Statement of intent

GOING BY THE address to Parliament by the President, Mr. K. R. Narayanan, to mark the beginning of the Budget session, the Central Government has major plans for the economy. But given the Government's record of moving in fits and starts it is one thing to list new policies and programmes and another to follow them through with concrete action. Besides, even as the economy has distinctly slowed down in the past year and at least two major sectors - agriculture and small-scale industry - have gone through a turbulent phase and remain distinctly worried about a possible deterioration in their fortunes in the near future the note of self-congratulation in the address is misplaced.

The centre-piece of the treatment of economic issues is the focus on a growth target of 9 per cent a year over the next decade. In this respect, the achievements of the past three years where growth has averaged between 6 and 7 per cent a year come in for praise. Yet, the fact is that this growth has been driven largely by the service sector where the only noteworthy success has been in information technology (which in spite of its rapid growth in recent years continues to contribute no more than a couple of percentage points to total GDP). If the economy is to get anywhere near the target of a 9 per cent growth rate, total investment in agriculture and industry has to make a quantum leap from the present levels. This has to come largely from domestic resources in both the public and the private sectors. Yet, other than a passing reference to the need to raise investment in agriculture, this was an issue that obviously escaped the Government's attention when it prepared its statement of intentions for Parliament. When it comes to the specifics, the Centre appears to be confident that it will be able to go ahead with its plans for disinvestment in a number of public sector enterprises (though the target set last year for 2000-01 is far from being met), give a further fillip to the IT sector, especially by increasing the number of graduate engineers, and aim for an extremely ambitious target of adding 100,000 megawatts of power generating capacity over the next decade. The Railways is another sector where the Centre feels it can halt the deterioration of recent years, though how many new answers to old questions can be provided by a succession of committees and high- profile advisers is a moot question. In each of these areas there are attitudinal and legislative hurdles to be overcome which cannot be ignored by making reference, as the President's address does, to the practice of a common approach to economic policies by the Central and State Governments. The first indication of how far the Government will be able to progress in all the challenges that it has listed here will be known when the Union Finance Minister, Mr. Yashwant Sinha, presents the Budget for 2001-02.

The economic issue that has received the most attention in the President's address is labour legislation. While the issue of amending the existing labour legislation has been talked about for some years now, this is perhaps the first time that it has figured prominently in the President's address to Parliament. This may well be an indication that the Government plans to shortly introduce legislative Bills to this effect. The aim is essentially to end the security of employment that is now available for labour in organised industry, on the ground that the existing level of protection militates against new investment in labour-intensive industries where India has an advantage. Much as there are reasons to question the present labour laws, this is something which the Government will find it extremely difficult to bring about changes in, even as it continues to argue that the planned reform will favour labour by facilitating an increase in employment.

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Section  : Opinion
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