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Wednesday, January 18, 2012

IMF needs $500 bn more funds to face debt crisis!Economic Parameters do stand aignst Excluded Mulnivasi Bahujan.Pranab Gears up to Make them FATAL!Where from to get the Money? Simply from so called Emerging markets,India and China mainly. It means ex


IMF needs $500 bn more funds to face debt crisis!Economic Parameters do stand aignst Excluded Mulnivasi Bahujan.Pranab Gears up to Make them FATAL!Where from to get the Money? Simply from so called Emerging markets,India and China mainly. It means expansion of Market at grass Root Level and budget Exercise policy Making and Planning have to support to acomplish this task!

Budget 2012: States tell FM to cut number of centre-sponsored schemes

BJP not perpetually against FDI. Neither NDA Opposes US Linked Zionist Free Market Economy!TWO party system Sustains manusmriti hegemony as Waman meshram had been Explaining!The NDA Government headed by Bajpayee had the DISINVESTMENT ministery. BJP also Pushes hard for Economic ethnic Cleansing!


Indian Holocaust My Father`s Life and

Time - SEVEN HUNDRED SEVENTY Eighty SIX

Palash Biswas

http://indianliberationnews.com/

http://indianholocaustmyfatherslifeandtime.blogspot.com/

http://basantipurtimes.blogspot.com/


Reforms drive is Pushed Hard by Global Brahamin Zionist Order.IMF needs $500 bn more funds to face debt crisis!Where from to get the Money? Simply from so called Emerging markets,India and China mainly. It means expansion of Market at grass Root Level and budget Exercise policy Making and Planning have to support to acomplish this task!

The International Monetary Fund said on Wednesday that it's aiming to increase its financial firepower by around $500 billion so it can give out new loans to help mitigate a worsening financial crisis.

Responding to widespread speculation surrounding its funding requirements, the Washington-based institution said its staff estimates that countries around the world will need about $1 trillion in loans over the coming years. Most of the concerns center on the 17-nation eurozone, which has been embroiled in a debt crisis for around two years.

``At this preliminary stage, we are exploring options on funding and will have no further comment until the necessary consultations with the Fund's membership have been completed,'' a Fund spokesman said in a statement.

Thanks to some $200 billion that European countries have recently promised to the IMF, it is already more than one third on its way to reaching its fund-raising goal.

The IMF has put up about a third of the financing of the eurozone's bailouts over the past two years, but there are growing worries that non-European countries will also need more help given the worsening economic outlook.

Earlier, its sister organization, the World Bank, urged emerging countries that they have to be ready for a severe global downturn if the crisis in the 17-nation eurozone intensifies.

The eurozone, in particular, has been pushing countries around the globe to give more funds to the IMF in the hope that it would build up a larger firewall to stop the continent's debt troubles from spreading to large economies like Spain, Italy or even France.

But so far, even countries relatively flush with cash as China or Brazil have been reluctant to put up more money for Europe. The United States is also reluctant to increase the fund's resources. British Prime Minister David Cameron said Wednesday that the government would be prepared to back an increase but that he would require approval from his Parliament.

``We believe the IMF must always lend to countries, not to currencies,'' Cameron said at a news conference with Italian Premier Mario Monti. ``We would only act if that was with others, not just as part of a eurozone measure.

However, Cameron said it's up to the eurozone itself to prove that it's ``standing behind its own currency.'' How the IMF's fund-raising goal will be reached is set to be discussed at a meeting of finance ministers of the Group of 20 leading economies in Mexico next month. There are several ways of boosting the IMF's lending power.

BJP not perpetually against FDI. Neither NDA Opposes US Linked Zionist Free Market Economy!TWO party system Sustains manusmriti hegemony as Waman meshram had been Explaining!The NDA Government headed by Bajpayee had the DISINVESTMENT ministery. BJP also Pushes hard for Economic ethnic Cleansing!



Concerned over declining growth rate in the current fiscal, Finance Minister Pranab Mukherjeeon Wednesday said that he will address the slippages in economic parameters in the upcoming Budget. The government on Thursday indicated that the budget session of Parliament may begin on March 12. Parliamentary affairs minister Pawan Kumar Bansal, however, said a final decision was yet to be taken and the Cabinet Committee on Political Affairs will soon take a call.

Economic Parameters do stand aignst Excluded Mulnivasi Bahujan.Pranab Gears up to Make them FATAL!


We all know the government Expenditure has NOTHING to do with Welfare. The Neo Liberal Age and Complete LPG Mafia Rule of Extra constitutional elements have killed the Welfare State. Public services like Education and Health are privatised. infrastructure has been handed over to Private Sector. Services like Post and Railway are all set to be Privatised as Energy and Oil Sectors have been. The Reforms drive have killed INFORMATION as the People are deprived of the information about Policy Making, Legislation and Governance. Representation whatesoever left after Poona pact has also been wiped out as the Elected Parliament and Assembly have no saying over policy making and Governance. Violation of Parliamentary Consensus on OBC head count is the burning example. As Waman meshram puts it, the Brahamins have Uncontroled Power. Spending on social Sector is meant to Promote Market only and the Corpoarte Economy fed by FDI and Tax forgone generates Corruption and scams. No Civil society or Media dare to oppose the Free market Economy.

Pranab Mukherjee has to stregthen this Free Market Economy!Pranab`s budget is the Budget for India Incs and MNCs targeted to free INFLOW of Foreign capital for which Indigenous Aborigine Mulnivasi Humanscape has to pay the Price with Life and Livlihood.


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Business LineThe Union Finance Minister, Mr Pranab Mukherjee, with Mr Harsh Mariwala, outgoing FICCI President, during the 84th annual general meeting of FICCI in the Capital on Wednesday. Photo: Kamal Narang

Corporate India today urged the Government not to judge industry by "deviants". It wants to rebuild trust to remove many hurdles inhibiting growth.

On his part, the Finance Minister, Mr Pranab Mukherjee, has asked India Inc to play a catalytic role in building consensus on economic reforms. He asserted that the UPA Government cannot be accused of not trying to push through economic reforms.

Post the unearthing of alleged scams in telecom and commonwealth games in the last few years, the relationship between the Government and industry had touched a low.

There has been a perception that economic growth was faltering on account of lack of adequate movement of policies and legislative changes to push through economic reforms. The global uncertainty has also not helped and India's economic growth has slipped below the 9 per cent levels seen few years back.

Meeting India's fiscal deficit target will be a "major challenge," Finance Minister Pranab Mukherjee admitted on Wednesday, adding that the South Asian economy faced a difficult few months ahead.

Economists have forecast India may miss its goal of reducing its budget gap to 4.6 percent of gross domestic product by one to two percentage points in the current fiscal year to March as growth loses steam and subsidies swell.


"Adhering to the fiscal deficit target of 4.6 percent of GDP (gross domestic product) in 2011-12 is a major challenge," Mukherjee told a business audience, adding India had "a difficult last quarter ahead of us in this fiscal year."

The gap between India's spending and revenues stood at 6.7 percent of GDP in the first half of 2011-12 and has emerged as a central concern of economists who say it could be between six or seven percent for this financial year.

The deficit problem has been worsened by a sharp shrinkage in growth of tax revenues and the cost of government payments to cover the revenue losses of state-owned oil retailers for selling products at state-set cheaper prices.

The fiscal deficit stood at 4.7 percent a year ago.

In another setback, the government has also raised just three percent of its goal of collecting 400 billion rupees ($7.9 billion) from sale of holdings in state-owned firms this financial year, according to official figures.

Prices of India's benchmark 10-year bonds have been falling on concern that the government will miss its fiscal target, resulting in higher borrowing costs.

India has already raised its debt sales target to a record 5.1 trillion rupees to meet the cost of higher subsidy payments and other expenses.

While the rupee has firmed from record lows against the dollar in recent weeks, Mukherjee said the currency would remain under pressure until there is a "durable solution to the sovereign debt problem in Europe."
The rupee was Asia's worse performing currency in Asia last year as investors fled developing markets to pump money into US assets such as treasury bills -- seen as safe bets in times of crisis.
Mukherjee said he expected the economy to grow by around "seven and a half percent or a little less" this year after expanding 8.5 percent in 2010-11.

But some economists have said growth could be below seven percent.


Addressing FICCI's 84th annual general meeting today, Mr Pranab Mukherjee asked corporates to demonstrate its willingness to marry its economic interests with some larger social responsibilities.

"It is true that sometimes the process of reforms gets overtaken by political events. This is in the very nature of our democracy and its polity. For this process to be speeded-up, the Indian enterprise has to help build the consensus across our diverse social and political space, to benefit from the opportunities before us".

He also highlighted that the Government had post the August 1 meeting with industrialists tried taking some of the doable suggestions (given by industry) forward.

"Unfortunately progress of economic reforms on some fronts especially FDI in multi-brand retail and some legislative amendments have not seen a smooth passage, but we cannot be accused of not trying".

The outgoing FICCI President, Mr Harsh Mariwala, said there was a need to change the relationship between the Government and industry. He said that India story is still alive and that "we are in a sweet spot".

Government and industry are partners and they must work on the basis of trust. "Sadly, today trust has eroded on all fronts and it is important to rebuild trust".

Mr Mariwala said that the Government should set up the private sector for success. He also admitted that industry had to self-regulate and internalise business ethics. It is also crucial that Government gives the private sector credit for creating wealth and value for the country.


Pranab to discuss burden shift in Wednesday meet; Planning Commission agrees with rationale, but finds no easy path ahead.In the coming budget proposals for 2012-13, also the first year of the next five-year plan (2012-17), finance minister Pranab Mukherjee is likely to outline a schedule seeking increased sharing by state governments of the social sector expenditure burden.Pronab Sen, principal advisor to the planning commission, said almost all states were in a much better fiscal position than the Centre. West Bengal, Kerala and Tamil Nadu were among the few still facing fiscal stress, he said.Spending on health, food security and education in the 12th plan is likely to touch 4-4.5 per cent of the combined gross domestic product of Centre and states. The big issue in the 12th plan is how the responsibility of spending in these areas would be divided between Centre and states. The planning commission is working on the issue.



"As I set about preparing the Union Budget for the next year, I have to take stock of the developments in the past months and find ways to address the slippages, the gaps and building on outcomes that need to be consolidated in the ensuing years," he said at 84th annual general meeting of Ficci here.

Warning that the months ahead are difficult, he said the growth rate could fall below 7.5 per cent in the current financial year from 8.5 per cent a year ago.

"We have difficult last quarter ahead of us in this fiscal year. Our growth for 2011-12 may be around 7.5 per cent or less...I must confess, at this point in the year, I find myself in much the same situation," he said.

There are also concerns on the central government finances for the current fiscal, he said, adding, performance during the first half on the fiscal front poses some risks in both receipts as well as expenditure estimates.

