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Journalism of Courage
NEW DELHI, DEC 6: In what has by now become par for the course, World Economic Forum managing director Claude Smadja used much of his 40 minute speech to lambast the government for its poor progress in critical areas such as controlling the fiscal deficit which, according to him would overshoot the budgeted target by around fifty per cent. The combined fiscal deficit of the centre and the states, Smadja predicted, would touch 9 per cent of GDP.
Smadja’s bleak summary of India’s economic scenario, in fact, have become an annual feature by now, and last year Finance Minister Yashwant Sinha attacked Smadja openly — unfortunately for delegates expecting another sparring today, Sinha could not attend the WEF meeting due to preoccupations in Parliament.
Having begun so complimentarily, Smadja then went on to state what he actually felt. The cost of Kargil, the election expenses, the Orissa cyclone, and so on would ensure that the central fiscal deficit would be 6 per cent of GDP, or 50% more than the budgettarget.
This, he pointed out for those who didn’t know their basic economics, would result in a lot less capital for investment in areas of infrastructure. It also meant that, with the government borrowing such a large amount of money, interest rates in India are among the highest in the world.
While complementing the government for being a lot more open to the idea of privatisation, Smadja pointed out that some of the new proposals being floated were dubious. He referred, in particular, to the proposal floated by power minister Kumaramangalam to get NTPC to pay Rs 4,500 crore to take over another power sector PSU, NHPC.
Smadja had another sarcastic dig at the government’s commitment to downsizing and reducing expenditures. “This government may be one of the largest ones in India’s history with no less than 72 ministers. Which is not necessarily the best signal when it comes to downsizing.” And if merging commerce and industry was a good thing, Smadja asked what the point of having a separateinformation technology one was.
The software industry has grown fast because there was no ministry to hamper it, so will the new ministry just lead to new wrangling between ministries and crippling of the sector, he asked.
