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NEW DELHI-Limits of Reflation

NEW DELHI Limits of Reflation B M ECONOMIC policy-makers in government and planners in Yojana Bhavan .seem to be on the horns of a dilemma. The mid-term review of the Sixth Plan is taking longer than was anticipated, evidently because it is difficult to arrive at any conclusions about the corrective measures needed to cope with the shortfalls in Plan implementation and the imbalances that they have created. , The conventional response in such circumstances always is to concentrate on what is called the 'core' of the Plan and let the rest take care of itself. The resource stringency aggravated by mounting defence expenditure is, however, so acute that even the 'core' is not easy to safeguard. A big disappointment in official circles in this context is that the 'liberalisation' measures have not helped to stimulate private enterprise to make any significant contribution to stepping up investment and growth. On the contrary, the concessions and the relaxation of controls and regulations have only whetted the appetite of big business for more incentives, even as it sits pretty and is reluctant to carry out the enlarged responsibility cast on it for stepping up investment, accelerating economic growth and raising production and exports. The recessionary tendencies in some industries have only compounded the problem. Another disappointment is that there has been no spurt in foreign capital inflow so far. Manmohan Singh, just before he relinquished charge as Member Secne- tary of the Planning Commission and assumed office as Governor of the Reserve Bank, publicly canvassed in favour of what might be termed a guarded reflationary policy. He said, in an interview, that if there is a general slack or under-utilisation of capacity, "we do not have to wait for a prior increase in domestic savings to increase public investment''. He did not straightway concede that .such a situation had already arisen but went on to .suggest that "a more liberal view both of safe limits to deficit financing and expansion of bank credit" could be taken. Indications are available that Manmohan Singh was not articulating just his personal opinion. He was probably canvassing for an adjustment in fiscal and credit policy which is believed to be gathering some support in government as against the earlier official hang-up with so-called deflationary measures to control inflation as the overriding concern of government policy. Already, however, selective relaxation of credit policy has been effected and the Federation of Indian Chambers of Commerce and Industry has promptly moved forward from a clamour for relaxing the 'credit squeeze' to lowering interest rates. The question is whether a switch to a generally reflationary policy is now in the offing. The answer will be available by and by, and will be probably completed when the next budget is presented.

NEW DELHI-Straws in the Wind

A DAY before Rajiv Gandhi, MP, left for the Soviet Union with his mother, the Prime Minister, there was a fire which gutted some furniture shops in the city, He rushed to the spot as befits an anxious representative of the people and, finding some deficiency in police bandobast, upbraided the police chief of the Capital for dereliction of duty. Within hours, two police officers were suspended on orders from the Prime Minister's house. Much was written in the Delhi press for a whole week about the incident and the rights and wrongs of the doings of Raiiv Gandhi, MP and his interference in the running of the administration in the Capital. There was no reaction or clarification from the official side. Within a day of the return of Rajiv Gandhi, MP, (he is always expected to be mentioned in this manner in the press), however, the police chief himself put up a formal statement defending what had happened and the part he and Rajiv Gandhi, MP, had played in the episode. Another interesting and related development was that the predecessor of the present Police Commissioner of Delhi, who had been on long leave after he relinquished charge in the Capital, had his leave cut short as soon as the present Police Commissioner issued his statement. The Police Commissioner had made his peace with the powers that be and the other one could be easily put out of the way. Those in the police force or others who had entertained the idea that the one who was earlier relieved of his duties in the Capital would be recalled after Rajiv Gandhi's displeasure with the present police chief have been very much disappointed.

NEW DELHI- Emerging Style of Government

THE casual and even bored manner in which problems, big and small, policy issues and administrative matters are approached and dealt with Is becoming a striking feature of the functioning of the government in New Delhi. The unquestioned political pre-eminence and power of the Prime Minister and the aides who happen to be currently enjoying her confidence in the Prime Minister's Secretariat and at other points in the administrative machine have weakened the institutional framework of the government. But what is now beginning to happen goes beyond the end of the system of collective responsibility and functioning, which had been brought about by divesting the established organs and institutions of government of all initiative in policy formulation and implementation and even the running of the administration. It is now a case of open and brazen display of personal whims and fancies at the top, without care for any norm of accountability or efficiency and with complete indifference to public sensitivity.

NEW DELHI-Message of Maruti-Suzuki

NEW DELHI Message of Maruti-Suzuki B M UNLIKE the rather guarded and cautious, one might even say sophisticated, manner in which India's economic liberalisation effort is often characterised, the visiting Foreign Minister of Japan was very open and forthright in lauding the "great significance" of the liberalised economic policies of the present Government of India.

NEW DELHI- FERA in Reverse

OPENING the doors wide to multinationals is no longer a hidden or disputed part of the policy of the present government It is indeed affirmed and proclaimed with vehemence and gusto. What is of some interest now, therefore, is to watch the variety of business opportunities that are being 'offered to multinationals, both those already operating in the country and others which the government is trying so hard to attract to India. Some of the deals that are being offered and worked out in tins context are indeed very interesting, even fascinating. One such in the process of being implemented is with the American tyre company, Goodyear.

