The latest Survey harps on reversing the unsustainable fiscal deficit. This despite its prognosis that the deficit will be 5.1 per cent of GDP for 2000-01, down from 5.5 per cent last year. The decline has taken place in the face of a slowdown in GDP growth rate to 6 per cent from 6.4 per cent.

It is nobody's case that a fiscal deficit of 5 per cent or so should pass muster. But where are the negative impacts of high fiscal deficit? The current account deficit, as noted by the Survey, remains below 2 per cent of GDP. There is no excess demand spilling over into imports. True, headline inflation is high, but this is thanks to the high prices of oil products.

In any case, pressures are building up to bring down the fiscal deficit, curtail government expenditure and subsidies. There is wide appreciation of the problems thrown up by the fiscal imbalance. This is not true of the slippage of growth. Why despite tall talk, does GDP growth not race past the 7 per cent mark? If growth had been closer to the desired projection, the fiscal deficit would have slipped below 5 per cent of GDF. So would it not have been worthwhile for the Survey to take up the issue of growth (and employment) stagnation?

To be fair, the Survey does touch upon the high absolute level of poverty (despite a decline in the poverty ratio) and the waning growth of employment in the organised sector. Employment growth in the public sector was nil in 1998 and negative in 1999; annual growth of employment in the organised sector, both public and private, fell from 1.44 per cent in 1991 to 0.04 per cent in 1999.

The Survey should have prioritised the employment issue: the public sector, stuck with inadequate investment and VRS, has ceased to be the generator of employment in the organised sector. The private sector is still a positive provider of employment but plays a rather small role in incremental terms.

The Survey should have given an inkling of the employment trend in 2000 when growth of both manufacturing and services slackened. (Has the high growth of exports this year added to employment growth?) Jobless growth demands far greater attention than high fiscal deficit, overseen by the IMF and World Bank.

The Survey draws attention to the need for accelerated privatisation of the competitive segment of the public sector. This, it says, will serve to stimulate industrial growth. (However, the issue of accelerating private investment deserves greater attention by far). The more important point in support of privatisation is that "a significant portion of central capital expenditure could be re-allocated to public goods and basic infrastructure which is not commercially viable." Fair enough.

But to reduce the fiscal deficit, capital expenditure will be cut in the first instance. This will have to be made good by re-allocation of capital expenditure saved through privatisation; a shortfall will depress aggregate demand.