ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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The Central Budget and the New Economic Policy

The Central Budget and the New Economic Policy Bhabatosh Datta The right-ward shift of economic policies has become pronounced with the set of measures proposed in the Budget for 1985-86. It had appeared for some weeks before the Budget that private industry was confident about such a shift The behaviour of the commodity and share markets did not show any pre-Budget nervousness and was in fact remarkably steady. While economists who were taking for granted that the public sector outlay in the Seventh Five Year Plan would be around Rs 1,80,000 crore (at 1984-85 prices) assumed that there would be strong measures for additional resource mobilisation right from 1985-86, the business world was banking on cuts in direct taxes; and on wider incentives to private investment It is this group which has anticipated everything correctly 7 he new government has been persuaded to adopt an Indianised variety of what used to be called 'supply- side economics' a few years ago THERE has been for some years now a visible change in the Union government's attitude towards planned growth. The Planning Commission has been systematically demoted and there have alongside this been a series of policy measures entailing a right-ward shift of the economy. People in the highest positions have spoken disparagingly of the public sector and have expressed themsleves strongly in favour of decontrol The chairman of a high-power committee on foreign trade policy openly urged liberalisation, even before the committee had finished its discussions with people outside government, Tax reliefs have been given every year with a view to meeting the pressures launched by the private sector. Investment allowances had converted some of the biggest companies into zero-tax assessces. The evil in this particular case went so far that the government had to take partial corrective measures.

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