NEW DELHI-Power Plan in Hock

NEW DELHI Power Plan in Hock B M THE fiasco of the Paradip-Dakari steel project in Orissa and the cancellation of the arrangements for turnkey construction and total financing of the project by foreign interests do not seem to have made the government any the wiser, The principal reason for the cancellation of the arrangement was the belated discovery that the cost of the project would be bloated on account of high cost of equipment and services from a single tied source of supply. But the Energy Ministry is still insisting that even if it might be advisable to postpone construction of a steel plant till more acceptable terms of collaboration and assistance from foreign sources might be negotiated, it has to go in for similar arrangements in a hurry for the erection of large power generation units if it is to achieve the Sixth Plan power target. According to the Energy Ministry, it cannot mobilise sufficient rupee resources for achieving the target and the only alternative is to attract foreign financing of the power programme.

NEW DELHI-Anti-Inflationary Thrust Flagging

upward march alter a brief respite of hardly a couple of months, the loud trumpets hailing the great success of the government an controlling inflation have become muted. Even so the govenrment had no option but to increase the issue prices of wheat from government stocks for public distribution and roller flour mills, The government is committed to reducing the budgetary subsidies as part of its policy and the IMF loan conditions. Since the procurement prices of wheat had been increased; it was necessary to increase the issue prices as well. It may be useful to note in this context that since last year, the increases in issue prices have been somewhat more than the increases in procurement prices.

NEW DELHI- Indigenous Technology and Colour TV

PUSHED hard at first by the Information and Broadcasting Minister as a personal fad or, more appropriately, as a personal enterprise, colour TV is now beginning to throw up interesting questions and ticklish policy issues. The official position is as ambivalent and obfuscating as can be. This is part of the style of functioning of the present government. Will one hundred or four hundred thousand colour TV sets be imported in the next few months? Or will only colour TV kits to be fitted into cabinets by Indian manufacturers of black and white TV be allowed to be imported? That there is no firm decision on such issues is clear from the apprehensions being publicly expressed by the Indian TV Manufacturers' Association. According to the Association, alter its members had placed adequate orders on the ETTDC, the public sector canalising agency for the imports of colour TV kits, to meet domestic demand, there should be no import of colour TV sets as such. There is a division also among local TV manufacturers since only the relatively larger units among them are being allowed to assemble colour TV sets and the smaller ones feel that they would be left out in the cold in the switch from black and white to colour TV. What is indeed interesting is that the question of colour TV has come to a head in the name of the Asiad which is supposed to generate so much demand for colour TV that things have to be done immediately to satisfy this demand. The pull of elitist demand in the market, real and contrived, on official policy has never in the past manifested itself so grossly as in the case of colour TV.

NEW DELHI-Prime Minister s US Agenda

NEW DELHI Prime Minister's US Agenda B M INDIRA GANDHI's visit to the USA beginning from July 27 is rather curiously, being played on a low key in the media and by the official publicity machine. It may be that attention tight now is so much on the presidential poll that the fanfare over the visit to the USA will begin only after the poll is out of the way. It is also possible, however, that the relatively lukewarm and cool stance of Washington towards the visit has discouraged too much drum-beating about it in New Delhi. But the importance of the visit can hardly be minimised, especially since it would appear that it has been arranged on the initiative of New Delhi.

NEW DELHI- Wheat Imports Again

NEW DELHI Wheat Imports Again?
B M THE government, it has been reported, is not contemplating imports of wheat this year, at least not yet. The position, is to be reviewed after the rabi marketing and procurement season. Such reports need not be taken too seriously or given too much credence. The experience of last year shows that the government likes to carry out such operations quietly, avoiding to the extent possible advance publicity of its intentions in order to strike appropriate commercial bargains. An increasingly difficult balance of payments position did not deter the government from importing substantial quantities of wheat last year in order to maintain what is called, a safe buffer stock of foodgrains and moderate pressure on prices of foodgrains in the open market. The position with respect to the rabi harvest, wheat stocks and wheat prices is not very comfortable this year either. The options open to the government for regulating supplies and prices of wheat in the coming months

NEW DELHI-Orissa Steel Plant Fiasco

NEW DELHI Orissa Steel Plant Fiasco B M THE cancellation of the letter of intent to Davy International of the UK for the construction on turnkey basis and wih total financing of an integrated steel plant in Orissa

NEW DELHI- Government - Business Camaraderie

NEW DELHI Government Business Camaraderie B M LIBERALISATION of credit for the corporate sector and wholesale trade is emerging as the main bone of contention between official policymakers and the organised industry and trade. The concern with this problem on the part of 'the leaders of industry and trade seems to be far more acute than even their disappointment with the relatively meagre fiscal reliefs for the private sector in this year's Budget.


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