A Growth-Oriented Budget

Industrial growth started slowing down in late 1995; by the middle of last year, the signs were unmistakeable. But there were many at that time who did not want to believe that industry was going into a slump. Some preferred to call it a slowdown, some argued that it was confined to only some sectors, forgetting that some industries buck the trend in every slump, some even claimed that a cooling down was good for industry. The Reserve Bank argued that we Indians deserved a slump: that we were not saving enough, and with our meagre savings we could not afford a higher rate of growth.

 

Now, however, reality is forcing itself upon the perceptions of all. As advance estimates for 24 industries show, industrial growth in April-December 1996 was 4.8 per cent, down from 10.3 per cent a year before. Associated with the recession is the feel-bad factor. Industrialists are under stress, and the stress shows itself in various unpleasant ways. They complain about foreign competition, about the minimum alternate tax, about the banks unwilling to lend, about Chinas dumping plastics in the Indian market, about the collapse of the public issue market, about whatever comes to their mind. The finance minister gets rather exasperated with all this whining as he calls it; but even he must confront the reality. Industrial growth is low, and it must go up if employment is to rise, if standards of living are to go up, if India is to count for anything in the 21st century. Accelerating growth must be the prime objective of the Budget.

In these circumstances, the finance minister must try to stimulate two components of growth in the coming Budget