It is ironical that while the finance minister's post has become a bone of contention, the fact of the matter is that, at least for fiscal 1998-99, the finance minister's job may well be one of the most thankless.Chidambaram has patted himself on the back about his ministry's achievements, but his legacy will essentially consist of a depleted treasury. He had presented a grossly over-optimistic budget which resulted in a major slippage in revenue generation. The situation was made worse by the United Front's profligacy on government pay. It failed to give much-needed attention to infrastructure, and policy vacillation on power, airlines, telecommunications was all too evident. The new finance minister will have his work cut out merely cleaning up the mess, and he will need a magic wand to raise resources for his government's investment expenditure, sorely needed to boost demand.
This year too, the finance minister will be called upon to gamble on growth. In order to kickstart growth, resources couldinitially be raised through higher government borrowing in the first half of the year. Spending those resources could boost capacity utilisation and production, and this may in turn lead to higher tax revenues during the second half of the year. At least low inflation leaves some room for manoeuvre. The BJP enjoys a tremendous amount of goodwill from the business community, and signals to corporates by means of one or two good policy initiatives will be sure to draw a positive response. If that happens, we can very well be on the road to high growth again this year. But there is no question that it will be tricky, and no thanks need be given to the UF government.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