"Adhering to the fiscal deficit target of 4.6 per cent of GDP in 2011-12 is a major challenge," he said.

The government proposes to bring down the fiscal deficit in the current fiscal to 4.6 per cent of the GDP from 4.7 per cent a year ago. However, the surge in subsidy bill and poor realisation from disinvestment has made the task difficult.

The Union Budget for 2012-13 should promote growth and employment besides focusing on infrastructure sector like roads, power and healthcare, West Bengal Finance Minister Amit Mitra said today.


"There should be growth centric Budget. Our major concern regarding the macro-economy is the slowdown of the GDP growth, which in turn is affecting all of us in the states," he told reporters after a pre-Budget meeting held by Finance Minister Pranab Mukherjee with state finance ministers.


While the government, in the last Budget, had projected 9 per cent growth this fiscal, the economy is likely to grow by around 7 per cent.


"We urge that some fresh and out-of-the-box thinking may be explored in the Union Budget to stimulate growth and employment while reducing the inflationary pressures," Mitra said, adding, "If the growth is slow, it affects the states. The budget should be employment centric. We need focus on human capital".


There are around 500 million people below the age of 25 who would suffer if jobs are not created, he added.


Mitra said the Centre should take steps for development of road and highways, education and health. He also sought special package for developing coastal areas and regulation of coal prices.


Besides, he demanded some relief for the state in the forthcoming Budget as West Bengal has a debt stock of about Rs 2 lakh crore.


"We are in debt trap. Debt stressed states may get some relief which include Punjab and Kerala also," Mitra said.


Besides, Tamil Nadu Finance Minister O Panneerselvam said a "severe power shortage," in the state was affecting its industrial and economic growth.


"As a solution to this problem, I appeal to the Centre to establish a gas grid connecting major cities of the State by developing the Colachel Port as an energy Port with facility for LNG import," Panneerselvam said.

With counting postponed to March 6, the earliest that Parliament could convene was on March 12 with the President's address. While discussion on a motion of thanks is the norm, this will be followed by theRailway Budget and the Economic Survey before finance minister Pranab Mukherjee tables the Union Budget.


Mukherjee has already confirmed that the budget will be delayed this year, something that Bansal reiterated during an interaction with the media.


This is only the third time that the budget will not be presented on the last day of February. In 1995, the budget was presented in mid-March although Parliament session was convened in February but ended with the President's address. In 1976 too, the budget was delayed. Usually, due to general elections, budget presentation is delayed.

Budget 2012: States tell FM to cut number of centre-sponsored schemes

Finance Minister Pranab Mukherjee on Wednesday underlined the need for striking a balance between fiscal consolidation and public expenditure, even as states stepped up their demand for more funds to achieve inclusive growth.

"...as the country enters the 12th Plan period in 2012-13, there is a need to balance the need for higher government expenditure for supporting improved and inclusive growth and the imperative of fiscal prudence," he said during a pre-budget consultations with state finance ministers here.

At present, he said, "we are facing three major challenges, maintenance of inflation, especially the food inflation, at reasonable level, bringing the economy back on the path of fiscal consolidation and maintaining sustainable and inclusive growth".

Mukherjee sought the support of states to meet various challenges facing the economy and emphasised that the country can meet those with mutual cooperation and support of each other.

He also underlined the need for greater coordination between Centre and states vital for creating a conducive environment for growth and inclusive development. During the meeting, a number of suggestions were given on the Union Budget for 2012-13.

They demanded that government should focus on growth in rural areas and provide more resources and facilities in education and health sector. Some members suggested that the government should implement the B K Chaturvedi Committee report pertaining to reduction in the number of centrally sponsored schemes.

Talking to reporters after the meeting, Bihar Deputy Chief Minister, who also holds the finance portfolio, Sushil Kumar Modi said a large number of states have agreed that BK Chaturvedi group report on central sponsored scheme (CSS) should be implemented and the report has suggested to reduce 147 CSS to 59.

"The fund allocated under the Cente-sponsored scheme should be routed through state governments so that CAG could audit the expenditure. At present, CAG cannot audit these schemes where money is not routed through state governments," Modi said.

In the meeting, the states pressed for increasing the open market borrowing limit for states. "Once you allow the borrowing limit, the state should be free to borrow that much fund at any point of time in the fiscal and they should not be required to seek permission every time they borrow from the open market," Modi said, adding that the state have sought extension of interest rate subvention to allied sector like dairy, fishery and poultry.

West Bengal Finance Minister Amit Mitra said that the Union Budget for 2012-13 should promote growth and employment besides focusing on infrastructure sector like roads, power and healthcare. "There should be a growth-centric Budget. Our major concern regarding the macro-economy is the slowdown of the GDP growth, which in turn is affecting all of us in states," he said.

"We urge that some fresh and out-of-the-box thinking may be explored in the Union Budget to stimulate growth and employment while reducing the inflationary pressures," Mitra said, adding, "If the growth is slow, it affects the states. The budget should be employment centric. We need focus on human capital".

They also urged the Centre to examine the recommendations of the Rangarajan Committee report regarding efficient management of public expenditure. The participants also wanted the government to consider fiscal incentives to states for spurring investments.

Many State Finance Ministers were of the view that the Union Budget for 2012-13 should focus on growth and employment generation as the country could not afford to have jobless growth.

The meeting was attended by the Chief Minister of Meghalaya, Deputy Chief Ministers of Bihar and Jharkhand and Finance Ministers and other Ministers of Andhra Pradesh, Arunachal Pradesh, Chhattisgarh, Gujarat, Haryana, Jammu and Kashmir, Karnataka, Kerala, Madhya Pradesh, Rajasthan, Sikkim, Tamil Nadu, West Bengal and NCT of Delhi.
  1. [PDF]

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  5. 14 Jan 2011 – Budget 2011-12 to serve as a transition towards a more transparent and result oriented economic management system in India. OVERVIEW OF ...

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  11. Union Budget of India. The Budget documents presented to Parliament comprise, besides the Finance Minister's Budget Speech, of the following: ...

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  17. www.moneycontrol.com/budget2011/

  18. Budget 2011-Union Budget 2011-2012: News and Highlights for India Union Budgetand Railway Budget for the year 2011 2012. Track India's budget 2011 Live ...

  19. India's Defence Budget 2011-12 | Institute for Defence Studies and ...

  20. www.idsa.inPublicationsIDSA COMMENT

  21. India's Defence Budget 2011-12. Bookmark and Share · Laxman K Behera. March 7, 2011. The union budget 2011-12, presented to the parliament on February ...

  22. Highlights of Union Budget 2011-2012 - The Times of India

  23. timesofindia.indiatimes.com/home/...budget...Budget.../7592642.cms

  24. 28 Feb 2011 – NEW DELHI: Finance minister Pranab Mukherjee on Monday presented to Parliament India's budget for the coming financial year beginning in ...

  25. India Budget 2011-12 highlights: Economy to grow at 9% | www ...

  26. www.commodityonline.com/.../india-budget-2011-12-highlights-eco...

  27. 28 Feb 2011 – India's economy is expected to grow at a rate of 9% and agriculture has reocrded 5.4% growth in 2010-11 while industry grew 8.1%, according ...

  28. Top 10 Expectations from Union budget 2011-12! - India Business ...

  29. trak.in/tags/business/2011/02/08/top-10-union-budget-expectations/

  30. 8 Feb 2011 – It's back to February, the month of Union Budget – a blueprint for the allocation of finances for the ensuing year; and the ways and means of ...

  31. [PDF]

  32. Speech of Mamata Banerjee introducing the Railway Budget 2011 ...

  33. www.indianrailways.gov.in/...budget/RailBudget.../RailBudget_2011-...

  34. File Format: PDF/Adobe Acrobat - Quick View

  35. 25 Feb 2011 – introducing the Railway Budget 2011-12. 25 th ... sustainable, efficient and rapidly growing Indian Railways, and on the other, by an acute ...

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  37. indianholocaustmyfatherslifeandtime.blogspot.com/.../budget-2011-1...

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Full coverage

Budget 2012: States tell FM to cut number of centre-sponsored schemes

Economic Times - ‎1 hour ago‎

During the meeting, a number of suggestions were given on the Union Budget for 2012-13. They demanded that government should focus on growth in rural areas and provide more resources and facilities in education and health sector. ...

States want budget to spur rural development

mydigitalfc.com - ‎16 minutes ago‎

By KR Sudhaman Jan 18 2012 , New Delhi Finance minister Pranab Mukherjee on Wednesday gave enough indications that the mantra for 2012-13 budget would be strive towards fiscal prudence and containing inflation. "There is a need to balance the need for ...

States want employment centric, growth-oriented budget

domain-B - ‎1 hour ago‎

Many state finance ministers attending the pre-budget meeting in New Delhi today were of the view that the union budget for 2012-13 should be growth centric and employment centric, as the country could not afford to have jobless growth. ...

States Seek Growth-Centric Budget in Pre-Budget Consultations with union...

Press Information Bureau (press release) - ‎4 hours ago‎

He also touched upon the issue of state of Indian and global economy and other related issues. A number of suggestions were given by the participating Ministers in the pre-Budget Consultation process for the Union Budget 2012-13. ...

States' social sector bill may inflate

Business Standard - ‎Jan 15, 2012‎

In the coming budget proposals for 2012-13, also the first year of the next five-year plan (2012-17), finance minister Pranab Mukherjee is likely to outline a schedule seeking increased sharing by state governments of the social sector expenditure ...

State finance ministers to discuss CST compensation issue with Pranab

Hindu Business Line - ‎Jan 17, 2012‎

Mr Pranab Mukherjee is holding pre-Budget consultations with various stakeholders, including the finance ministers of states and Union Territories, in the run up to the Union Budget for 2012-13. The Empowered Committee of State Finance Ministers on ...

Mukherjee expects Inflation in 6-7 pct range by March end

Moneycontrol.com - ‎Jan 17, 2012‎

India's headline inflation slowed in December to a two-year low as food price pressure eased dramatically, but the central bank is expected to leave interest rates on hold next week. The country's economic growth is slowing after a prolonged bout of ...

<B>Nitin Desai:</B> Growth, not prudence

Business Standard - ‎1 hour ago‎

Expenditures on social inclusion are a necessary part of the Budget in India'spolitical context. But a decisive shift from NREGA-type handouts to training and skill development for entry-level jobs in the non-agricultural economy would be a positive ...

Pranab to meet state FMs on CST compensation, GST in Feb

Economic Times - ‎4 hours ago‎

Finance Minister Mukherjee asked the state representatives to stick to the pre-budgetconsultations and give suggestion regarding that," Bihar Deputy Chief Minister Sushil Kumar Modi, who heads a panel of state finance ministers on GST, said. ...

