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Next government will inherit a bountiful economy, asserts Sinha

Amberish K Diwanji in New Delhi

In keeping with the National Democratic Alliance's decision to seek votes on the basis of performance, Finance Minister Yashwant Sinha today showcased the economy as an achievement of his government.

At a media conference at the Bharatiya Janata Party central office in New Delhi, he was critical of those who had lampooned his policies in the past. "If you compare what all my political opponents said and predicted about the economy with the present statistics, you will see their lies," the minister declared.

He stated his government had finished 17 months in office -- from March 19, 1998 to August 19, 1999 -- and in those months, the economy had undergone a sea change. "Today, the economy is performing as never before, and much of that credit is due to this government's ability to contain and manage the various crises it faced over the past months in office," he said.

He listed six challenges faced by his government. "The first," he said, "was we inherited an economy that was declining when our government took office, whether it be agriculture, services or industry." The minister said the decline began from mid-1996, and though the United Front government was then in office, Sinha squarely blamed the Congress for the mess.

"It was the restrictive monetary policy pursued by the Congress prior to 1996 that caused the economy to decline. The situation worsened in 1996 and 1997. Thus, the first problem was to revive the economy," he said.

According to Sinha, the second problem was the East Asian crisis, which began in mid-1997. "When we took office in 1998, everyone was predicting that the situation would improve in two months. Yet, the reverse happened and from East Asia, it went on to affect Japan, Russia and finally Brazil. There was a flight of currency, devaluation and the need for massive help from the IMF," he said.

The third problem was the nuclear tests that in turn led to the imposition of economic sanctions. "Everyone believed that India would buckle under the sanctions," he added.

The fourth problem was rising prices, caused by the decline in agricultural products. "The impact of this was felt in November last year when the prices of onions, tomatoes, and potatoes shot through the roof.

Everyone then blamed the 1998 Budget (which had been presented on June 1, 1998) and when I said the cause was the fall in agricultural products, no one cared to listen," he pointed out.

The fifth and sixth difficulties, said Sinha, were political instability, caused after the BJP-led government was defeated in the Lok Sabha, and the Kargil intrusions by Pakistan, bringing the two countries to the brink of war.

Then, after making the list, he went into aggressive mode. "No other government in the past has tackled so many problems as we have. They usually had a crisis or two, but never six. And the result was that everyone predicted a gloom-doom scenario," he said.

He then went on to compare the forecasts made by Opposition leaders with his achievements. "The Opposition said that growth in 1998-99 would be less than 4 per cent of GDP, but it is close to six per cent.

"The Opposition insisted the WPI (Wholesale Price Index) would be in double digits, but in fact it is the lowest today over the entire decade," he said.

Sinha was particularly critical of his predecessors Palaniappan Chidambaram of the United Front and Manmohan Singh of the Congress. "I remember Chidambaram saying in the Lok Sabha that the current account deficit would touch 3 per cent of the GDP, but the fact is that it is only 0.96 per cent!" he said.

Not sparing Dr Singh, he pointed out how the former finance minister had recently said that India was six months away from a financial crisis. "I sincerely wish that our former finance ministers make their predictions with care, because their words do carry weight. Dr Singh is completely wrong because if anything, our foreign direct investment is rising. It was less than $ 2 billion in 1997-98 and $ 3.4 billion in 1998-99. It will be much higher next year," he declared.

He predicted that in fiscal 1999-2000, growth will be around seven per cent of GDP. "And this is not just the finance ministry's statement but based on a study made by the Washington DC-based International Institute of Finance," he stated.

He added inflation is less than two per cent, calculated on the same base as used by Dr Singh and Chidambaram. He further pointed out that India's foreign reserves now stood at $ 43 billion, while foreign currency alone stood at $ 30 billion (the rest being in dollars and Statutory Drawing Rights or SDRs).

Sinha pointed out that a good agriculture season should help the economy stay on the road to economic growth. "Whoever forms the next government, it will inherit a bountiful economy," he said.

The finance minister added that perhaps his greatest contribution in office was to bring back the "feel-good factor" in Indian business and economy.

"No longer are our business leaders depressed. On all fronts there are positives. The stock market had crossed all records and the Sensex now stands at over 4700. Even the political instability and Kargil have had extremely limited impact," he said.

The finance minister dispensed with speculation about a 'Kargil tax' to raise revenue in the wake of the recently-concluded conflict. "We will have to wait for the results of the second quarter (September 30) before deciding whether we need to impose a tax," he stated, which clearly means that any tax, if imposed, will only be after the general election.

He once again clarified the concept of swadeshi (national self-reliance) and emphatically stated that there was no contradiction in seeking foreign direct investment of $ 10 billion per annum (as stated in the NDA manifesto) and in seeking to strengthen swadeshi.

"Swadeshi means an India built by India. That does not mean we don't want foreign investment. We welcome all investment in all sectors, but it also means ensuring that our industry can stand on its own feet," he pointed out.

The minister also blasted the Congress for raking up mud on the swadeshi issue while insisting that the various BJP affiliates were now with the party on the same. "India is a democracy and everyone has a right to air their views if they don't agree with a policy. Such disagreement is after all an input into policy making," he said, "but after we have made a decision and announced it, there has been no problem from anyone. Don't forget, the BJP is the first party that espoused the cause of liberalisation, so we cannot be against it."

After the media briefing, Sinha was asked if the economy had finally delinked from politics. "There is no doubt that at least the corporate sector is quite divorced from political decision making, which is a positive development. But politics still has an impact upon the economy," he pointed out.

He chided the media for their bias for Dr Singh. "When Manmohan Singh helped India recover from the crisis in 1991, you people all praised him, and rightly so. But when it happens now, you guys say it is because the economy is divorced from politics. At least give us credit where it is due," he said.

Sinha will campaign in the South Delhi constituency, from where Dr Singh is the Congress candidate, on August 29. "Be there, I am sure you all will enjoy that!"

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