The Telegraph
Since 1st March, 1999
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Mr Jaswant Singh does seem to believe in grea-ter openness. Not only were the two Kelkar consultation papers put up on the internet, but there is also now a mid-year review of the economy. A mid-year review should take place around mid-year, so that corrections are possible. In December, there are hardly four months left in which course corrections can be made. So, apart from transparency, what purpose does this review serve' There is indeed a four-point agenda for reform, but this agenda is not new.

Understandably, there is emphasis on the good and papering over of the bad. Gross domestic product growth will be between 5 and 5.5 per cent in 2002-03. Food stocks of 51.4 million tonnes. Inflation of 2.3 per cent by the wholesale price index and 4.3 per cent by one variety of the consumer price index. Sixty-six billion dollars of foreign exchange reserves, export growth of 13.5 per cent in dollar terms between April and September 2002. In six core and infrastructure industries, there is 5.6 per cent growth between April and October 2002, with signs of an industrial recovery. All this is indeed true. But it is equally true that MYRE has no idea how to step up investments required for 8 per cent growth. In 2001-02, 12 issues in the capital market raised Rs 2,360 crore. The six issues listed in 2002-03 have only raised Rs 962 crore. Foreign direct investment inflows are also lower than last year. Disbursements from all-India financial institutions are down by 46.2 per cent. Nor is the MYRE clear about what can be done on the fiscal problem. Budget estimates for 2002-03 projected an 11.9 per cent increase in revenue expenditure, MYRE shows an increase of 15.9 per cent in the first six months, with a suggestion that expenditure management might deteriorate in the remaining months. The budget promised 15.7 per cent increase in capital expenditure, MYRE shows an increase of 3.6 per cent in the first six months. The budget estimated a 13 per cent increase in subsidies, MYRE has an increase of 62 per cent in the first six months. The budget promised Rs 12,000 crore of disinvestments, the first six months have touched 25 per cent of this target. In fairness, MYRE could not have come up with a new reform agenda, nor was it expected to address the political economy. “There is a need to revise the rate of interest on small savings in line with movements in market-related interest rates. Any successful expenditure rationalization and reprioritization programme must address the issue of subsidies, through a rationalization of the prices of food, fertilizers, LPG and kerosene.” The finance minister’s middle class agenda stands in the way.

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