Pranab asks India Inc to help build consensus on economic reforms

Hindu Business Line - ‎8 hours ago‎

Kamal Narang The Finance Minister, Mr Pranab Mukherjee, has asked India Inc to play a catalytic role in building consensus on economic reforms. He also asserted that the UPA Government could not be accused of not trying to push through reforms. ...

Budget to address fiscal 'slippages', says Pranab

Hindustan Times - ‎1 hour ago‎

Finance minister Pranab Mukherjee on Wednesday said that he would have to address the slippages in economic parameters in the forthcoming budget. Speaking at industry chamber Ficci's 84th annual general meeting, he said the situation has not changed ...

Budget 2012 to address slippages in economy: Pranab Mukherjee

Economic Times - ‎3 hours ago‎

NEW DELHI: Concerned over declining growth rate in the current fiscal, Finance Minister Pranab Mukherjee on Wednesday said that he will address the slippages in economic parameters in the upcoming Budget. "As I set about preparing the Union Budget for ...

Economic growth may fall below 7 pc: Pranab

IBNLive.com - ‎11 hours ago‎

Addressing India Inc in CNBC-TV18's India Business Leader Awards, Mukherjee assured that the government is making best efforts for medium to long term fiscal consolidation. Though impacted by the global developments, India's growth fundamentals are ...

Govt to address slippages in economic parameters in Budget: FM

Times of India - ‎5 hours ago‎

NEW DELHI: Admitting that the situation has not changed much during the past one year, finance minister Pranab Mukherjee today said that he will have to address the slippages in economic parameters in the upcoming Budget. "I must confess, at this point ...

Budget to address slippages in economy: Pranab

Hindustan Times - ‎3 hours ago‎

PTI Concerned over declining growth rate in the current fiscal, finance minister Pranab Mukherjee on Wednesday said that he will address the slippages in economic parameters in the upcomingBudget. the developments in the past months and find ways to ...

Growth will be below 7.5%, says Pranab

Hindustan Times - ‎7 hours ago‎

Our growth for 2011-12 may be around 7.5% or less," Mukherjee said while addressing the 84th annual general meeting of the Federation of Indian Chamber of Commerce and Industry (FICCI) here. In Budget for 2011-12, the finance minister had set a fiscal ...

Govt to address slippages in the Budget: FM

Rediff - ‎8 hours ago‎

"I must confess, at this point in the year, I find myself in much the same situation," he said 84th annual general meeting of Federation of Indian Chambers of Commerce and Industry in New Delhi [ Images ]. "As I set about preparing the Union Budget for ...

India says meeting deficit target 'major challenge'

AFP - ‎9 hours ago‎

Economists have forecast India may miss its goal of reducing its budget gap to 4.6 percent of gross domestic product by one to two percentage points in the current fiscal year to March as growth loses steam and subsidies swell. ...

India Minister: Rupee May Remain Under Pressure

Wall Street Journal - ‎8 hours ago‎

By MUKESH JAGOTA NEW DELHI -- The Indian rupee, which has started strengthening against the US dollar this year after a sharp fall in 2011, will continue to be under pressure due to the prevailing uncertainties in the global economy, Finance Minister ...

Growth could fall to below 7%: Pranab

Hindustan Times - ‎21 hours ago‎

PTI Union finance minister Pranab Mukherjee with MoS Namo Naryan Meena and SS Palamanikam at the pre-Budget consultations with Social Sector related Groups in New Delhi. Warning that the months ahead are difficult, finance minister Pranab Mukherjee on ...

Pressure on rupee to continue: Pranab

Hindu Business Line - ‎10 hours ago‎

Stating that India's growth fundamentals are strong, he said overall economic growth for 2011-12 may be around 7.5 per cent or less. "We have difficult last quarter ahead of us in this fiscal year.'' The Union Finance Minister , Mr Pranab Mukherjee ...

Difficult months ahead, growth could fall to below 7%: FM

Moneylife Personal Finance site and magazine - ‎11 hours ago‎

He, however, expressed hope that the Reserve Bank of India (RBI) would take appropriate steps in its forthcoming monetary policy review on 24th January to keep the growth momentum. "Going forward, I am sure RBI will take into account important concerns ...

Trying for medium to long term fiscal consolidation: FM

Moneycontrol.com - ‎Jan 17, 2012‎

A concerned Finance Minister Pranab Mukherjee feels that global economic environment continues to remain fragile but is confident on India's ability to grow stronger. Addressing India Inc in CNBC-TV18's India Business Leader Awards, Mukherjee assured ...

Call for social audit of all Centrally-funded schemes

Hindu Business Line - ‎Jan 17, 2012‎

The Union Finance Minister, Mr Pranab Mukherjee, with the Minister of State, Mr Namo Narain Meena, and the Chief Economic Advisor, Ministry of Finance, Dr Kaushik Basu, during their pre-Budget consultations with social sector related groups in the ...

India to struggle to meet fiscal deficit target of 4.6%: Pranab Mukherjee

Economic Times - ‎11 hours ago‎

India will struggle to meet a fiscal deficit target of 4.6 percent for the fiscal year that ends in March, Finance Minister Pranab Mukherjee said on Wednesday, calling it a "major challenge". Mukherjee added that inflation will drop to between 6 ...

Hectic policy action expected in budget; Pranab Mukherjee to unveil investor...

Economic Times - ‎Jan 16, 2012‎

NEW DELHI: Finance Minister Pranab Mukherjee will attempt to nudge entrepreneurs to invest more by unveiling a raft of investor-friendly policies in the budget to be presented in March, as the government looks to revive the economy without raising ...

Proactive steps needed to boost industry in India - FM

SteelGuru - ‎13 hours ago‎

Describing near 6% growth in industrial production in November as a good sign, Finance Minister Mr Pranab Mukherjee indicated that the government could take some proactive steps to boost the economy. Factory output, as measured by the Index of ...

Trade unions urge hike personal income tax exemption limit

Hindu Business Line - ‎Jan 16, 2012‎

Trade union groups have urged the Finance Minister, Mr Pranab Mukherjee, to revise upwards the exemption limit for personal income tax in the upcoming Budget. Many workers, especially in the lower and middle income groups, have been facing the brunt of ...

Bharat Jhunjhunwala bats for policy reforms to reduce our fiscal deficit

Tehelka - ‎Jan 16, 2012‎

INDIAN FINANCE minister Pranab Mukherjee has admitted that fiscal deficit is likely to rise above the budget estimates. Reason being that the government has been able to garner only Rs 25000 crore via disinvestments against the Rs 40000 crore target. ...

Year End Review 2011- Ministry of Statistics and Program Implementation

Press Information Bureau (press release) - ‎Jan 16, 2012‎

The Union Finance Minister Shri Pranab Mukherjee said that the decline in the monthly headline inflation for December 2011 to 7.47% as against 9.11% in November 2011 was mainly due to significant decline in inflation for primary articles including food ...





BJP not perpetually against FDI. Neither NDA Opposes US Linked Zionist Free Market Economy!TWO party system Sustains manusmriti hegemony as Waman meshram had been Explaining!The NDA Government headed by Bajpayee had the DISINVESTMENT ministery. BJP also Pushes hard for Economic ethnic Cleansing!

BJP not perpetually against FDI. Neither NDA Opposes US Linked Zionist Free Market Economy!TWO party system Sustains manusmriti hegemony as Waman meshram had been Explaining!Faced with a failing government mired in corruption scandals, and struggling to take any action to correct a listing economy, India's opposition Bharatiya Janata party should be preparing for power.As Mamata Banerjee replaced Brahamin Buddhadev, the Brahmin Party Congress would be repaced by Brahamin Jati party BJP.

Meanwhile,a US Republican Party delegation called on senior BJP leader LK Advani and sought to know the possibility of early Lok Sabha elections. Advani, while not ruling out the possibility, hinted at the UPA-2 "tottering" up to 2014 to complete its term in office like a "terminally ill patient, managing  to survive till the last," BJP sources said.

While talking about media during his speech Sir Waman Meshram reiterated, that media wants to hide, but we will highlight and hence during Bamcef National Convention we have decided to hold a discussion on this topic. He said that the government has taken decision in favour of Brahmins to render the Brahmin monopoly over media. There would have been some justification, if we as majority were to have control over the entire administration and the system, but in reality it is minority Brahmins who are enjoying the supremacy over the majority in India.He said Democracy and Aristocracy cannot go hand in hand together. In Aristocracy autocracy naturally prevails and as a result Democracy is evolved, to get rid of the autocracy. Apart from Press, the Parliament, Administration, and Judiciary, are also under the Brahmin control. He explained about the prevalent system in India by exemplifying it be saying, as while having meal, one a tastes a pickle, similarly our people, elected representatives in parliament are kept as pickles for them, just for the sake of taste in the entire administration of the country.


The Bharatiya Janata Party had been on the forefront of opposing foreign direct investment (FDI) in multibrand retail but is not "perpetually" against it, party leader Arun Jaitleysaid Wednesday.

However India Incs,MNCs and the Economists are not ready as yet to give BJP blanck cheque. Instead the Hindu nationalist party, which began life appealing to the rising middle class, will go into state elections next month in March with opinion polls suggesting that it will struggle to do any real damage to the Congress-led government.The reasons are myriad. But one key factor appears to be that the BJP is blamed, almost as much as Congress, for the political stalemate that has left Parliament unable to operate properly, discouraged investment, hit business confidence and transformed India's ambitious nine per cent economic growth target into something closer to 7 per cent.

Five state elections are about to test the impact the dispute and drift has had on India's voters. The outcome of one of them in Uttar Pradesh, India's most populous state, is a key indicator of who stands to form a national government in two years' time.The standard fare of free water and power promise will not be part of BJP's poll promise document for Uttar Pradesh. The party, which has finalised a vision document for the poll-bound state, has steered clear of reckless populism and said, if elected to power, its top priority would be on a "more crop per drop" approach towards agriculture.The decision of JD(U) to go it alone has not restrained BJP from showcasing Nitish Kumar's governance model in poll-bound UP . The document, which describes the Bihar government as the best-governed state, said BJP will incorporate key elements of Kumar's governance paradigm. "Bihar, which once was the most under-developed state, has become the fastest growing state under NDA rule. It has eliminated goonda raj and established the rule of law," the document said and promised similar changes for making UP an attractive destination for investments.

Prime minister Manmohan Singh's coalition is in turmoil coming into the polls. It has had to accept that its ambitious growth targets were just that, and the telecoms corruption scandal, in which the state auditor claimed that $39bn in potential revenues to the exchequer had been lost in a botched auction for mobile licences, has dented its standing.



Speaking at the annual general meeting of industrial chamber FICCI, Jaitley said the present situation was not right for FDI in multibrand retail.

"When international companies will enter retail, their sourcing will also be international. Without becoming a cheap manufacturer, the sourcing will go to countries which manufacture cheaper goods," Jaitley said in reply to a question.

