• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

QUITE POSSIBLY, THE President, Dr A. P. J. Abdul Kalam, the rocket scientist he is, finds it difficult to accept the hackneyed governmental promise of turning India into a Developed Nation by 2020. He would like the country adopting a new vision, but have we not heard this before? Similar Presidential addresses have been made in the past without the citizenry being any the better and the GDP growth rate topping 6 per cent per annum on a consistent basis. Dr Kalam's address lists numerous urban and rural programmes to mitigate poverty without touching on their performance. The Tenth Plan, with a GDP growth target of 8 per cent, he says, "distinguishes itself" from previous Plans by being "a Reforms Plan and not merely a Resources Plan". Does a country into the tenth year of economic reforms need anymore a Five Year Plan, when the markets are supposed to decide risks? The number of mobile phones at 14 lakh in April 1999 crossed the one crore market in just three years but only after the freeing of the telecom market. A phone connection is available on call and that is thanks to the competitive pressure built by a large number of players. In the rural areas, an STD/PCO booth is the lone icon of reforms and that is despite the Planning Commission.

With interest payments, subsidies and Defence gouging out any rise in government revenues, a Five Year Plan does not provide any direction to even government expenditure. The President dubs "the National Highways Development Project as one of India's proudest success stories since Independence". That may be unfair to the technically more complex Konkan Railways built by the Konkar Railway Corporation. Dr Kalam is proud of India being able to handle big projects. Big projects do make political sense but the need now is to run efficiently the extant infrastructure projects (mostly in the public sector). For the market, the endorsement of the Kelkar report is the Valentine card from the Vajpayee Government for economic reforms . Somehow most economists have been critical of the report that pleads rightly for scrapping all tax exemptions and binding tax rates to a three-tier formula. For too long, taxes have been upped to underwrite extravagant government expenditure; the Kelkar formula could pin down spending by cutting out free money usurped from the public.

Yet, neither Dalal Street nor Mint Street is betting on the Finance Minister sticking to the Kelkar path on Budget day though most believe the election-year tax proposals will not deepen the discontent. Though it might be dubbed populist at this juncture, lower taxes with a wide spread (including farmers) are what the Indian economy needs. If Mr Jaswant Singh can knock down indirect taxes, production costs and prices will dip prompting customers to walk the shopping malls. That could turn on growth for the taxman to axe his bit. The Government has only to help replicate the pluses in the telecom and software sectors and that, as Sherlock Holmes would say, is elementary.

Article E-Mail :: Comment :: Syndication

Stories in this Section
Not on target

Copyright © 2003, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line