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Gujral promises industrialists govt support

Prime Minister Inder Kumar Gujral on Wednesday assured industrialists of total support from the United Front government in achieving an above 8 per cent growth rate and stated that the temporary setbacks in the national economy should not be seen as a source of pessimism.

Gujral also promised a level playing field for the domestic industry.

"I am convinced that the fundamentals of the Indian economy are strong,'' Gujral said, while addressing the 77th annual meeting of the Associated Chambers of Commerce and Industry of India (Assocham) in New Delhi.

"Temporary ups and downs of the economy should not make us pessimistic. It should, instead, make us more determined to move forward and meet the challenges. India is confident of achieving higher economic growth and both the government and industry should work together towards this end,'' he added.

With the flow of external investment into the country going up steadily and domestic savings also increasing, the government was confident of sustaining the present 7 per cent growth rate and even surpassing it in the future.

Assuring total support to the industry, the prime minister said the government wanted industry to function unhindered.

Regarding the call for a level playing field for domestic industry, Gujral said the resolutions of the 'Bombay Club' have been considered seriously. ''We will not let everyone come in and swamp the domestic industry. We will help in preserving the interests of our domestic players,'' he added.

The government, Gujral said, was trying to free industry from bureaucratic controls, promote competition in the domestic industry, and rope in more investment in human resource development.

"A socially just society is always more powerful and we are working towards that end,'' he said, and also called for expanding the entrepreneurial class in India.

The prime minister, however, expressed dissatisfaction at the pace of reforms in the infrastructure sector.

"I am not satisfied with the improvement in power, roads and ports. We have great potential for developing these sectors,'' he added.

Gujral said the government, as part of its efforts to ensure overall growth of the country, was stressing on poverty alleviation and primary education.

Admitting that insurgency was a ''fact of life,'' Gujral said the entire issue needs to be looked at in a wider context.

"We should not rush to any conclusion regarding the government's attitude towards insurgency. We need to first see what is more important for us -- the nation or commerce.''

The prime minister declared that the government has no intention of victimising or punishing anybody nor has it accused any individual or business house of harbouring or promoting terrorism.

Earlier, in his presidential address, Assocham's outgoing president H L Somany said the slowdown in industrial growth and economy in 1996-97 was still persisting and remained a cause for concern. ''Somewhere midway, we seem to have lost track and perhaps are overwhelmed by political compulsions,'' he said.

He also called upon the government to change antiquated laws which discourage the corporatisation of the agriculture sector, especially to meet the requirements of export markets.

The private corporate sector's large scale participation in agriculture is all the more needed in view of declining capacity of the government to meet capital requirements in areas such as irrigation, rural infrastructure, and research and development, he said.

"It is also necessary to achieve a minimum four per cent growth rate in agriculture if an aggregate growth of seven per cent is to be sustained.''

On subsidies, Somany said there was very little progress towards them even when those in the government acknowledged their grossly distorting impact on the allocation efficiency of scarce resources.

"We are inclined to treat this as one of the priority areas if the government really seeks to achieve macroeconomic stability,'' he said.

Somany said despite the positive policy measures and active interaction between the government and the industry, the economy was yet to reinvent the industrial surge experienced in the initial years of economic reforms.

"I would like to request you to usher the second wave of economic reforms to exploit the greater potential of Indian economy,'' he said, adding that politics should not drive away good economics.

On infrastructure development, Somany said an additional fiscal deficit to the extent of 0.5 per cent of the gross domestic product on account of increased investment may be a worthwhile proposition. This will give a demand pull, he added.

Saying that the Foreign Exchange Regulation Act was not in tune with the spirit of liberation, he said a lurking fear existed that all draconian provisions in the FERA and more may get transferred to the Money Laundering Act.

"In our opinion, the Money Laundering Act should limit itself to nefarious crimes such as drug trafficking, arms and smuggling,'' he said.

UNI