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March 2, 2001                                       Feedback  

    - EXIM POLICY '00



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'Politicians want to run down the public sector, so that it loses value, and can be sold for a song to their business cronies.'

Prithviraj Chavan

I am not happy with the overall thrust of the Budget.

It continues the populism of the railway Budget, clearly with a view to the coming assembly elections. It is focused on stock market sentiments and caters more to the FII requirements.

There is nothing for the agricultural sector or rural development. In fact, the plan expenditure is drastically curtailed to meet the fiscal deficit target.

It is not a growth-oriented Budget. The downward trend of the GDP growth rate for the last three years will continue. Without adequate plan spending, demand will not grow and therefore industrial growth is doubtful. We may not even reach this year's low GDP growth rate of 5.9 per cent.

The excise reforms are welcome. He should have simplified the direct tax code as proposed by (former finance minister) Shri Chidambaram. Different custom rate slabs could have been reduced. I think there is adequate tariff protection against agro-imports.

Instead of listing the many bills which they intend to bring, they should have actually introduced them by now. Reforms legislation has nothing to do with the Budget day. The commitment to the road project is also welcome. But revenues will not be as buoyant as predicted by the FM because there is nothing for industrial growth or demand growth.

The initial euphoria will soon evaporate when the reality dawns. Of course, the FM has catered to every wish of the industry organisations, FIIs and capital market punters. Naturally, they are happy.

But what about the silent majority -- the millions of farmers, rural poor, slum dwellers, small scale industrialists, artisans, industrial workers -- who depend on government spending to boost the economy that is going down. Therefore, we have termed the Budget anti-poor, anti-farmer and anti-labour.

Take power sector reforms. It's a long wish list. I don't think 100 per cent metering of power by the end of the year or stoppage of theft of electricity, or privatisation of distribution, although desirable, will be difficult for the state governments to implement. The same goes for the proposed pension reforms or amendment of essential commodities act. This EC act amendment may affect Maharashtra's monopoly cotton purchase scheme.

We do not think the Budget is growth-oriented. The economy will continue to stagnate as it has been since the BJP took over. The growth rate may be even less than this year's. We are against wholesale privatisation of profitable PSUs. The weaker ones need to restructured, not sold off for a pittance.

If you read the recommendations of the divestment commission, the first thing they say is that you must give autonomy to PSUs and they will do well. This government is not interested in improving the finances or strengthening the management or modernisation of PSUs. They just want to sell off the family jewels for a song. The public sector was created as a result of great sacrifice by the poor people of India. They deserve better. You must try to restructure PSUs.

The loss-making PSUs or those with outdated technologies, which cannot be revived, could be sold off. But what is the logic of selling profit-making ones? I think the divestment targets are not being reached because the government is not clear about its objectives.

Most of the loss-making PSUs are those which went sick in the private sector and were taken over or with change of technology have become irrelevant. The government must get out of these sectors. And yes, there will be buyers for the real estate value alone.

We should convert loss-making ones into profitable units and currently profitable ones into cash rich units. But we must give autonomy, restructured remuneration, invest in modernisation and new technology. It can be done. If NTPC, BHEL and oil companies can be profitable, so can others. But sometimes, politicians want to run down the public sector so that it loses value and can be sold for a song to their business cronies. The common man must guard against this crony capitalism.

We in the Congress believe we should be cautious about capital account convertibility after our east Asian experience. The FM has taken a few cautious steps; it's welcome.

(Does he know the difference between other countries and ours?) I have studied in the USA and lived there for five years. You must realise where we started in 1947. With 15 per cent literacy, almost 95 per cent abject poverty, no infrastructure either physical or social, except, perhaps, railways.

Considering our low starting point, we have done considerably well. If you want to blame, blame the social order of the last 2000 years, the likes of which no other country has witnessed, which kept 98 per cent people from education. Some of the east Asian countries, dictatorships all, have perhaps done better than us, but at a great human cost.

Prithviraj Chavan is a Congress MP and a member of the party's economic cell


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