"Our manufacturing sector will suffer," he said, adding that steps were first needed to boost the country's manufacturing sector.

He added that the fears of job losses were also a major factor.

http://pravinraje.wordpress.com/2011/11/26/formation-of-new-states-brahminical-hegemony-preservation-politics-by-waman-meshram-national-president-bamcef/

"Formation Of New States: Brahminical Hegemony Preservation Politics" – By Waman Meshram, National President, BAMCEF

It is not our aim to fulfill the intellectual needs of our people. There has been an intellectual class created in our society which is interested in intellectual discussions as their stomachs are full. Such people discuss different issues on different occasions to satisfy their intellectual thirst and the matter ends after such discussions or by arm-chair criticisms. If you want to wage a war you cannot win without weapons. People from the Bahujan populace have to learn to use effectively an intellectual weapon in the war that is being waged today. Those who can use speech don't have to make use of the bullet, if it is needed then bullet too must he used. In this case the aim is more important and the aim justifies the means. We believe that our people have not yet learned the ability of firing a bullet and in such a situation it won't be appropriate of us talking about the firing of bullet. If we learn to effectively speak our language, there won't be any need for a bullet. Revolution has always been done by those in the minority. But for this they have to become a majority. Hence the guardians of the majority people must correctly speak their own language. Those who have a movement also have their own terminology, own words with a specific meaning. When this specific meaning is utilized and implemented it gives a specific result.
The undercurrent of an ideology should always be undivided. The strategies employed by our enemy on different issues, his standards and the character of our enemy should be exactly identified by us. First principle of awakening is that we identify our enemy. If you don't implement this principle you won't be able to create the wave of awakening. In its absence you would not be able to bring together the majority people with you. When our own people come under the influence of our enemy, they make our movement ineffective. This happens because our people don't know and identify our enemy.
The process of creating small states in our country has been implemented by people who are not in favor of creating small states. This process of creation of small states has been initiated by them in order to fulfill their political need.
When the movement for a separate Uttarakhand had started, the SP-BSP combine was in power in Uttar Pradesh. During the movement for separate Uttarakhand, there was maximum opposition to Mandal Commission from the Uttarakhand region. Today Mandal commission can he implemented in the whole of Uttar Pradesh; however, there is stiff opposition from Uttarakhand region. Before this implementation could be made this movement for a separate state has been started.
It has been written in Manusmriti that Brahmins should not reside in a kingdom ruled by a Shudras i.e. they should migrate to another nation. Actually if we see, every caste in itself is a nation as everything needed by a nation is found in a caste. When the government of Uttar Pradesh was formed by the Shudras and Ati-Shudras of SP-BSP combine, the movement for a separate Uttarakhand was initiated. The Brahminical media was never in favor of smaller states; however, the same media supported the movement for separate Uttarakhand with gusto.
Manusmriti says that Brahmins should migrate to another nation. In such case which country should the Brahmins go to? Imagine for a moment that a Shudra state has been established in India. Will the Brahmins then, as per the dictum of Manusmriti, have to start a movement for the partition of India? I presume that such a movement would start. Brahmins would start a movement to divide India. They have the option of going to Europe or America, as they cannot go back to Iran, which is being ruled by Muslims, from where they came as said by Mahatma Jyotirao Phule. Would any country, where Brahmins want to go, accept them? If they try to illegally migrate, they would be shot down at the borders. In this situation they have only one option left, to partition the nation in which they are already living. If this is an eventuality, then how to tackle it is a pertinent question in front of us.
Today Brahmins have already started the program of partition of our nation and they want to create states out of those areas with comparatively have more population of Brahmins. Many movements for separate states like Jharkhand and Chhattisgarh have been going on in our country. However, their claim for a separate state had not been considered till now as these regions had majority people belonging to backward class. However, Brahmins carried on a movement for four years and immediately their demand is going to be accepted. On the other hand the movement for a separate Jharkhand state is going on since before independence, and only now their demand is going to be accepted. The politics behind these developments have to be understood.
In order to clearly identify the Brahmanism, we will have to understand how the Brahmin mentality works. A point to be noted here is that Uttarakhand is a small region and the resources required for its development would not be present in the state? This is a problem. In spite of this fact the process of its formation has been initiated. Another pertinent point to be noted here is that all the Brahmin Chief Ministers of Uttar Pradesh were the natives of Uttarakhand region. Govind Valabh Pant, Narayan Dutt Tiwari, Hemvati Nandan Bahuguna are all from the Uttarakhand region. The Brahmins have ruled over all the Shudra- Atishudras by ruling Uttar Pradesh. But when the Shudras came to power, the Uttarakhand Brahmins decided that we won't let them rule over us. This evidence of Brahmin mentality contains in it the issue of politics of supremacy. The fact is that they won't let anybody rule over them and for that they would even create a separate state with a Brahmin chief minister in order to maintain control over their region.
Indira Gandhi, when she was alive, had raised the slogan "Unity of the nation in danger" again and again. She was the perpetrator of the danger and she herself used to propagate about the so called impending danger. Bhindranwale was a small time priest of a temple who was brought into politics in order to counter the Akali policy so that those who were in power in Delhi would remain in power in Punjab too; Indira Gandhi used Gyani Zail Singh as a medium in this strategy of empowering Bhindranwale. When he became powerful he started demanding a separate Khalistan and thus gave credibility to Indira's slogan that the unity of India was in danger. Indira Gandhi gave this slogan to befool the indigenous people of our country. The people of that community which was being led by Indira Gandhi are today slowly initiating the process of partition of India. For these Brahmanists a nation is akin to nothing, for them they themselves are of supreme importance.
The Brahmins attached the Uttarakhand along with the demand for separate Jharkhand and Chhattisgarh, as raising the issue on a standalone basis would have created opposition. When the Supreme Court kept Lalu Prasad Yadav in judicial custody for a considerable period, it felt that this would make matters worse and would have to face the accusations of Casteism and Brahmanism. Thus Mishra too was kept in judicial custody for a few days so that people won't react adversely.
Let us take example of the Chhattisgarh area of Madhya Pradesh. The assembly elections concluded recently in Madhya Pradesh. The Congress party was in power before the elections. Under their rule the tribal people of the state used to demand that a tribal should be made the chief minister, however during this election no such demand came up. Why did this happen? This is similar to the Babri Masjid demolition issue rose by the BJP and put into effect by the Congress. In this politics of collusion the Mulla-Maulavis are an active party. The reason for selecting Babri Masjid was that for past one and a half century no namaj had taken place in this Masjid. The Maulanas were active in this issue in order to deny the rights under Mandal commission to the religious minorities which have converted to Muslims from the indigenous people. What would happen to the status enjoyed by the Maulanas if the backward Muslims get their legitimate rights? This is the politics of supremacy working behind this issue.
Similarly the BJP and Congress in Madhya Pradesh under a joint strategy decided to create separate Chhattisgarh. There are around ninety seats in the assembly of Chhattisgarh which have majority of tribal population. This is the area whose people had been raising the demand in the past that the chief minister of Madhya Pradesh should be a tribal. However, the Congress and RJP have made these tribal people believe that they would get a separate state hence during the recent elections the earlier demand did not come to surface. Nothing concrete has actually been given except lip service. This assurance has pushed the demand, of making a tribal the chief minister of Madhya Pradesh under the carpet. When the tribal people talk of ruling the entire Madhya Pradesh, it sounds alarm bells to the Congress and BJP. Hence both of them colluded and stated an intention of creating a separate state. Shyama Prasad Shukla and Vidya Prasad Shukla hold sway over Chhattisgarh. Journalists had asked Shyama Prasad Shukla whether you would make a tribal the chief minister after the elections of Chhattisgarh. To this he replied that the Congress doesn't believe in Casteism. This is a very decisive example of the Brahminical mindset of supremacy.
Amar Singh Chowdhary, a tribal person, was made the chief minister for a few days by the Congress. Madhav Singh Solanki, who is an OBC, was made to cool his heels and a tribal was made chief minister instead of an OBC. The roaster system was made ineffective through Amar Singh Chowdhary. The interchangeability principle was scrapped and it was decided that if no candidate from the scheduled caste is available, one from the scheduled tribes would be selected and if no candidate from the tribes is available, one from the OBC's would be selected. Thus they made one person chief minister and he took away the rights of the entire community. What bigger example can be given where even when our brother is made chief minister in their system, it strengthens them instead of us. This is because of the party system created by the people of ruling castes based on the Varna- Caste system. This is the reason why tools, stooges and agents are created in the parties. If a stooge or an agent is made the chief minister, the work of creating more such stooges and agents gets momentum which is the real danger.
When a person wants to be the chief minister of the entire region of Madhya Pradesh, the Congress-BJP doesn't let it happen. Instead such ploys are implemented that the tribal people forget their demand. Thus the area of Madhya Pradesh excluding Chhattisgarh region automatically gets reserved for the Brahmins. This is the politics of supremacy. The total votes of Scheduled Castes and Tribes in Madhya Pradesh are 38 percent. If the congress has ruled the state on the backing of 35 percent votes then why can't those people who constitute 38 percent of votes come together and run the state? This can be made possible. However, now the process to counter such intentions has been started.
Due to the formation of linguistic states, individual castes are powerful in different language speaking states. Congress has been instrumental in the process of formation of linguistic states. Thus the result of different castes becoming powerful in different states is before us to see. This phenomenon was considered a danger to the process of nation building by Babasaheb Dr. Ambedkar. The thinking behind creation of linguistic states was that people speaking common language should form part of one state. But Dr. Ambedkar thinks that many states speaking a common language should he formed, which would possibly deter the influence of a single caste. Thus we should note that creation of linguistic states and creation of smaller states out of existing ones are two different issues.
If states are created on the basis of language then a language state nation is created. Babasaheb Dr. Ambedkar believed that this was an obstacle in the nation building process. If in future the central government becomes weak then the states which have been created on the linguistic basis would not spend much time deciding to become separate nation. When Dr. Ambedkar had provided a strong Centre in the constitution, the socialists and communists had accused Dr. Ambedkar of converting the states into municipal councils. ‗What had happened in the past should not be repeated in India' – was the sentiment behind the provision of a strong centre.
Today the BJP-Congress people are not the supporters of smaller states. But they want to use the issue of smaller states as a weapon in their politics. Take the example of Jharkhand. Before independence the Congress made Raja Jaipal Singh, an Adivasi leader, a minister and thereby killed the Adivasi movement.
Gandhi had promised the Adivasis that separate Adivasi states would be created and they would rule them. After independence, this responsibility went to Nehru. Moreover, Gandhi was not alive to have been able to fulfill this responsibility as he was assassinated in 1948, five months after independence. This too was a part of politics.
Today when Bihar is being ruled by the backward classes, the ruling castes ruling from Delhi make a plan with the aim that the backward classes should not be able to rule over the entire Bihar. When the congress was in power, it had always kept the issue of a separate Jharkhand under the carpet. However, it started raising the issue when the backward classes came to power in Bihar. This is an evidence of Brahmin mentality. This mentality is behind all the politics being played on this issue. A shrewd ploy was implemented by naming the bill placed in the Parliament as "Vananchal Bill". Jharkhand is an Adivasi movement and Vananchal literarily means a region covered with forests. The word Jharkhand emanates from the Adivasi culture, which the Brahmins don't want to identify themselves with. Hence, even the word is being rejected by them. Parts of Orissa and West Bengal also fall under Jharkhand. But the Brahminical people of Orissa and West Bengal don't want to give any area to the Jharkhand state as these two states are being ruled by Brahmins. This is an evidence of the mentality of Brahmin which works to maintain supremacy in politics and for this they use the movements for smaller states. Keeping this in mind the formation of smaller states alone would not help. We would have to restructure the Indian states. People would have to be sensitized to the importance of this process of nation building. Restructuring of India in its true sense would be possible only after India has been reserved for its indigenous people.
Hon'ble Waman Meshram
(National President, BAMCEF)
(*from Dristikon, Chapter 13)
Translated in English by Mukesh Gaikwad

http://indianliberationnews.com/brahmin_media_wants_to_hide_but_we_highlight.html

