September 7,1998
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EXCLUSIVE: PRANAB MUKHERJEE First, Get Your Priorities Right Implement plans, do it fast, and do it forcefully. If there is the most important suggestion among many that I have to make to the finance minister in his attempt to revive the economy then it is: take hard, unpopular decisions if need be. The objective is to be a good finance minister, not a popular finance minister. The objective is not to focus on 200 things, but the 20 that will get the economy going. And yes, political instability does have an effect on policy implementation, but it is not insurmountable. See what we did in 1991. The Congress party did not have absolute majority; this trend is now inherent in the system. But what did we do? We did not have the majority, but we brought in so many major changes in investment policy, industrial policy and trade policy. We broke convention. Whether we were able to carry them to their logical conclusions is another matter. The fact is that we could have been outvoted on the very day we proposed these changes. But we took the risk and went right ahead. You can inspire confidence in the minds of the people only by sending the right signals and taking firm measures. Nobody was prepared for another election so the Government could have quite easily got approval for its plans. I'm sorry to say this, but the Government missed the bus because it wanted to be populist. I appreciate that there are political compulsions. But if political compulsions are to be given priority, then one has to sacrifice the economy. We cannot have both things together. Then there is the matter of priorities. The slowdown in the economy has been going on for quite some time now. The rate of industrial and agricultural production, GDP growth and exports are much slower than they were in 1995-96. So a big one-time investment, a shot in the arm step-up of public expenditure is called for. I understand the problem of the finance minister because if he wants to step up public expenditure it will impact on the overall fiscal deficit. This is where the reason for delays is inexplicable because going by his own logic, he has already taken the risk of having a higher fiscal deficit of around 6.5 to 7 per cent of GDP. But even here, the provision for expenditure is mainly on account of unproductive purposes. He should have taken this risk for productive purposes by stepping up public expenditure. But what does the Government really want? If inflation control is the priority, then you can't have deficit-backed spending. If interest rate moderation is your priority, you can't have it either. Coming to exports, mere policy announcements is not enough for growth. You have to take certain steps to help the exporter by providing him inputs on priority in the form of power, communications, transportation facility and cheaper rates of interest. It may not seem like much, but the alternative should be unnerving enough: a balance of payments problem. It isn't there today, but it is certainly looming on the horizon. As far as industrial production is concerned, a survey is urgently needed to identify the problems of bottlenecks with respect to certain key industries in the core sector, and corrective measures should be taken. The finance minister has started this exercise but the whole process is slow. Take the case of power, where certain decisions have to be taken irrespective of certain political compulsions. You can say that others didn't clear fast track projects and you have done it, but it is not going to help the economy if clearances are only on paper. The electricity tariff regulatory provisions were diluted. If you want to have real investment and reform in the power sector -- which are needed -- in generation and distribution, there has to be a proper authority, so that investors are certain of getting back their money. Therefore, private investment is not coming in that area. Rationalisation of power tariff is also called for. It is also important to not fall into the trap of projecting plan outlays and seeing where resources can realistically come from. Mr Sinha has said that he was raising the Central Plan outlay to Rs 1,05,000 crore from a level of Rs 85,000 crore this year. It is wrong to compare revised estimates to budget estimates. He does not know what the figure will be at the end of the day. He has stepped up the Plan outlay for major sectors like railways, power, transport and communications, and told them that he has made the provisions through Internal and Extra-Budgetary Resources (IEBR). It has never worked. The Government must also pay attention to the Ninth Plan, which should have been finalised by now. It is becoming the victim of political instability. They should have accepted the draft prepared by the outgoing Finance Commission and finalised it. One year has already been wasted. It is important that no more time is wasted, either for the Plan or for anything else. My suggestion to the finance minister is state your priorities and just go ahead and fulfill them. Do what is necessary, irrespective of whether you have stability or instability. |
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