NEW DELHI: The Prime Minister, Narasimha Rao, will have to drastically change the course of his economic reforms program in coming months in the light of the electoral debacle in four states. The budget for 199596, scheduled to be presented by the end of February, will be dramatically different both in style and content.
There is a belated realization among the ruling party circles that the common man’s anger against what he perceives to be the preindustrial and pro foreign investor economic reforms has contributed in no mean measure to the rout of the party in South India. “It might not have been a referendum on the economic reforms as it was not a referendum as such on the leadership of Prime Minister Narasimha Rao. “But the fact remains that wrong priorities of the economic reforms have alienated the common man from the ruling party, said a Congress MP. This is precisely why N.T. Rama Rao’s promise to provide rice atRs2akg appealed to the vast masses in Andhra.
Common man had no place in the economic reforms initiated by, the Prime Minister, Narasimha Rao, under the management of the Finance Minister, Manmohan Singh. For him, the reforms meant nothing bur more agony in terms of Prices, wages and unemployment. The four pillars of economic reforms program for liberalization, Exim policy reform, relicensing of industry and tariff reduction had become increasingly ant poor and pro rich. The foreign and Indian businessmen, investors, professionals and executives, the select middle class and of course, the middlemen, are having a field day. The acid test of any reform process is the extent of cheer it brings to the livelihood of the vast majority of India’s masses. But in the last three years of reform, prices of essential terms went up by 3040% on average, Wage increase failed to keep ao even half way except in the high in ‘come workers group. Since 1991, prices of food grains went up by nearly 50%. Unemployment level has not come down while the organized sector sees the exit policy inaction through prolonged closures, voluntary retirement schemes and redeployments. ‘The reform has resulted in an all-time high foreign currency reserve of $20 billion. Gold and silver imports are the highest ever. Urban consumer durables are seeking a boom time and it is said quality goods are finally coming. However, all these are good news for the top 10% but irrelevant for the poor sections of the society.
Dr. Manmohan Singh has gone on record stating that an eight per cent growth rate is a must for facilitating flow of reform benefits to the poor. It is a confession that the poor people should wait till the fortunes of the privileged group grows to the level of eight percent per annum so that their surplus will trickle down to the masses. No one knows when that eight per cent growth will be achieved.
Import liberalization is another reform instrument being cited as an important measure of social change. It is nice to see good products on the road on the shelves of ‘super bazar. IT is also nice to see and Coke taking on each other in the market place of the urban elite. But the reform does not include any program to provide drinking water to thousands of villages in the country.
Have import liberalization and industrial deli censing benefitted the common man? No. These liberalization exercises have in fact killed the rural industrial base at the small scale, tiny and artisan levels.
‘The political leadership appears to have realized that the economic reforms in the present form cannot continue. For survival, the government will have to recast it in ‘such a way that the common man gets some relief. The task before Dr, Singh is extremely difficult. He may not be able to prune fiscal deficit in coming years. Nor will he succeed in reducing subsidies. The budget for 199596 will reflect the new thinking of the government.
Article extracted from this publication >> December 16, 1994
