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Political leaders paint a rosy picture of India Inc, experts see gloom in it

For once politics took a back seat as states made a concerted attempt to woo investors even as economists spelt out a gloomy forecast for the country on the whole.

Even as the nation bristled with furious political activity, state ministers who participated at the 1998 India Economic Summit went on with a single-minded economic agenda.

Topping the list was the savvy chief minister of Andhra Pradesh N Chandrababu Naidu, who pitchforked his state within a short span to be the second most investor-friendly state in India. This he attributed solely to the thrust he gave to information technology.

As a result, the Credit Rating and Information Services of India Limited has improved its rating from A minus to A. The change is due to ''a result of progressive policies and sustained structural reforms on both the fiscal and administrative fronts.''

Calling Andhra Pradesh a model for others to follow, Naidu said his state's economy will see a seven-fold increase in per capita income while achieving 100 per cent literacy growth in five years.

Close on his heels was Maharashtra Chief Minister Manohar Joshi, who said developing infrastructure has been accorded top priority by his government. Citing examples, Joshi said the first phase of the 2450 mega-watt Dabhol Power Project in the state would commence operation next month.

Besides, power purchase agreement has already been signed with Ispat India and the Reliance group for their projects in Bhadrawati and Patalganga respectively. Enron, Reliance and Ispat India would generate around 4000 mega-watt of power.

He refuted statements that Maharashtra is no longer a favourite investment destination.

Uttar Pradesh Chief Minister Kalyan Singh asked industrialists to avail of the investor-friendly atmosphere existing in the state. He called UP the biggest market of the country.

The state government, he said, has taken a massive task to restructure key sectors in the economy, which will be actively supported by the World Bank. The sectors identified include power, road, health, education and irrigation.

Gujarat industry minister Sureshchandra Mehta said the government has been at the vanguard to remove procedural bottlenecks creating single window facilities and reforming the state-owned public sector units.

The Securities and Exchange Board of India chairman D R Mehta suggested more easier norms including a higher debt-equity ratio and frequency of buybacks for companies willing to buyback shares.

SEBI has written to the government asking for allowing companies to adopt 4-to-1 debt-equity ratio instead of 2-to-1 allowed in the buyback ordinance.

He said the regulatory authority also has suggested that the companies may be allowed to buyback after once in six months rather than one in two years as provided in the ordinance.

Former finance minister P Chidambaram stressed the need to forge closer economic and commercial relations with United States as no country in the world has progressed in the last 100 years without its cooperation.

He was also of the opinion that India's relationship with Europe and more importantly with the European Union had to be strengthened further. The protectionist measures in EU are casting a shadow on Indo-European ties and issues like subsidies and anti-dumping need to be addressed.

He also stressed on the need to strengthen links with Japan and East Asia.

Coming down heavily on the concept of globalisation proposed by multilateral funding agencies, former prime minister Inder Kumar Gujral said if this has resulted in what Asia is witnessing today, India is not willing to subscribe to it.

He was particularly critical of the western world's habit of witholding technology while demanding a share in Third World markets. Sharing, he said, begins with the sharing of knowledge and not just markets.''

India's priority, Gujral said, was to maintain its independence and pursue a holistic model of economic development such as the one prescribed by the late Pakistani economist Mahbub-ul-Haq.

Even as the India Inc and the state leaders went ahead with their marketing programmes, economists stated that the country was in troubled waters.

If the World Economic Forum managing director Claude Smadja is to be believed, India is likely to close the current financial year with seven per cent fiscal deficit as against the targeted 5.6 per cent.

Painting a gloomy picture of the Indian economy, he stated that the government's disinvestment target is also likely to be missed.

The country, in fact, stands the risk of getting back to where it started in 1991.

''The Union budget for this year was prepared with an assumption of six to seven per cent industrial growth. But, the calculations have gone haywire and revenues are down. Indirect tax collections have missed the target. However, direct taxes are doing well but it is not enough to compensate. This is the major reason for the increased slide and widening of the fiscal deficit,'' he added.

On disinvestment, he said, the government had projected revenue of $ 1.2 billion through strategic sale of public sector undertakings. ''Despite the sale of government stake in Container Corporation of India, it will be able to achieve just half or two-thirds of the target.''

The WEF chief also flayed the government policy on subsidies saying that it also contributed to pulling down the economy. ''Forty per cent of the electricity produced in India goes to people who do not pay for it. And to compensate for this, the government is over-charging the industry.''

UNI

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