NEW DELHI (PTI): Starting the year under the burden of the fall out of the demolition of the mosque at Ayodhya the economy showed signs of bouncing back to a steady path of growth bot as 1994 nears amid expectations of Launch of the second phase of reforms disturbing rise in inflation and. centers fiscal deficit indicate a bumpy road ahead.
In a year of Bombay bomb blasts stock broker big bull Harshad Mehtas sensational claims of Rs 10 million payoff to prime minister P.V.Narasimha Rao midterm poll to the four crucial northern states and raging controversy over new Gatt deal exports surged ahead and the foreign exchange reserves stood at an impressive nine billion US dollars
However industrial recovery remained sluggish though certain sectors like automobiles have substantially improved their growth in the second half of the year.
The jubilation over the declining fate of inflation is slowly giving way to increasing worry as it fs on the upward march again fuelled ironically by the rise in food prices in a year of bountiful harvest.
The annual rate of inflation is sail in Single digits bot apprehension not withstanding governments optimism is that it may hit the double digit mark Soon.
The rupee became fully convertible On trade account early in the year Though the rupees purchasing power Continues its down the hill slide it has held steady against dollar around Rs 31 belying fear that by the year end one dollar would fetch between Rs 40. And Rs 50.
A turbulent year when the credibility of the union government was increasingly questioned the events of the last 12 months did not surprisingly have an adverse impact on Indias donors and foreign investors as was feared by many.
Concern was however expressed by advocates of reforms both in the country and outside that the violent incidents and midterm poll to northern Indian states Uttar Pradesh Rajasthan Madhya Pradesh and Himachal Pradesh may reverse the liberalization process midway.
The events did stow down the pace of reforms necessitating repeated assertions by the government particularly to foreign audience that its commitment to liberalization and determination to speed it up remained strong.
Finance Minister Dr Manmohan Singh acknowledged that there was some loosening in the control over government’s fiscal profligacy At the Same time he said that once the dust and din of electioneering settled down the reform process will pick up momentum
The year Sam unexpected resistance to several aspects of the reforms from a section of industrialists who are otherwise all praise for the liberalization. Some of them met in Bombay just as the government was talking of the Success of two years of reforms and raised the demand for level playing field.
The call for level playing field from a Section that never agreed with the earlier governments moto of commanding heights to the public sector Ted to comments that the big names in Indian industry were after all really a scared Jot wanting protection against competition.
The explanation that they are not only for continuation of reforms but for accelerating its pace as well has not been that convincing and even evoked critical comments from the finance minister himself .
Article extracted from this publication >> January 7, 1994
