Stimulus to remain: Cong economic resolution

The stimulus measures to tide over the impact of the global economic crisis on India will remain in place a little longer, according to the Congress’s economic resolution, placed before the party at its plenary session today. The storage, distribution and prices of grain require tweaking, but this will not hold up a food security law, the resolution adds.

Upholding a new set of rights put in place by the government to ensure inclusive growth — to education, information, work, land, identity and now food — the resolution asks the party to address with “courage and candour” the downside of its tenure in power: inflation.

“In a developing country, some prices rise because of supply-demand gaps. Some prices rise because of the need to give a reasonable income to the producers of goods and services. And some prices, especially of imported goods, are determined by the international market.” All three factors, the resolution says, led to prices rising.

The resolution supports subsidies, but cautions against inefficiencies and hoarding, among other things. It says inflation will moderate to 6 per cent by the end of the financial year. It expresses concern at the state of growth in the agriculture sector to which is added the diversion of land for non-agricultural purposes. It says the government should adopt preferential procurement policies that favour disadvantaged sectors like scheduled castes and scheduled tribes.

Interestingly the resolution is nuanced about foreign direct investment. It is important to put transparent rules and regulations in place to encourage FDI flow in an orderly manner to sectors that need and can absorb it, it states, together with the advantages that such foreign capital brings to the sector. This is significant in light of the debate on whether FDI be allowed in sectors like defence and retail.

The economic resolution also sets India squarely in competition with China, especially in building capacity. It says huge capacities are required to be added in sectors such as steel, metals, power, fertilisers, oil and gas. “The INC calls upon the government to remove all unnecessary obstacles to new investments in these sectors,” the resolution says.

The resolution defines a public sector institution as one where the government controls 51 per cent of the equity with voting rights in a public sector enterprise. While the word disinvestment does not appear anywhere in the resolution, “expansion and better management” of the public sector has been emphasised.

The resolution promises a 13-point agenda for the next decade – an omnibus laundry list of all that the government has been doing so far.