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Tuesday, Feb 10, 2004

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`India can grow at higher than 8%' — Mr Jaswant Singh, Finance Minister

G. Srinivasan

AFTER being in the limelight continuously ever since he unveiled the mini-Budget package in the run-up to the Interim Budget he presented in Parliament on February 3, the Finance Minister, Mr Jaswant Singh, appeared reticent at a one-to-one interface. Always maintaining his proverbial aplomb and martinet mien without least betraying what is going on in his inscrutable mind, Mr Jaswant Singh remained the master of the macroeconomy he is presiding over, as he answered questions in his inimitable voice and measured accent.

When his attention was drawn to the frequently used word, `sops', to describe his largesse to Indian industry and the people, the Finance Minister asked, with an impish twinkle, to be "educated" on the word and also directed an officer to look up the word in a dictionary. As the officer read out the meaning — "something to appease or satisfy and meaningless concession" — he urged those using the word to "At least be kind to me".

Mr Jaswant Singh does not like to describe his short but momentous tenure in North Block in any manner as "it would be arrogant of me to do so. How can I do a subjective assessment of myself? It is for others to assess what the Ministry of Finance has done" over the past few months. Asked if he is leaving a good legacy for the successor government, he hastened to add: "This sounds like a farewell unless your question suggests that you want to say good bye. I am not in a farewell mood. There is a great deal to be done."

No way was he in any doubt about how he feels the Indian economy is doing now: "The Indian economy is on a roll. We are underestimating the explosive growth potential of the nation's economy and our citizens' creative genius."

In an exclusive interview to Business Line in his furnished North Block office from where he administered the country's finances for less than one-and-a-half years, presenting one full-fledged Budget (for 2003-04) and an Interim Budget (for the first four months of 2004-05), Mr Jaswant Singh gave his take on the major issues confronting the economy.

Excerpts from the interview:

On GDP growth:

In my view, the Indian economy's 8 per cent growth is sustainable, as the advance estimates for the current fiscal by the Central Statistical Organisation (CSO) figures just released today amply bear out. I am of the view that India can and must grow at a higher rate. Poverty reduction has to be addressed and corrected through a many-pronged approach. These must directly address the problem of nutritional deficiency and that is why we have extended coverage of Antyodaya Anna Yojana and rozgar yojanas and the Interim Budget brought special emphasis on self-help groups.

On fiscal deficit reduction to 4.8 per cent this fiscal and 4.4 per cent the next being "jugglery" to be effected through cuts in Plan investments in public enterprises, as alleged by former Finance Ministers:

I don't want to enter into this kind of disputations. They are eminent economists and I do not claim to be one. But it is strange for them to question the veracity of the facts which are based on empirical data.

Revenue receipts this year have gone up more than budgeted and for the first time in many years we are exceeding the budget target on this count by a few thousand crore rupees. Non-tax revenues also grew due to the interim dividend from petroleum companies and the unified licensing fee.

All put together, plus expenditure containment, it came to Rs 21,000-22,000 crore, which brought down the fiscal deficit from 5.6 per cent to 4.8 per cent in the revised figure. There is no reduction in the Plan investment of public enterprises. We have only assessed what they can spend in the remaining three months. It is not a cut. The Ministry of Finance is not authorised to cut expenditure approved by Parliament.

On disinvestment receipts of Rs 14, 500 crore in 2003-04:

This is not assumed. It is now a reality. Before the end of March, the Disinvestment Ministry has formally advised this programme to be completed and this is the expected receipt. All the formalities have been over for the disinvestment of oil companies before the end of the March 2004.

On Value-Added Tax:

I have said earlier and I have no difficulty in stating that VAT is an essential reform of the taxation system. But it can only be introduced if a certain number of States or a certain basic mass of States of the Union are ready to accept it. We have brought a central value added tax. But the States have certain problems and unless these are sorted out, VAT cannot be introduced across the country. I can't have major States into VAT as of now and I don't wish to name them. It is not a numerical figure of how many but the question is volume.

On exporters' woe of rupee appreciation vis--vis the dollar:

I don't see why so much is made of rupee appreciation vis--vis the dollar. Exports went up by 43 per cent in December 2003. They could not have gone up if there was something wrong. Rupee has strengthened. We are mindful of the development and in consultation with the Reserve Bank of India, we are monitoring the situation.

Though other constraints, such as infrastructure not being fully in place, do dog the exporters, and airports must improve — they are moving at a certain speed and I wish they moved a bit faster.

In the highways system, there is a great deal of improvement and some development is happening in seaports. I am confident that in the near future, significant improvement will be visible, discernible and is to be experienced.

On poverty reduction:

As the web of infrastructure develops, and with the spread of physical infrastructure, poverty reduction and gainful employment to millions would be assured.

All that has been said in the budgets of the past is achievable; we need determination, combined with economic management of it, and the challenges must be met. The harder the task, the greater will be the endeavour.

On economic reforms:

The economic reforms are irreversible. I have had a considerable part in successive election manifestos and I do not concur with the view that the NDA or the BJP has swung from the extreme of swadeshi to openness and reform.

Reform is integral to growth and how can you grow by going backward? Public sector reform too is on. Take the instance of the Indian Railways. Is it a public utility or a commercial venture? Sixty per cent of India travels in trains. So, a balance has to be struck in the system when attempts are made to reform it.

On the `India Shining' blitzkrieg:

This is not propaganda. It is an information campaign which we started last year.

India Development Initiative is a Parliament-approved information and promotional campaign to inform Indians here and abroad, and in each campaign there is a specific theme or project or programme highlighted, such as dada-didi programme or power sector reform.

On the foreign exchange reserves crossing $100 billion and what productive use this could be put to:

"Watch the space to see to what innovative use the foreign exchange reserves" would be put. The management of the country's foreign exchange reserves is in the hands of the RBI. It is managing them most ably and efficiently and it takes full care of the country's interests.

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