Chidambaram blames Rao govt for economic slowdown

Finance Minister Palaniappan Chidambaram has blamed the P V Narasimha Rao government for the slowdown in economic growth in 1996-97.

Addressing the Bombay Chamber of Commerce and Industry in Bombay, the finance minister said the Congress government's efforts to contain inflation within a single digit in the run-up to the general election caused it to soar to a historic high of 22 per cent during the year. The second reason was the fall in agricultural production which generally slackened the consumer demand mainly from the rural sector.

Unfolding the United Front government's unfinished agenda, the finance minister said the Reserve Bank Act will be further amended in light of recent developments. Besides, drastic reduction in government expenditure and subsidies, disinvestment of public sector undertakings and massive restructuring of legal system are on the anvil, he added.

The finance minister strongly opposed non-plan expenditure without making adequate financial provision for public investment in infrastructure projects, education and healthcare. ''We are spending money that we borrow from our next generations,'' he said.

The finance ministry has made an investment plan of Rs 620 billion in the current fiscal year as against a deficit spending of Rs 26 billion and against a massive provision of subsidies to the tune of Rs 1430 billion. ''How can we sustain such expenditure?'' he observed.

Expressing concern over poor return -- about three per cent -- from investment in public sector units and also slow growth of infrastructure industries, he said the only way out was decontrolling various infrastructure-related projects like roads, coal and ports. This will allow the private sector to step in with investment and expertise under an independent regulatory body, he added.

Comparing his role in the UF government with that of a one-day cricket player, Chidambaram said he was eager to score as many runs (reform measures) as possible because of fears of sudden curtailment of the match (fall of the government) due to rains or other incidents.

Criticising various groups for opposing the reform process in the name of swadeshi, he said these people were helping to hold back the country's progress, people's mental and economic growth to match the challenges of the 21st century.

Urging industrialists to fight back, Chidambaram said more investment should be made by them in the core sector of the economy. The minister strongly believed that 1997-98 would be the year of achievement and great revival of consumer and industrial demand.

UNI