NEW DELHI(PTI): Indian finance minister, Dr. Manmohan Singh on April 24 ruled out restoration of any subsidies and scotched the opposition charge that the country was heading for debt trap due to borrowings from International Monetary Fund (IMF),

Inaugurating a seminar on economic reforms, Dr.Singh said the government was committed to correcting the fundamentals to enable the stock market function freely,

Dr.Singh said while vulnerable sections needed to be subsidized any generalized system of subsidies would lead the country to a “disaster,”

He said the argument that United States and EEC subsidized agriculture was not tenable for India where 70% of the population de pended on agriculture.

In the U.S. and EEC only three to four per cent of the population depended on agriculture and hence it could afford subsidies to the agricultural sector, he said.

Referring to the opposition charge that the government had succumbed to the pressures of IMF and multinationals, he said there was “no basis” for the charges.

He said during the last two years the government had borrowed 2.6 billion dollars from the IMF and same¢ amount was borrowed during the opposition rule from 1989 91.

The foreign exchange reserves during the Narasimha Rao government soared from 1.1 billion dollars to about seven billion dollars, he said,

During the opposition rule the foreign exchange reserves dipped drastic fall in inflation rate 6.4%, from three billion dollars to one billion dollars despite 2.5 billion dollars borrowing from the IMF.

Dr.Singh said there was no truth in the opposition charge that the country was moving towards adept trap, On the contrary the macroeconomic stability brought about by the government was taking the country towards “self-reliance.”

Regarding reduction in customs duties, he said contrary to the fears the import bill had come down,

He said India essentially imports raw materials and capital goods and hence it was unlikely that nonessential import would go up as a result of the reduction of import tariffs.

Dr.Singh said though the fiscal corrections had brought about a there was no room for complacency.

He said if India had to become competitive in the world it needed to be brought down to at least five per cent as the trend world over was to keep the inflation rate at two to three per cent in the 90s,

Regarding foreign investments, the finance minister said the government had set a modest target of 400 million dollars of actual disbursement this year, It expected one billion dollars disbursement by 199596.

On balance of payment situation, Dr.Singh said the country had to step up exports with at least 15% growth to meet the country’s import requirements on a sustained basis.

Article extracted from this publication >>  April 30, 1993