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Things are going out of hand: finance minister's advisor

Finance Minister Yashwant Sinha will soon convene a meeting of chief ministers of all states where he is expected to do some plainspeaking on the state of the economy.

The finance minister's new advisor Mohan Guruswamy, in an interview to a private television channel, said he will tell the chief ministers that ''things are going out of hand and ''it is high time'' good economic sense prevailed.''

Guruswamy disclosed that North Block would appreciate fool- proof prosecution of Indian businessmen rather than high-profile arrests without sufficient homework.

On exporters demand for a still weaker rupee to match East Asian currencies, Guruswamy clarified they should not expect more and more sops from the government.

He said the meeting was likely to be called early next month. ''If you are going to consume all the resources you raise through revenues on yourself or on few people then things are not good either,'' he said.

When asked why it needs a finance minister to tell the states about the reality, Guruswamy said at some stage good economic sense has to take over.

''The logic of economics is that one day things will grind to a halt and then you have to wake up. Even the great state of Bihar, which is marching to a different drummer, will have to wake up at some stage when things come to a halt,'' he said.

The finance minister's adviser said the economy has got into the tradition of mismanagement, and politics has taken precedence over good economics. He, however, said things are coming to a stage when good economics and good politics will go hand in hand.

On a question about giving more powers to authorities to deal with tax evaders, Guruswamy said, ''You can prosecute a person without arresting him. We have got into a tendency to arrest a person which amounts to pre-judging a person and to punish him by keeping him for six weeks and three months, but this does not result in prosecution. What you need is a good legal groundwork, get your facts right and prosecute for punishment. The arrest brings the whole system into disrepute. It is a disgrace and these provisions have been misused. People become the judge and the jury. In many countries even murder suspects are not arrested till conviction and sentencing.''

He said he was concerned about the decline in developmental expenditure. Trends in the last seven to eight years have been very ominous, coming down each year. This meant that ''you are financing one end of the society like government employees and people who get subsidies at the cost of people who are less organised and less articulate. You are starving funds for irrigation, agriculture, education and health, which the majority needs the most.''

In reply to another question, he said, ''This whole privatisation business has been carried to a ridiculous extent. After all, it is the state which has to spend on infrastructure and manpower.''

He referred to the rising expenditure in the public sector in the last 50 years. The public sector was supposed to produce surplus money for developmental expenditure, but the public sector itself had become a beast of burden.

He said it was clear that things had come to a stage where ''we can no longer afford to or allow these decisions to be enmeshed in petty and personalised politics. Maybe we are lucky, we have come at a time when there are no alternatives for hard economic decisions).''

Referring to the fall in the price of the rupee, he said that the businessmen should not look to the government for sops, and should instead restructure their businesses and priorities. But he said the Reserve Bank of India was watching the situation.

UNI