"Brahmin Media Wants to Hide but We will Highlight" - Sir Waman Meshram

While talking about media during his speech Sir Waman Meshram reiterated, that media wants to hide, but we will highlight and hence during Bamcef National Convention we have decided to hold a discussion on this topic. He said that the government has taken decision in favour of Brahmins to render the Brahmin monopoly over media. There would have been some justification, if we as majority were to have control over the entire administration and the system, but in reality it is minority Brahmins who are enjoying the supremacy over the majority in India.


He said Democracy and Aristocracy cannot go hand in hand together. In Aristocracy autocracy naturally prevails and as a result Democracy is evolved, to get rid of the autocracy. Apart from Press, the Parliament, Administration, and Judiciary, are also under the Brahmin control. He explained about the prevalent system in India by exemplifying it be saying, as while having meal, one a tastes a pickle, similarly our people, elected representatives in parliament are kept as pickles for them, just for the sake of taste in the entire administration of the country.


Sir Waman Meshram reiterated that Brahmins has not only gained the monopolistic control but they have unrestricted control and supremacy over the affairs of the country. He informed the listeners that Indo-Pak dispute is an internal mutual understanding between the two countries. An attack was undertaken through sea route. After the attack on Indian soil elections were held. Congress was suppose to loose the seats in the elections, but in reality Congress could secure seats in elections. Pakistanis come and hold an attack in India and then Brahmins make a propaganda about the same. Brahmins are infidel in disguise behind the veils of so called patriotism. Bahujans are natural patriots. Sir Meshram said that in India there is monopoly of Brahmins now, where the ruling party, opposition party and the third front constitutes Brahmins at the top. Hence they enjoy unrestricted power and control over the land.


Sir Meshram further enlightened about the Pro-Manuistic people who are against the Constitution. He refererred to the Agitation of Anna Hazare, he was critical about decision about Mumbai HC saying that "Judiciary may bar me from carrying on an agitation in future by precedence of the decision taken in the Anna Hazare's case". Fundamental right has to be propagated. We have to stand in defence for our fundamental rights. He said HC has insulted itself by refusing to allow the ground and by later asking to book the ground by paying fees, and by doing so it has also lost its dignity.


Sir Meshram further asserted that Manuist are conspiring against our media which we are aiming to develop. He said that these Manuist make plan and conspire keeping us in the view our development. He asserted that he is not an academician, but a warrior. He said being a warrior he keeps track of what is happening. He said, he constantly keeps watch on the enemy moves.


Sir Meshram said, that the vocal media which we have, is the most powerful and vaster. RSS afiliates are alert and scared, and so they say that "do not speak to Bamcef cadres and people". This is an evidence, that our enemies are greatly disturbed and terrorized. He said that he would be building an organization of Mulnivasi Saints. He asserted that he will make Mulnivasi Saints to tussle out will the sanctimonious Brahmanical Saints. The saints would form a part of our vocal media. He said that apart from vocal media we have started Internet Channel, and Radio. He said we will progress step by step.The work for the mission which have started will be carried on untiringly without any stoppage. He declared that between a span of three years i. e. from 2016 to 2018 we will start our National Channel and a Regional Television Channel too. He said we are through with the print media. He spoke on the fundamental aspect of battle. He said a battle has to be fought with a specific strategy. He further said that a battle which lacks strategy cannot be fought but if you have any strategy then it cannot be disclosed either and hence he will not disclose anything now. He said we are planning for our aims. He said we have progressed considerably.


Prior to ending his speech Sir Meshram reminded everyone that Supremacy of Brahmins is by the virtue of their inflicted Voilence on Mulnivasi Bahujans and thus Non-Voilence cannot be used to have victory over them and their supremacy. He said we do have an appropriate retort and we will prove that when the time ripens.


12 JAN, 2012, 05.04AM IST, HEMA RAMAKRISHNAN,ET BUREAU

Budget 2012: Industry should fully support GST rather than maintain silence


Ahead of Budget 2005, former finance minister P Chidambaram wanted big ideas from industry captains. A top industrialist sought tax breaks in research and development, saying it was needed to foster innovation. His peers simply wanted more tax exemptions for their sectors. The story was much the same in Budgets that followed. So, last month, senior finance ministry officials were a bit surprised when an industry delegation led by Marico founder and Ficcipresident Harsh Mariwala spoke about big ideas for Budget 2012.

Opening commercial coal mining to private sector, building an inventory of government assets other than public sector units that can be monetised and a one-time amnesty to bring back money stashed overseas featured in the list. The first suggestion makes sense as it would help avert an impending power crisis due to the shortage of coal. It would mean scrapping the Coal Nationalisation Act to end state monopoly in coal. This reform brooks no delay. The other two measures would help raise revenues. But of the three, only a tax amnesty scheme would have to wait for the Budget as it would need changes in the Income-Tax Act.

For a change, the industry delegation did not ask for a cut in the corporate tax rate, saying government finances are in a bad shape. Somehow, the same logic did not hold while seeking a lower minimum alternate tax rate - a levy that was imposed to bring zero-tax companies under the net - or sectoral tax breaks. Many more exemptions will be sought when top business leaders meet finance minister Pranab Mukherjee this month-end.

The irony is that his Cabinet colleagues too want tax breaks in the sectors they oversee. Agriculture ministerSharad Pawar, for instance, has sought a tax waiver on income from animal husbandry and livestock products, saying it would help increase the supply of superior foods and tame food inflation.

The proposal to the PMO is now doing the rounds in the finance ministry. But sops must end as they are a drag on the exchequer. Will the government muster the political will to eschew exemptions? For Mr Mukherjee, worry lines are drawn, as growth has slowed down, industrial production is limping and tax revenues are faltering. Investment sentiment is weak. Reforms are, therefore, must to drive growth and also bring government finances to a better shape.

Of course, the Budget can be a platform for big-ticket announcements that go beyond tax policy changes. But the government should also renew its focus on tax reforms that have taken a back seat in the last two years. The goal should be to widen the tax base and raise the level of tax collection to GDP. The Centre's tax revenue as a proportion of GDP dropped to 10% in 2009-10 from 12% in 2007-08. The personal income tax-to-GDP ratio witnessed a sharp fall. This is hardly surprising as less than 3% of people in the country pay taxes and only a few thousand admit to earning income of over Rs 10 lakh a year. This must change.

What is more worrisome is the pittance collected from service tax that accounts for more than half of the country's GDP. Service tax as a proportion of GDP fell to 0.9% in 2009-10 from 1.03% in 2007-08. The biggest tax reform that can reverse this trend and raise the overall tax collection to GDP is the goods and services tax (GST).
http://economictimes.indiatimes.com/opinion/comments-analysis/Budget-2012-Industry-should-fully-support-GST-rather-than-maintain-silence/articleshow/11456290.cms

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11 JAN, 2012, 05.43AM IST,

US dollar to remain dominant global currency despite its economic travails

By Sanjeev Sanyal

Currency Update: Rupee at 3-week high vs USD

EDITORS PICK

RELATED ARTICLES




The relative economic decline of the US has led many economists and policymakers to question the US dollar's position as the world's anchor currency. Suggested alternatives range from a global reserve system to even a return to gold. While recent efforts to internationalise the Chinese yuan have only added to the expectation of a shift in the international monetary system, we believe the US dollar will remain thedominant global currency for a long time to come.


History shows that the global economic system has often been based on an asymmetric relationship of an anchor economy - currently the US - that runs persistent current account deficits even as it providesliquidity to the rest of the world. This leads to a symbiotic relationship where the anchor country gets cheap financing and the rest of the world gets the monetary liquidity needed to lubricate economic activity.


Unfortunately, history shows this system eventually breaks down because the anchor country needs to run continuous current account deficits in order to provide more and more liquidity needed by an expanding world economy, making it increasingly indebted over time. In turn, this undermines the very credibility on which the monetary system is based. This scenario was first described in the 1950s in relation to the Bretton Woods system by Robert Triffin and has since become known as Triffin's Dilemma.


During the Roman times, the world economic system was underpinned by booming trade between the Roman empire and India. The problem with Indo-Roman trade, however, was that India ran a large trade surplus with the empire. This deficit meant that there was a continuous drain in gold and silver coins that, in turn, created shortages of these metals in Rome (in modern terms, this was a monetary squeeze).


The Romans unsuccessfully tried to impose restrictions on imports but eventually resorted to reducing the gold/silver content of imperial coins (the ancient equivalent of printing money). Yet, frequent findings of Roman coins in India suggest that Roman coinage continued to be accepted for a long time after it was obvious that the gold/silver content had fallen.


Spain was the world's dominant power in the 16th century but expensive wars caused it to run continuous deficits and eventually default. Yet, Spanish silver coins continued to be the key currency used in world trade right up to the American Revolution. In fact, they remained legal tender in the US till 1857 - long after Spain itself had ceased to be a major power.


In fact, the only clear historical solution to Triffin's dilemma can be seen with the 'triangular trade' system between Britain, India and China in the 19th century. Under this arrangement, the British sold manufactured goods to the Indians and purchased opium. The opium was then sold to the Chinese in exchange for goods that were then sold back in Europe.
http://economictimes.indiatimes.com/opinion/comments-analysis/us-dollar-to-remain-dominant-global-currency-despite-its-economic-travails/articleshow/11430747.cms


MAINSTREAM, VOL XLVII, NO 37, AUGUST 29, 2009

Economic Reforms in India: Is there a Political Consensus?

