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Anirban Nag
Mumbai, July 15: Finance minister Yashwant Sinha expressed optimism that the economy would achieve 7 per cent growth in this fiscal. Speaking at several functions in Mumbai on Thursday, Sinha took credit for the economic recovery which has been underway, triggered by buoyant industrial output, booming capital market, comfortable forex reserves and lowest inflation level in 20 years.
Earlier, Sinha promised industrialists present at a meeting at Indian Merchant Chambers (IMC) that the BJP coalition government would unleash a fresh dose of economic reforms if voted back to power.
Later at another meeting with the Reserve Bank of India governor Bimal Jalan and heads of banks and financial institutions, Sinha said that he was confident that the economy would achieve a growth rate of 7 per cent in the current fiscal. Later in the evening he told reporters that he expected to contain the current account deficit to 1-1.5 per cent of GDP.
At the IMC meet, the finance minister gave a warning that India faced aproblem with fiscal deficit and fresh measures needed to be devised to keep it under reasonable control. He gave a broad hint that he intends to tap the wave of patriotism in the country to tackle fiscal deficit. "Today there is a groundswell of patriotism in the country. People want to do something, contribute to the country," Sinha told the IMC seminar.
"We should give a push to this movement and if we do so we should achieve significant results. That is how we propose to tackle the fiscal deficit," Sinha said.
In his address to bankers, the finance minister said that the behaviour of the economy during the recent events in Kargil had amply demonstrated India's inherent fundamental strength.
An RBI release issued after his meeting with the bankers said that the finance minister reiterated his statement in the Parliament and underlined the government's resolve to provide maximum autonomy to the Reserve Bank, as the country's Apex bank, in the conduct of monetary and financial policies.
Sinha saidthat despite the recent intrusion on the border, the economy remained stable. The inflation rate is record 20-year low of around 2 per cent, forex reserves comfortable and substantially higher than that of the last year and the industrial output and exports have also shown encouraging trends. He added that the capital market is riding high and this is possible because of the resilence of the Indian economy and the resurgence of investor's confidence in macro-economic stability.
Sinha said foreign funds flowing to invest in business and in the country's markets despite Kargil showed confidence in India. The government's revenue raising efforts will be helped by growing signs that a three-year slowdown in industrial growth is coming to an end, he pointed out.
"There are robust signs of revival," Sinha said adding "this revival will hold and we will go forward from here." Industrial output data earlier this week showed a 6.3 per cent year-on-year rise in growth in April and May and buoyant revenuecollections.
Sinha said revenue collections showed recent efforts to simplify India's tax code were paying off and the number of taxpayers had increased "tremendously". "The lesson is very clear. If you simplify taxes ... make procedures easier and if taxes (rates) are reasonable, people are willing to pay," he said.
"The time has come for the second phase of reforms. That is what we propose to do," Sinha said.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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