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

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The Economy and 1998-99 Budget The economic reforms of the 1990s, white having achieved a distinct beginning, have not demonstrated sustainabitity. After the initial set of actions in rationalisation of the tax structure, financial sector reform and opening up of trade, the speed of reform slowed down and only short-term macroeconomic policies some good, some bad but, in any event, inadequate were used What are the overall directions in which India needs to move to revitalise its reform process and to sustain it? 1925 An enhanced growth strategy for India calls for a three-pronged approach: sharper focus on exports, rural improvement through a concerted campaign of infrastructure upgrading and redesigning of state policy and maintenance of macroeconomic stability. 1935 The reform process has not encountered much resistance from pressure groups because it has not made much headway in deburenucratising and depoliticising the management of infrastructure and in decentralising rural development Since land redistribution is not politically feasible and top-down subsidy-oriented poverty alleviation programmes have been shown to be ineffective, economic and social empowerment of the poor can be achieved only through rapid broad-based labour-intensive growth. 1943 There are many question marks on the capacity of the economic reforms to bring about sustained growth accessible to the poor because the underlying policy-making processes have focused on the short-term gains of a few groups rather than on the long-term challenges to the system. 1949 The actual changes in the policy regime affecting food and agriculture and the structure of the rural economy have been considerably more moderate than the government's claims and intent and, worse, many of them have been unwarranted by the needs and potentials of the economy. 1955 The principal factor underlying the withdrawal of retail investors from the capital market has been the erosion of investors' confidence in the corporate sector. Yet many provisions of the Companies Bill pending before parliament are likely to further reduce corporate managements' accountability to shareholders. 1961 While the finance minister's initiative in giving effect to the tenth Finance Commission's recommendations on an alternative tax devolution scheme is in the right direction, it does not go far enough. Reform of tax devolution must go along with consideration of the issue of tax reassignment to evolve a co-ordinated system of domestic trade taxes. 1971 Examination of the requirements of macroeconomic management in the aftermath of the 1998-99 Budget identifies three areas of concern; maintenance and enhancement of macroeconomic stability, making the capital market more attractive for investors and improving the supply side responses of the economy. 1977 The attempted strategy of the 1998-99 Budget, its likely impact and some issues beyond the budget on which policy debates in the days to come are increasingly likely to focus, 1985 The budget is aggressive in its attempt to be all-inclusive; measures to improve the farmers' lot, no changes in the direct tax structure so as not to hurt the middle class, protection to industry while increasing expenditure on infrastructure. But in its attempt to carry all sections of society, the government has failed to rein in the fiscal deficit and its accommodative stance has inherent in it the possibility of the budgetary targets of revenue and expenditure coming undone. 1995 Is the economic reform process to continue along the lines chalked out? Has the 'swadeshi' rhetoric been reflected in actual policy? And has the process of redefining the role of the state been continued? What pointers does the 1998-99 Budget provide on these issues? 2001 Wrong notions of liberalisation, failure to widen the tax base and, most importantly, fallacious interpretations of the role of the state in an otherwise market economy have marked successive budgets and Yashwant Sinha's one is no exception, its 'swadeshi' pretensions notwithstanding. 2007 The relationship between budget deficits, money creation and debt financing suggests that interest rate targeting and inflation control arc both monetary and fiscal policy issues. For any given deficit, there exist optimal levels of monetisation and market borrowings. The implications of the 1998-99 Budget. 2009 While the emphasis in the budget on small-scale industries, information technology, a level playing field for Indian firms and a greater rote for non-resident Indians is correct, the actual measures introduced might turn out to be counter-productive. 2016 How has the 1998-99 Budget addressed the imperatives facing the country's external sector in the present phase of its increasing integration with the global economy? 2020 Founder-Editor: Sachin Chaudhuri Inequity in Flatresst Sanctions and Science: Poor Planning Religion in Politics: Spreading Disease

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