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SEBI chief urges 'experts' to see the human angle in Budget

BUDGET 2000

The Securities and Exchange Board of India chairman D R Mehta has criticised "financial experts and economists" for their one-sided comments and narrow approach towards the Uunion Budget proposals for the year 2000-2001.

Participating in a discussion organised by the management students of the South Indian Education Institution at its campus in New Bombay, Mehta said that the experts were insensitive towards more critical issues such as population control and job creation which were not focused in the Budget proposals.

They preferred to concentrate their arguments on fiscal deficits and subsidies.

"We cannot remove food subsidies when a majority of our population is below the poverty line . The 50-year old legacy of subsidising agriculture sector can not be wiped out overnight," Mehta observed.

Expressing his displeasure over dividend tax, export tax and hike in urea prices, he said that the Centre had taken bold measures to enhance its earnings but the capital market was not kind enough to accept such proposals. The market witnessed successive falls after the presentation of Budget on February 29.

Mehta, who recently received an extention of two years for the post of SEBI chairman, said that the reform process of the government has to be gradual, looking at the vast population.

Explaining the myth of Indian subsidies, he said that if the subsidies are removed, prices of agriculture produces would go up substantially and then the government would have to procure those products at a higher cost for the nation's food security, thereby neutralising the benefits of subsidies withdrawal.

Similarly, exporters should not have been taxed because they are not at level-playing ground in India to compete with the foreign products because of high domestic input cost such as power tariff, transport cost and telecom fees.

He cited the happenings in the erstwhile Soviet Union, which had engaged in Cold War with the USA for seven decades, was easily broken apart into several states within a period of just one year because the country went ahead fast with reform measures as suggested by an expert from the Harvard University.

Mehta also wondered why World Bank projects failed to see the success of the day in many countries barring a few in India because the projects were not conceived on ground reality and the management knowledge was limited.

Overall, he said that the Union Budget had given a new direction towards the growth of knowledge-based industries, FIIs' investment and public sector disinvestment and venture capital finance.

UNI

D R Mehta on The rediff.com Budget Chat

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