It's About Politics
The limits on Finance Minister Yashwant Sinha's budget this year are political. He has the prescription to put the economy on a high growth track, but hampered by vested interests, vote-bank politics and stubborn opposition parties, he is unlikely to deliver.

The Rot in Farming
Falling prices, stagnating production and diminishing returns are brewing an unparalleled crisis in farmlands across India. Ironically, the alarming situation has arisen despite an unprecedented 12 consecutive normal monsoons.

Creeping Paralysis
Doubts over Keshubhai Patel's fitness to rule are growing after his government failed to provide basic relief like tents to those affected by the earthquake. Despite having speedily restored electricity and water, which earned praise from some international agencies, criticism over Patel's poor marshalling of resources continues.

Artless Artistry
The festival tried to exhibit the widest selection rather than the best, making it a disappointing show.

Stillness of Change
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John Buchanan gives an exclusive insight into what it takes to coach the world's most successful team. He also enumerates what
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Strategic Partners
As emphasis shifts from relief to rehabilitation, Care Today is selecting regions to focus on and NGOs to help it channelise aid. The involvement of victims is integral to the plan so that their dignity remains intact.

COVER STORY: BUDGET 2001

III PRIVATISATION WILL LANGUISH

BECAUSE vested interests are not ready to let go of their fiefdoms.

Achieving less than 20 per cent of an income target is a good reason for sacking a manager. For two years now, the Government hasn't attained even 20 per cent of its annual disinvestment target. Of course, in this case Parliament is itself the reason for the abject failure of the disinvestment programme. In the past 10 years, successive governments have tried several methods to speed up disinvestments, sometimes by bypassing the political system and on other occasions by involving it. There have been at least four committees on privatisation. There is now a ministry and the Cabinet Committee on Disinvestment. Yet politicians continue to stall its progress, the latest instance being the sale of 51 per cent government equity in BALCO announced on February 21. The very next day the Rajya Sabha had to be adjourned because of an uproar over the manner of disinvestment.

To be sure, the Government's handling of privatisation has not helped build political consensus. In every privatisation move-BALCO included-the procedure has been so opaque that allegations by conspiracy theorists abound. "It's a loot with a capital 'l'," claims Somnath Chatterjee, leader of the CPI(M) in the Lok Sabha. Mukherjee opposes any disinvestments in profit-making PSUs and demands a white paper on the subject. In fact, most politicians agree with the concept of privatisation but oppose the process. Says Trinamool Congress MP Krishna Bose: "The Government should leave hotels and automobiles to the private sector. But disinvestments should be done in a way that does not hurt people." But the real stonewalling comes from either the ministers under whom the PSU is or the MP in whose constituency the company is located. For both, the PSU is a fiefdom, not to be given away easily.

All political parties are pro-protection when they are outside the government and anti-protection when they are running it. So Manmohan Singh, the father of liberalisation, is now being hailed by a section of industry as pro-Indian industry, while it's the erstwhile swadeshi Sinha and Vajpayee who are warning the industry of imminent competition. This being the last budget before India dismantles import licensing completely, the protectionists have a lot to watch out for and to demand. The Government not only has to satisfy the coalition partners and the Opposition but also accommodate sections of its own fraternity, like the Swadeshi Jagran Manch (SJM) and the Rashtriya Swayamsevak Sangh (RSS). That's because delicensing of imports from April 1, 2001 will threaten the survival of SSIs which have been a long-standing support base of the BJP. Admits Jagdish Shettigar, head of the BJP's Economic Cell: "There is a fear that imports may destroy SSIs. One way out is for SSIs to become ancillaries." For the time being, a group of ministers headed by Home Minister L.K. Advani is working on a future policy on the SSIs.

Mukherjee, who as the then commerce minister signed the WTO agreement on behalf of India in 1994, blames the United Front government for cutting the customs duty rates too low. He advocates periodic adjustments in customs duties and strengthening of anti-dumping measures to ensure that an open import regime is not inimical to the domestic industry. Therefore, expect some hikes in customs duty rates and resolves to protect the interests of Indian industry in the budget.

But they would mean very little beyond rhetoric. As the swelling imports of consumer products from China and east Asian countries prove, even high tariff walls will not protect the section of Indian industry which is way behind the global levels in quality and pricing. Only an outright dismantling of SSI reservation will give efficient players in the sector a chance to grow and compete with foreign companies. But the politics of the day will not allow Sinha to dereserve the SSI sector.

		BJP NO: Economic nationalism is the last refuge of the inefficient "If dumping is not taking place, there is no question of protection." Jagdish Shettigar

MetroScape
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