Protiti Roy

Having lost almost all its wealth to the colonial overlords, the erstwhile Golden Bird was now afraid to allow any outsider to participate in its economy. However, a certain degree of liberal-capitalism was considered essential, and thus newly independent India adopted a "mixed economy", in which features of both the capitalist model and socialist model were prevalent. The "mixed economy", however, was not very well mixed, and had strong socialist tendencies.

The policy-makers adopted a planned economy approach to development, and advocated state run industries with just a few areas open to the private sector. This was largely due to the influence of the tremendous success of the USSR's economy and the impact of the Great Depression of the 1930s.1 But given the capitalist history of the Indian economy, the government was keen to reconcile equity with the free market.2 The Government of India, while recognising private industries, declared that the functioning of this sector—establishments, products, capacities for production etc.—would be regulated by the government.3

This state run structure, though advocated by the Congress, and backed by Left-wing parties such as the Communist Party of India, was not supported by the Swatantra Party.4

This structure worked well for the first fifteen years, but thereafter started to decline as a result of, inter alia, political interference at top management levels and declining accountability which came with the security of employment. State owned industries were afflicted by diseases such as under-utilisation and poor management of resources, obsolete technology, wrong selection of products, to name a few.5 Such problems led to a downswing in the economy. The Licence Raj stifled India's trade relations and deprived consumers of choice with regard to products for consumption.

Towards the beginning of the eighties decade, world oil prices doubled, resulting in a huge deficit in India's current account which had so far bordered balance.6 An inappropriate exchange rate led to complete stagnation of exports during the phase 1982-1985, causing persistent current account deficits.7 Though the economy grew rapidly through the 1980s, the growth was not sustainable due to unstable fiscal conditions.8 Inflation surged to an all-time high by the end of the decade.9

This crisis forced India to open up its economy to the world and adopt the policy of Liberalisation, Privatisation and Globalisation. The new government that came to power in 1991 had to restructure the economy, but the greater need of the hour was to stabilise the economy—reduce inflation and reduce fiscal deficits.10 The fiscal deficits would have to be substituted by foreign borrowings. But the structural model of the International Monetary Fund (IMF) and World Bank involved India having to open up its economy and replace public institutions and investments by market determined investment and production decisions.11 Thus, the early attempts of Rajiv Gandhi to loosen state control over the economy finally found completion in the measures taken by the Narasimha Rao Government and the New Economic Policy (NEP) was adopted.

Once India had embraced the free-market system, economic reforms in the country were supported by a standby credit from the IMF. In 1991-92, this credit supported fiscal retrenchment and a credit squeeze in the economy. The rupee was devalued by 19 per cent. Import controls were instituted. The deflation and import compression helped improve the balance of payments to a large extent.12 The Indian economy has taken a definite upward swing sincethe 1991 reforms, and is now one of the fastest growing economies of the world.

However, globalisation leads to erosion in the state's capacity. The ability of the government in its position as a welfare government is getting reduced to a large extent. The world over, welfare states are giving way to more minimalist states that perform only the core functions of governance such as maintenance of law and order.13

Free-market forces have become the prime determinants of economic and social priorities in the country. The appearance of multinational companies on the global economic platform has also led to a reduction in the capacity of governments to take their own decisions.14

¨

How favourably is this form of governance suited to the various political parties? This is a crucial question. Soon after assuming power in 1991, the Congress Government, headed by the then Prime Minister, P.V. Narasimha Rao, announced its decision to liberalise, privatise and globalise the Indianeconomy. The Opposition reacted strongly to this, describing Finance Minister Dr Manmohan Singh's ideas as "far too radical for what the compulsions of democratic politics would allow".15

The Indian National Congress, in its present Economic Agenda, has claimed that its policies have led to a substantial increase in the growth rate of the country and has brought a major segment of people above the poverty line.16 The Congress also claims that it was the manner in which the reforms were carried out that made a big difference to their rate of success.17 However, a major factor in the continuing success of the economic reforms, through the regimes of many different political parties, has been the "directional convergence" of all these parties towards the same economic goals.18 They all maintained the economy's orientation towards the free market and encouraged globalisation.19

It is also true, however, that the parties in the Opposition lived up to their role of "opposing" the government. All parties, when in Opposition, vehemently criticise the policies of the government. Nonetheless, the debates in Parliament and the manifestoes of most major national parties have always argued over the minor details of economic policies, rather than objecting to the idea of reformsas whole.20

A comparison of the 2004 election manifestoes of the Bharatiya Janata Party and the Indian National Congress point out, interestingly, that both parties essentially guarantee the same things, though their promises are worded very differently. It is also interesting to note the acrimonious language in which each speaks of the other's failures, while taking the very same steps themselves.21

The BJP had opposed the Congress Govern-ment's policies of external liberalisation in the early 1990s, but after it came to power (from 1998 to 2004), it itself promoted external liberalisation and announced measures that aimed at attracting private foreign investment on a large scale.22

The Communists have passionately opposed liberalisation policies, and termed them as "abject surrender to the IMF".23 However, when the United Front governments came to power from 1996 to 1998, the Left-wing parties supported them all through their policies regarding financial sector liberalisation, disinvestment, foreign investment etc.24

Thus, even though the powers of the state have been reduced to a large extent because of the open economy, economic reforms are still being favoured as compared to the earlier socialist model of development.

The evident reason for this is the fact that ever since the Indian economy was liberalised, we have seen phenomenal growth rates, touching the six-point mark in the 1990s.25 The inflow of better quality consumer goods satisfied the middle class of society and high foreign exchange stocks were beneficial to investors. Thus, such conditions proved satisfactory to most people. The other possible reason could be the fact that along with the collapse of the USSR, the rupee-rouble trading system collapsed as well. All over the rest of the world, the dollar was essential for carrying on trade. Thus, it was essential to have a large stock of foreign exchange, particularly in terms of dollars, in order to carry on trade relations with other countries.

The fact that all governments that have come to power post-1991 have followed and advocated the free market ideology without any hesitation, also requires explanation. One possible explanation is the fact that after the Narasimha Rao Government, all other governments till date have been coalition governments supported by a number of ideologically neutral regional parties.26

In a democracy it is the people who decide the rise and fall of a regime. They are the foundation on which the political superstructure is built. Also, the various policies pursued in order to effect the economic reforms, at the end of the day, have affected nobody but the common man. Even if political consensus is prevalent among various political parties, it is essential that the vote-bank of these parties also agree to the policies. "Political consensus", therefore, cannot be complete if the consensus of the common man is not taken into consideration.

¨

The trouble is, what the people want, or even need, may not always be what the government considers before defining its policies. The external debt of the nation, while a major cause of concern for the government, is not something ordinary citizens would ever worry about.27 Similarly, the internal debt of the government, Budget deficit, balance-of-payments situation, financial losses of public sector enterprises, expansion of money supply etc. are economic issues which are of utmost importance to the government of a country, but themes that are very distant from the lives of the people.28

However, there is indeed a connection between the economic necessities of ordinary people and the economic compulsions of the state. A person belonging to the middle class of society would need a television, a refrigerator, a car, an air-conditioner, and so on. Economic liberalisation of the country meant that the government allowed foreign investment in and freer imports of consumer goods.29

But even among the people, there are differences in what different classes of people desire from the free market. The choice between better cars or better public transport system, cellphones or ploughs and pumpsets, soft drinks or safe drinking water is the choice that has to be made.30 Now, the production and supply of a product depend to a large extent on its demand and the price it gets in the market. The rich in society have more purchasing power, and thus, it is the cars and the cellphones and the soft drinks that get produced, not the ploughs and buses.31 Private investment would also, therefore, be attracted towards sectors producing goods to satisfy the needs of richer consumers.

Consensus for economic reforms, therefore, seems to be coming from political parties and the middle and upper classes. The interests of the poor are hardly being taken into consideration. Such a state of affairs is sure to have backlashes, particularly for the government in terms of votes secured. An example of such an incident was that of the Chandrababu Naidu Government. As reported in the Hindustan Times, "Though the state had made significant progress on the IT front and the reforms process had been initiated by the Chief Minister, the unrest in the interiors of Andhra Pradesh continued. Farmers were committing suicides and hunger and poverty had made life tougher for the common man."32

It is but obvious that technological progress alone cannot help a country progress. Liberalisation, privatisation and globalisation may ensure availability of foreign exchange and high quality consumer goods, but it does not necessarily ensure a decent standard of living for the common man. On the other hand, it may lead to loss of livelihood, if policy implementation is not done with sufficient care and consideration.

The Deccan Herald reported on August 26, 2007 that the Central Government had approved of the iron ore mines in Bailadila, Chhattisgarh, to be opened up for steel giants Tata Steel and Essar to prospect for their steel projects.33 The Tatas plan to set up a five million tonne steel plant at Bastar, in Chhattisgarh, and the iron ore would be used for that purpose.34

Nearly four years before this article was published, The Times of India had come out with an article "Mining Plans Threaten Water Security: NGO". The article spoke at length of a report by the non-governmental organisation, Kalpvriksh, about how mining activities are threatening some of India's most ecologically sensitive places, including Bailadila.35 Such activity will also be interrupting drinking water supply to millions of people as many crucial catchments would be severely affected, including the Sankhini river at Bailadila.36 Kalpvriksh called for "a rethink of development policies and introspection on the wasteful ways in which minerals are used".37

Counter Currents, an online journal which has articles on issues concerning common people, carried an article on how the mining industry is hurting not only the environment, but also human rights. "Refutation of the rights is characteristically multidimensional—one is the denial of the eligible rights of the people in mining zones, another is the flouting of law by the state machinery and third is the rights of the mineworkers," said the article.38

More importantly, the article talked of how privatisation, and subsequent mechanisation of mining, has led to the loss of livelihoods, and in cases where the workers protested, of life itself.

