New Delhi Feb 28: Bloated Government, huge expenditures and dis-savings are the reasons why this year's economic growth is around one per cent less than last year's. This year's combined fiscal deficit, for both the Central Government as well as all the States, is close to what it was in the crisis year of 1991 - it was 9.2 per cent of GDP in 1991 and was 8.5 per cent last year. All this, and a lot more, has been pointed out in this year's official review of the economy, the annual Economic Survey released in Parliament today, as a backdrop to the presentation of the Union Budget tomorrow. The Survey points out, quite unequivocally, that the huge dis-savings by the Government are the reason for a fall in the overall savings rate in the economy; private sector savings remain healthy. This, in turn, has led to a fall in investments, and hence in growth. In the case of agriculture, for instance, where the Government investment has fallen dramatically, the reason given in the Survey is that Government spending has been in the form of useless subsidies. The survey says that agricultural growth has fallen due to the overall lack of investment in it. Naturally, then, the Survey states that hard decisions are needed to put the economy back on the growth path. It has stressed on the need for cutting subsidies and size of the Government along with less dis-savings if the growth of the economy is to increase. As a strategy for restoring fiscal health of Centre and States, the Survey has stated that downsizing Government, reducing subsidies, transparent sale of underutilised public properties and disinvestment in power and transport for resource generation, were a must.The Survey has stated that the adverse effects of large fiscal and revenue deficits on virtually every important dimension of macro-economic performance are well known. ``They range from low savings and investment, high real interest rates and reduced growth, to adverse pressure on inflation, financial markets and the external sector,'' the Survey has noted. It has stated that the continuous series of large deficits lead to inexorably mounting interest payments, leaving a declining share of Government expenditure available for essential functions such as defence, law and order, social services and public investment in infrastructure. The Survey has noted that major subsidies are budgeted to increase marginally to Rs 22,440 crore in 1999-2000 compared with Rs 21,030 crore in 1998-99.Though revenue receipts have increased by 15.4 per cent in April-December 1999 compared to growth of 4.7 per cent in the same period last year, the Survey said expenditure during the period had grown by 17.8 per cent. This coupled with other receipts like disinvestment netted only Rs 1,383 crore against the target of Rs 10,000 crore for the current financial year.On the positive side, the Survey said growth from manufacturing would almost double to 7 per cent in 1999-2000 from 3.6 per cent in 1998-99. The growth in GDP from the construction sector is expected to accelerate to 9 per cent in 1999-2000 from 5.7 per cent in 1998-99.As a recipe for all the ills, the Survey has called for a redefinition and narrowing of Government responsibilities to those functions that only Government can discharge effectively.Systematic efforts were needed to reduce subsidies by targeting them to the poorest segments of the society, the Survey said adding a vigorous drive had to be undertaken to divest in commercial undertakings like power utilities and transport undertakings.It called for a concerted programme to deploy user charges for economic services rendered by the Government, systematic induction of information technology tools and modern management practices to enhance practices of governance.
