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'Economy fine, fiscal deficit 'uncontrollable', trade and industry must pay taxes and help govt': Sinha

Anurag Joshi in Bombay

The inherent strength of the Indian economy coupled with the confidence of trade and industry, domestic and international investors in the economic fundamentals of the country will aid in absorbing the cost of the Kargil conflict, according Finance Minister Yashwant Sinha.

Sinha noted that the economy, which was quick to factor in the fall-out of the political situation arising out of the fall of the Vajpayee government in April, will boom despite the general election in September-October and the Kargil conflict.

The finance minister addressed the Indian Merchants' Chamber in Bombay today. Sinha felt that the manner in which government handled the Kargil crisis ensured success in operations and victory on the diplomatic front. He said that the 'inherent' strength of the Indian economy did not allow any major impact on the economic situation of the country.

''The inflation is at 3 per cent, the foreign exchange reserves are at comfortable levels, industrial production has improved in May and inward remittances and foreign direct investments keep flowing into the country. All these are robust signs of revival. The important lesson to be drawn from this is that the country is not bothered by small considerations of political instability,'' Sinha said.

He said that the government is assessing the cost of the Kargil confict and its impact on the next Budget.

Dwelling on the past events, the finance minister said that during 1997-98, the economy was passing through an economic slowdown. ''Then the nuclear tests and the economic sanctions came, followed by downgrading of India's creditworthiness by the global credit rating agencies. This had a dampening effect on sentiments. There was certainly a feeling of doom as every observer of the Indian economic scene was predicting a worsening of the economy. In this situation, I spoke about the situation turning around. In these circumstances, we launched the Resurgent India Bonds Scheme which was a huge success and proved the rating agencies wrong,'' he said.

He went on say: ''We are today moving confidently as a nation... as an economy. This confidence was not there a couple of years back.'' He said that the industrial production has improved in May, despite analysts forcasting the opposite in April. He added that manufacturing sector growth was 8.40 per cent.

''We have reached a stage where economics and politics are two separate streams. Whichever political formation comes to power, economic reforms are here to stay. If the BJP forms a government again, we are determined to continue the reforms process,'' Sinha said.

Sinha said that the fiscal deficit has remained ''uncontrollable'' despite years of liberalisation. ''Fiscal deficit continues to remain the most intractable problem'', he remarked. He said that the government will have to raise revenues to tackle fiscal deficit.

He added that at a time when the country is swamped by a groundswell of patriotism, the trade and industry should come ahead by diligently paying taxes and helping the government to manage the fiscal deficit.

The finance minister said his dream was to see India joining the club of developed nations by the year 2010 and becoming an economic superpower by 2020.

UNI

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