The mechanisation goes to such an extent that in future it may need only two or three workers to run the plant. The prophets of industrialisation talk about prosperity and creation of jobs, but what is actually happening is shocking. In the Bailadila mines, 10,000 labourers were rendered jobless at one stroke. All resistance was crushed. Ten thousand huts were burnt down, numerous women raped, and labourers fired upon. The orgy of mechanisation forced 10,000 labourers to face the desperation of hunger.39

Similarly, the Government of India introduced Bt cotton to Indian farmers in March 1995.40 Though it initially met with some resistance, the farmers finally accepted the new variety of seeds, and took to it in a big way. And, to begin with, the effect was tremendous. The cotton acreage increased by 20 per cent.41

However, India being a monsoon dependent country, and irrigation not being up to the mark, there were soon problems with using this genetically modified plant variety. The technology was not well-suited for non-irrigated areas, and cotton is mostly grown in dry regions.42 Bt Cotton failed miserably for small farmers, in terms of both yield and expenses, and it also did not reduce pesticide use for them.43 The cost of cultivation rose to a great extent and the farmers earned no profit at all.44 In Vandana Shiva's words,

The seeds aren't tested, they aren't adapted, the same seeds are sold across different climate zones, they obviously don't perform well. Instead of 1500 kilograms per acre, farmers get 200, 300, sometimes total failure; add to this the fact that even if they have 300 kilograms of a bad cotton variety because its fibre is of a very inferior quality.45

The crop failure hit farmers in Vidarbha and Andhra Pradesh particularly hard, and incidents of farmer suicides rose at an alarming rate. Dr Suman Sahai, the Director of an organisation called Gene Campaign, conducted a study on the introduction of Bt Cotton in India.46 The results announce, in no uncertain terms, that the government's zest to introduce private investment onto the agricultural sphere has cost the nation very dear. That the government has failed the people badly, is most evident through this incident. "Despite specific knowledge that Bt cotton would not work in rainfed areas, the government had introduced it in Vidarbha. The result was that in an area with a history of indebtedness, the high input costs of Bt cotton had increased indebtedness," says a report about the study in The Hindu. It also says: "The study revealed that many farmers adopted Bt cotton because they believed it was a 'government seed' and did not know that it was privately produced and marketed. They also accepted it because the government was actively promoting the technology."

Farmers have been committing suicide in hundreds. Their government failed them.

The government is the elected representative of the people and their policies, therefore, should be directed towards the benefit of the people. If privatisation leads to loss of livelihood, if liberalisation introduces such poor quality of industrial inputs, it is then meaningless to continue with such policies.

True, the economic reforms had their benefits —the life of a middle class consumer improved manifold, foreign exchange reserves skyrocketed, our GDP increased to levels unparalleled in the past. However, the poor just ended up being poorer. Development should be holistic, and should necessarily take all sections of society under its purview.

Politics in India stems from the people. Political consensus in our country cannot be taken to mean only the various political parties. It is true that the various political parties in our country agree that the economic reforms were essential. Most object to the stand taken by the government when they are in power, but they themselves further the same policies when in power. Thus, even if not in words, in deed there is a definite political consensus, so far as political parties go.

But as far as the people of this country are concerned, only a minuscule urban middle and upper class have benefited from the reforms. Most of India still lives in her villages, and even the cities have a large number of people living below the poverty line. How far the reforms benefit these people should be a matter of concern. They have so far not found any advantage in the New EconomicPolicies, and their consensus on them is definitely missing. Not just all political parties, but also all sections of society should have consensus on the reform policies before they are instituted in India. Regrettably that is not the case till date.

Footnotes

1. S. Palshikar and Y. Yadav, Politics in India since Independence (1st edition, New Delhi: NCERT, 2007), pp. 49, 50.

2. C.P. Bhambri, The Indian State: Fifty Years (Delhi: Shipra Publications, 1997), pp. 156-159.

3. Supra note 2 at p. 162.

4. Supra note 1 at p. 37.

5. San José State University, Department of Economics, "Economic History and the Economy of India", available at (November 8, 2008).

6. V. Joshi and I.M.D. Little, India's Economic Reforms 1991-2001 (New Delhi: Oxford University Press, 1996), p. 14.

7. Supra note 6 at p. 14-15.

8. Supra note 6 at p. 15.

9. Supra note 6 at p. 15.

10. Supra note 6 at p. 16.

11. Supra note 2 at p. 195.

12. Supra note 6 at p. 16.

13. Y. Yadav and S. Palshikar, "Globalisation", Contemporary World Politics, (1st edn., New Delhi: NCERT, 2007), p. 139.

14. Id.

15. R. Jenkins, Democratic Politics and Economic Reform in India (Cambridge: Cambridge University Press, 1999), p. 12.

16. "Economic Agenda", Indian National Congress, available at (November 11, 2008).

17. Id.

18. S.D. Tendulkar and T.A. Bhavani, "Understanding the Post-1991 IndianEconomic Policy Reforms", Global Development Network, available (November 11, 2008).

19. Id.

20. Ibid.

21. See generally "Vision Document – 2004", Bharatiya Janata Party, available atand "Economic Agenda", Indian National Congress, available at .

22. Supra note 18.

23. Supra note 18.

24. Supra note 18.

25. C.D. Wadhwa, "India Trying to Liberalise: Economic Reforms Since 1991", available at (November 13, 2008).

26. Supra note 18.

27. A. Bhaduri and D. Nayyar, The Intelligent Person's Guide to Liberalisation (New Delhi: Penguin Books India, 1996), p. 4.

28. Id.

29. Supra note 27 at p. 6.

30. Supra note 27 at p. 7.

31. Supra note 27 at p. 7.

32. H.T. Correspondent, "Andhra Elections", Hindustan Times, available at(November 16, 2008).

33. DH News Service "Prospecting 250 MT iron Ore: Tatas, Essar get Centre's Nod", The Deccan Herald, available at (November 9, 2008).

34. Id.

35. The Times News Network, "Mining Plans Threaten Water Security: NGO", The Times of India, available at (November 10, 2008).

36. Id.

37. Ibid.

38. Goldy M. George, "Mining to Destruction and Hijacking their Rights to Submission", Counter Currents, available at (November 10, 2008)

39. Id.

40. "Chronology of Bt Cotton in India", Inida Resource Centre, available at(November 11, 2008).

41. BS Reporter, "Bt Cotton Acreage Rises 20 per cent", Business Standard, available at (November 11, 2008).

42. Devinder Sharma, "Has the Bt Cotton Bubble Burst?", India Together, available at (November 11, 2008).

43. Rhea Gala, "India's Bt Cotton Fraud", Institute of Science in Society, available at (November 11, 2008).

44. Id.

45. Vandana Shiva, "Closing Address to the Soil Association Conference", Transition Culture, available at (November 16, 2008).

46. Special Correspondent, "Bt Cotton has Failed in Vidarbha: Study", The Hindu, available at (November 11, 2008).

Protiti Roy is a student of the National Law School of India University, Bangalore.

http://www.mainstreamweekly.net/article1594.html


REFORMS

Assessing India's economic reforms

India needs to launch a second generation of reforms after undertaking an in-depth analysis of what has gone wrong until now during the course of the ongoing round of reforms.

SUBRAMANIAN SWAMY

THE two decades since 1980-81 have been easily the best in India's economic performance in the last century.

After averaging about 3.6 per cent a year in GDP (gross domestic product) growth rate during the 30 years between 1950-51 and 1980-81 and less than 1 per cent a year in the half century before that, GDP growth accelerated to 5.6 per cent in the 1980s (5.3 if 1991-92 is included) and averaged even higher at 6 per cent in the final decade up to 2000-01. Indeed, if the crisis-affected year of 1991-92 is omitted, GDP growth in the past nine years (1992-93 to 2000-01) averaged an unprecedented 6.3 per cent (Table 1). And between 1992-93 and 1995-96, the growth rate averaged even higher at over 7 per cent a year.

This vindicates the stand of this author since 1971 that economic liberalisation, de-regulation, and market principles were essential for raising the growth rate in the economy that required eschewing the then current command economy ideology copied from the USSR, and which failed there too. In his 1971 book Indian Economic Planning, an Alternative Approach (Vikas, New Delhi), this author had predicted that such a transformation in policy toward market economy would raise the growth rate to 10 per cent a year, but alas had then found little acceptance because of Indian economists: that India was bound by the "Hindu rate of growth" of 3.5 per cent a year.

The past trend in decadal growth rates looks increasingly better, partly because of the declining population growth rate over the years. When we look at per capita GDP growth, we find that it has accelerated from 0.8 per cent in the 1970s to 4.6 per cent in the last nine years. Furthermore, while the growth performance in the 1980s was bedevilled by unsustainable fiscal deficits and increasing drain in external reserves, which led to the balance of payments crisis of 1990-1991, in the last nine years, the external sector has been manageable despite the fiscal imbalances deteriorating.

What is significant is that in an international perspective India's growth performance of the last two decades ranked amongst the top six in the world growth league, along with China, Korea, Thailand, Singapore and Vietnam. Moreover, since the 1997 East Asia meltdown, India's rank is now second only to China in growth rates. In PPP (purchasing power parity) terms, the 1990s growth has also put India among the top four in the world. In fact, on corrected data, the growth rates of China and India in the 1990s have been about equal [see the author's Economic Growth in China and India (1980-99) presented at the Fairbank Centre's New England China Seminar, Harvard University, October 15, 2001], and unless the present dispensation in power makes an even bigger mess than it managed to do since 1998, the Indian growth rate can exceed China's during the first two decades of the 21st century.

Much of this growth has been due to macroeconomic policy changes since 1991, but also due in part to fortuitous international circumstances and to the global environment. While P.V. Narasimha Rao as Prime Minister deserves credit for implementing the first generation reforms, he obviously could not have done so soon after taking office (within 10 days) unless the blueprints were ready. These had been, in fact, prepared under my supervision as Minister by the previous government headed by Chandra Shekhar. I had also held a Cabinet rank position in Narasimha Rao's government as Chairman of a Commission on issues relating to the General Agreement on Tariffs and Trade. Sadly, it is now quite clear, however, that reforms in India have run out of steam (Table 2).

What is more alarming is that since the departure of Narasimha Rao, and since 1996-97, even the relatively high growth rates are not sourced to agricultural and industrial growth but to the services sector.

If we subdivide the nine years following the 1991 crisis into an initial period of five years (corresponding to the Eighth Plan) and the subsequent four years up to 2000-01, the following points are worth nothing: First, the acceleration of GDP growth to -6.7 per cent from the pre-crisis decadal (1980-89) average of 5.6 per cent is remarkable and attributable to reforms. Second, it is noteworthy that in the post-crisis quinquennium, all the major sectors (agriculture, industry, services) grew at a noticeably faster pace than in the pre-crisis decade.

Third, the average growth performance in the four most recent years is, in sharp contrast, disappointing (Table 3). Overall GDP growth drops to 5.8 per cent. Of much more concern is the collapse of agricultural growth to 1.4 per cent and the significant fall in industrial growth to 4.9 per cent. In 2000-01, the rate only dropped to 2.1 per cent. Indeed, the drop in GDP growth in these four years would have been much steeper but for the extraordinary buoyancy of services, which averaged a growth of 8.8 per cent. This growth in services was much faster than in the case of industry, a pattern which raises questions of sustainability. No economy can continue to grow this way for long.

The importance of services in India's economic growth is brought out in Table 4. For the full nine years (1991-92 to 2000-01), the growth-contributing role of services was nearly 60 per cent. This proportion rose to 70 per cent in the last four years.

