle the public procurement system which has been built up over the last 30 years and to replace with what they did not know.

The very same day in an interview to The Tribune I had warned that if this scheme is implemented in an ill thought manner it would have ruined millions and millions of farmers. Now, the Finance Minister has reiterated to do away with this system without having an alternative in place. So, instead of giving Azadi to the farmers in Punjab, Haryana and neighbouring states he has created added uncertainity for them. If you really want to give thrust to agriculture, increase public investment in the sector. The problem throughout the 90s had been low rate of public and private investment in agriculture, which has lingered around 1.2 to 1.3 per cent of the GDP. How will it go up?

The Economic Survey says credit to agriculture has gone up while sale of machinery and equipment has gone down. There is no evidence that the concerted efforts are displayed even with regard to agriculture.

I am not doubting his (Mr Yashwant Sinha’s) intention. But I don’t think there is a programme of action which in the first year of the 10th Five Year Plan will ensure the target rate of 4 per cent is achieved.

The Finance Minister talked about competitiveness. What is the grand strategy of competitiveness? In this year our exports have been stagnant. India’s exports during the last five years, except for the previous year, has done much worse than the previous five years. There are certain incentives like special zones in textiles, etc. But what India needs is not this “fine-tuning” but an overall strategy that will make exporting as a whole profitable. I don’t think that the vision and the strategy is there.