Chandigarh, August 2
A former Finance Minister of India, Dr Manmohan Singh, today attributed the current economic slowdown in the country to the “crisis of governance.”

Speaking at an interaction with senior members of the editorial staff of The Tribune group of newspapers, Dr Manmohan Singh said this crisis of governance was visible not only at the Centre but also in every state in the country. There was gross mismanagement of the country’s resources, be it power, water, health building and roads or the infrastructure sector. Was it not amazing that state governments non-chalantly attributed up to 50 per cent of power generated to transmission and distribution losses? he said. “Thus, the more power we produce, the more we lose.”

What was, therefore, needed was a complete change in the mindset of those who took crucial national decisions. “Unfortunately, I don’t see that happening in the near future,” he said.

He recalled that when he took over as Finance Minister in 1991-92, the country’s economy was in a bad shape. “But we turned that crisis into an opportunity to come to grip with the situation and improve all parameters of the economy. As a result, by the time I left in 1995-96, the country’s economy was in a robust health. Economic growth had increased from 3.5 per cent to about 9 per cent, exports were rising, industrial output had touched a new high and agricultural production was consistently good. It had become one of the fastest growing economies of the world. But it was sad to note that within a few years, all those gains had been frittered away.”

This was because there was no consistency in the government’s economic policies. The direction of the government approach changed with the presentation of every Budget. So much so, that that there was a complete 180° turn in the policy during the first four budgets presented by Mr Yashwant Sinha.

He was also critical of the “cavalier manner” in which the government had dealt with the UTI crisis which had undermined the confidence of the millions of investors.

Thus, the government failed to create a climate that was friendly to the industry. Little wonder, investments in the industrial sector fell which in turn led to the shrinkage of the job market and a general slowdown in the economy. He pointed out that during his years in office, as many as 10 million new jobs were created. Indian savings were 23 per cent of the GDP in 1994-95. Public sector savings constituted 2 per cent of the GDP. These had now fallen to minus 2 per cent. Unless all these indicators were reversed, the country’s economy would head for a greater mess.

He emphasised that privatisation of public sector undertakings was good. But this had to be accompanied by changes in the economic policies. Unless this was done, the money raised through the sale of public sector companies would also be mismanaged and all that money would go down the drain.

Dr Manmohan Singh said he came to politics by accident. But he had dealt with politicians all his life. He was of the view that good economics was good politics.

Turning to the positive side of the Indian economy, Dr Manmohan Singh said it was now less dependent on rains than ever before. The contribution of the agriculture sector to the economy was now about 25 per cent which was roughly the same as that of the industrial sector. Besides, the country’s foreign exchange reserves were at a historic high while inflation had been kept under a strict check.

In reply to a question, Dr Manmohan Singh said he favoured certain curbs on the adoption of populist measures adopted by the political parties to win elections. In this connection, the Election Commission must intervene and ask the political parties promising populist schemes as to how they planned to finance those measures. Such a step on the part of the Election Commission did not require any amendment in the existing laws.