A part of the services sector growth in the last four years was, furthermore, bogus in the sense that it simply reflected the revaluation of the value-added in the subsector "Public Administration and Defence" because of higher pay scales resulting from decisions based on the Fifth Pay Commission Report. This may be called the "Chidambaram hoax". National income accounting practice requires that value added in non-marketed services be estimated on the basis of "cost" and in current prices. These Pay Commission effects, including in States, were spread mainly over three financial years 1997-98, 1998-99, 1999-2000, when growth of "Public Administration and Defence" soared to 14.5 per cent, 10.3 per cent and 13.2 per cent, respectively, compared with an average growth in the previous five years of less than 4 per cent.

Thus, the nation needs to launch on a second generation of reforms after an in-depth analysis as to where we have gone wrong.

THERE are four major areas of the Indian economy summarised below, which require urgent attention.

Fiscal deficit

There has not been too much progress in cutting the fiscal deficit. Whatever little the Central government has managed up to 1999 has been cancelled out by the deteriorating fiscal position of the State governments. Since 1999, even the Centre has failed to curb fiscal deficit. The combined fiscal deficit is now near 10 per cent of GDP. High fiscal deficit crowds out private investment and banks' capacity to lend, since the government corners the lion's share of the bank's funds. Fiscal measures to encourage domestic saving and foreign direct investment (FDI) are essential now.

Poverty

There is no consensus yet on the key question: have the reforms helped the poor? The data put out by the National Sample Survey Organisation suggests that poverty rates have remained static, but National Council for Applied Economic Research (NCAER) data show that poverty rates have fallen. But since the rent-losers from economic reforms are entrenched and organised, and the gainers are not, the legitimacy of reforms is being eroded every day. This needs to be set right.

Growth distribution

Growth has been unevenly distributed, especially in terms of regions. Some dynamic States like Maharashtra are sprinting ahead, while the likes of Bihar have stagnated. This could put pressure on the federal system, since the bulk of the poor and rapidly growing population lives in the already populous northern States. The North-South divide (as it is seen globally) is reversed in India, and could upset the polity in the future.

Growth impulses

The economy's growth impulses are getting weaker, while domestic industry, with exceptions like TVS, is caving in to foreign companies in hostile take-overs. While the government still talks about pushing GDP growth rate to 8 per cent, the harsh reality is that India seems stuck in the 5-6 per cent range during the last four years. Talk cannot be a substitute for action.

While growth is the ultimate target of macroeconomic policy, low fiscal deficit, high savings, and investment are intermediate targets. Controlled inflation, increasing employment, and decreasing poverty are immediate targets of macroeconomic policy. Macroeconomic policy needs to be designed keeping all three types of targets in mind.

If growth is the key measure of macroeconomic performance, inflation (or rather its absence) is the generally preferred indicator of macroeconomic stability. In the 1980s, India's average inflation rate of 7.2 per cent was close to the average rate for Asian developing countries as a group (7.1 per cent), a little above the average rate for the developed countries (5.6 per cent) and much lower than the average for all developing countries (39 per cent), which was driven high by Latin American inflation (145.4 per cent). In the 1990s the conspicuous difference was that inflation in developed countries dropped to a low 2.6 per cent, or one-third the average rate for India. And in the last three years, inflation in the Latin American countries came down to single-digit figures.

Thus inflation was contained worldwide, and India was a beneficiary. It is therefore not merely because of India's macroeconomic policy that inflation was contained, but because of the global environment of price stability.

In the next wave of reforms, what is going to be crucial is the launching of what India's representative at the International Monetary Fund (IMF), Vijay Kelkar, calls meso-economic reforms, otherwise known as second generation reforms: that is, major infrastructure sector reforms in energy, irrigation works, transportation, telecommunications, universities and other higher institutions of learning and housing construction. In a growing economy, these sectors will require enormous amounts of new investment. That is easier said than done in India, because no country in the world has achieved a sustained growth rate or high rate of investment with such high interest rates as in India (of 6-8 per cent in real terms). Bringing the real interest rates in the neighbourhood of 3-4 per cent is therefore essential. It can trigger a spectacular investment boom throughout the economy.

Such a reduction in the long-term interest rates will also be essential to maintain an exchange rate regime that is supportive of trade liberalisation, that is, avoid the over-valuation of the rupee. Thus, the reduced interest rate and competitive exchange rate can become the "Archimedean" lever to propel the economy on the high growth path.

Currently, by and large all infrastructural sectors are in the public sector and in some cases they are monopolies. If in these sectors we introduce both privatisation of public sector enterprises and the entry of the private sector, the gains to the economy are likely to be quite spectacular. In the Indian economy the benefits of these meso-economic reforms could add 3-4 per cent of GDP per annum, which can accrue with little capital, and provide the springboard for further gains, particularly by inspiring new private investment and productivity growth. In this list of meso-economic reforms, emphasis needs to be laid on reforms in higher education, that is colleges and universities, to dismantle, for example, the severe entry barriers to start a private university in India, to permit collaboration or alliance of Indian educational institutions to be outsourced for academic research and even teachers by cost-strapped academic institutions of the U.S. and other developed countries.

A major implication thus of these meso-economic reforms is a need to create a new institutional and financial architecture for the management of the Indian economy to sustain a full-fledged modern market economy, where stability, predictability and transparency of policies are seen to be of fundamental importance by foreign investors.

The new institutional architecture will also imply the strengthening of independent regulatory agencies such as the Securities and Exchange Board of India (SEBI), the Telecom Regulatory Authority of India (TRAI) and the Central Electricity Regulatory Commission (CERC), and to their independence being treated on a par with the independent judiciary. Such a new institutional architecture will have an independent monetary authority. This will be achieved by giving greater independence to the Reserve Bank of India on the lines of the autonomy enjoyed by the Federal Reserve in the U.S. and the Bank of England. This will inspire confidence amongst both investors and consumers and promote competition in these sectors since it would end the crony capitalism that plagues India and inundates the economy with mega scandals involving insider trading and plain fraud.

In the reforms initiated in 1991, the emphasis was on reforms of product markets by abolishing industrial licensing and import barriers. These reforms, however, left the factor markets such as labour markets, land markets and capital markets, the natural resources market such as water, and institutions mostly untouched.

However, now, among the necessary factor market reforms, two are crucial: reforms, first, of the labour markets, and second, of the financial sector. India's present laws of bankruptcy (exit policy) and corporate control require reforms so that the market for corporate control becomes competitive. The financial sector reforms would involve reforms of the banking sector, equity markets, debt markets and foreign exchange markets. In this, privatisation of state-owned banks is perhaps the most essential, but preceded by strengthening of the regulation and supervision of financial institutions and of capital markets, which are really non-existent at present. The recent developments in the Indian stock market vividly show how the actions of one private bank, one cooperative bank, one major stock exchange management, and a giant mutual fund of 20 million subscribers can have a deleterious impact on national equity markets and particularly on small shareholders, because of a lack of strong supervision.

But the most deleterious effects are from rogue empires, which no government wants to regulate, and whose suffocating tintacks are everywhere choking off competition. Thus the downside risks of globalisation get amplified if the financial sector is weak and more so as the economy liberalises and integrates with the world economy. This is the main lesson of the 1997 Asian crisis and the recent crisis in Turkey, and the 2001 meltdown in Argentina.

THE question that remains is: where can the funds to finance these reforms come from? Three sources seem feasible in the Indian context: a rise in domestic savings prodded by attractive tax policies; a sharp increase in FDI by means of appealing reforms in regulations and labour laws; tapping the liquidity in the banking sector.

The first phase of reforms, which started in 1991, essentially concentrated on reforms at the Central government level. Now these have to be taken to the level of the States and district local bodies. Almost 40 per cent of our revenue and fiscal deficit are because of poor State finances. A number of reforms are required to improve the delivery system, too, since all social services such as education, health, and so on are delivered at the State level. The State-level reforms are of particular importance to promote regional equity, which is a matter of fundamental significance for a federal polity like India.

K. RAMESH BABU
P.V. Narasimha Rao, who was Prime Minister from 1991 to 1996, deserves credit for implementing the first generation reforms, but the blueprints were ready already.

These reforms should be designed also to have India playing its rightful role in the world so as to provide growth and stability to the global economy, an aspiration China is meticulously working to fulfil. In the age of globalisation, this means not just achieving a high growth rate of the gross national product, but more on what India can contribute to the global pool of knowledge and technological progress. While India's potential in this area stands demonstrated, the nation with the world's third largest scientific manpower has a long way to go to become a world player in information technology (IT).

For instance, if patents are taken as one of the quantitative indicators of innovation or growth of knowledge, in the year 1999, the most recent year for which data are available, the number of patents India obtained in U.S. was only 114 compared with Taiwan or South Korea, which got as many as 4,000. For the developed countries such as the U.S., Germany or Japan, the numbers are much higher. Even in the case of domestic patents, there were 1,660 in India, 12,000 or so in China and 3,00,000 in Japan.

As we have seen in earlier sections here, in the growth of "total factor productivity", an index of technological progress, India's performance has been lower than in countries such as China, Japan, Korea or the U.S. Even the research and development (R&D) expenditure that India devotes as a percentage of GDP is far lower than that of Japan, Korea and other developed countries. When it comes to education, whether in terms of literacy or the amount of support to the universities, India's performance, vis-a-vis other high-performing developing countries such as China and Korea, is woefully inadequate. In other words, this "knowledge or innovation deficit" is a big problem, which India will have to overcome in order to compete successfully in the emerging knowledge-based world economy and become a source of technological progress for the world. Once again, media-projected bald prognostications of a Prime Minister or Finance Minister cannot be a substitute for urgent action on a well-designed strategy.

A. ROY CHOWDHURY
Daily-wage labourers outside Hi-Tech City in Hyderabad. There is no consensus yet on the key question: have reforms helped the poor?

As India faces the new century, the Indian economy stands at a crossroads. Either it can take the "business as usual" road, which also means continued poverty and a low growth trap, or take the high road to achieve prosperity, global prominence and a more egalitarian society through accelerated reforms and by energising the national innovation system. This means that government's national orientation has to shift from religious fundamentalism, re-writing history and terrorising minorities to achieving economic goals, and concomitantly the voter has to rise, or be encouraged by the intellingentsia to rise, above caste, religion and inducements to vote for performance. The task is achievable, but not by wishful thinking and armchair pontification of intellectuals.

Experience and economic theory tell us that the impact of such micro-meso-macro economic reforms can be multiplicative, exploiting their synergy. Hence, I am quite confident that with these reforms the Indian economy can grow at the rate of 10 per cent per annum over the next two decades or so. This would make India's economy by the year 2020 the world's third largest, after the U.S. and China, perhaps even bracketed second, overtaking all the major European economies such as Germany, France and the U.K.

Dr. Subramanian Swamy, a former Union Minister for Commerce, is currently a member of the faculty in the Department of Economics, Harvard University (2000-02).

http://www.frontlineonnet.com/fl1902/19020610.htm

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Palash Biswas
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