September 7,1998
|
|
|
|
EXCLUSIVE: YASHWANT SINHA Judge Us by Our Performance Key numbers are looking up, a policy push is to follow. In the past few days, my predecessors have said that there isn't a recession, the economy isn't doing that badly, the hold up is with policy bottlenecks. I agree with them entirely -- they are responsible for it. They held up power projects for five years. We have cleared them in five months. They squeezed public expenditure. I am increasing public expenditure, trying to get the private sector projects off the ground as quickly as possible. Spending per se is not bad. The question is: what kind of spending? If it's on infrastructure and housing and creates a cascading effect, then it's good investment; we have planned a 35 per cent increase in investment for infrastructure. If you just give larger pay packets to employees it won't work. One should not have a blinkered view only of the darker side of the first few months of this year. The economy is showing signs of revival despite what some people might think. Companies which have not done well in the first quarter are those which deal in steel, cement, manufacturing, commercial vehicles, etc. The general demand is not there. But recession, or slowdown, is something we have lived with for the past 24 months. It is not something that happened five months ago. It is a major challenge for this Government to take the economy out of this demand recession, and our strategy is meant to create demand for the sectors that are not doing too well. But we do have other sectors where results have been good. Industrial production for the first quarter of this year has grown by 5.4 per cent compared to only 3.7 per cent last year. Electricity generation has increased sharply by 10.2 per cent compared to only 5.4 per cent last year. Capital goods production has gone up by 11 per cent compared to (-)1.3 per cent last year. Direct tax collections have gone up by 41 per cent this year in the first three months, and corporate tax collections by 121 per cent. Personal income tax collections should register a better growth by early October. Excise revenues are up and customs revenues have improved since July. Sanctions by financial institutions have grown by 104 per cent in April to June, as compared to 4.6 per cent in the same period last year. Disbursements have grown by 48 per cent as compared to a decline of 16 per cent last year. These are positive signs. We are acutely aware that there are negative signs also. Like exports. We have taken a number of steps to give a boost like reducing cost of export credit and simplifying procedures. But the international situation is very volatile -- even China is doing badly in exports -- and we hope growth in exports will pick up. It's just that the total picture, while not entirely positive, is not entirely negative. We have done extremely well as far as the Resurgent India Bonds are concerned. We have been able to collect $4.16 billion despite the prophets of doom, downgrading by Moody's, economic sanctions. This is a most resounding vote of confidence in India at a difficult time of a persistent East Asian crisis, the Japanese and Russian economies not doing well, and with bonds and the spreads of almost all the developing countries doing badly. The mood of gloom is like a self-fulfilling prophecy. From my interaction with foreign investors, I find they are more positive about India. We shouldn't talk about despair, but hope. The construction season begins in September, after the rains. Then projects envisaged in the budget will get off the ground. New railway lines will come up, more gauge conversions will take place, houses will be built. When this happens the demand in steel, cement, trucks, other building material will rise. We propose to go to the market with our first disinvestment in September. We will disinvest at the market price and not wait for the market to turn and for the Government to make larger profits. We are going to process a number of recommendations of the Disinvestment Commission so that we can go ahead with disinvestment on a larger scale than we had projected in the budget. We have targeted a GDP growth of 6.5 per cent in the budget. I am still hopeful that the turnaround in the economy will help us achieve that target. Agriculture should be doing well compared to a decline last year. All the signs show that the kharif crop will be very good. And that gives us hope. For instance, in Punjab the rice production this year will be up by 2.5 million tonnes. As for talk of political uncertainty, in a coalition, people worry government policies will change. On the contrary, except for differences of opinion on some issues, there is already a political consensus with regard to economic policy. Nobody is going to set aside the Electricity Regulatory Authority. Nobody is going to say we should not spend on infrastructure. Reform will continue, but at a faster pace. I as finance minister would like to assure everyone that this Government is not merely announcing policy measures. If we want to be judged by any yardstick, it is policy implementation. |
|
|
Issue Contents | Write to us | Subscriptions | Syndication INDIA TODAY | BUSINESS TODAY | INDIA TODAY PLUS | COMPUTERS TODAY © Living Media India Ltd |
 |
 |
