What is most heartening is the finance minister's truthful admissions aboutthe huge deficits of the state electricity boards, primarily on account ofmismanagement, and transmission and distribution losses which have beencorrectly classified as theft and dacoity. What he has omitted to mention isthe rampant corruption which is at the root of the problem. The solutionought to be to completely privatise transmission and distribution and takeaway the powers of the state electricity boards in this regard.

A reduction in the fiscal deficit will have a salutary effect on inflationcontrol which reared its ugly head during the current fiscal year and, tothat extent, the common man will stand to benefit.

The downside resulting from the reduction in the rates of interest is thatthe fixed income earner, especially retired and senior citizens, will earnlower incomes and tax exemption under Section 80-L, which has been reducedto Rs 9,000 per annum will adversely affect the lower income groups.

The reduction in the surcharge will certainly bring relief to the honesttaxpayers who found the tax rates creeping up in the last three years onaccount of the surcharge of 15 per cent. The effective maximum marginal ratefor income earned during the financial year 2001-02 will be just 30.6 percent in view of the 2 per cent Gujarat earthquake surcharge remaining, downfrom the present effective rate of 35.1 per cent as a result of the 17 percent surcharge applicable on income earned during the current financial yearending on March 31, 2001.

Further, the reduction in the rate of dividend tax on distributed profits to10.2 per cent will ensure higher earnings in the hands of shareholders and,in turn, give a boost to the capital market with the Sensex touching 5000.

Positive sentiments on the stock market will get a further boost as a resultof FIIs being permitted to invest up to 49 per cent of the share capital.

However, this will happen only in the second half of this calendar yearafter the shareholders have passed the requisite resolution permitting theincrease in limit. Coupled with good corporate results, some of thecompanies should see their market capitalisation increase by at least 25-30per cent.

The salient policy measures announced by the finance minister encompass theentire gamut of the economic spectrum. Apart from channelising more credittowards the agricultural sector and reducing the cost of loans taken byfarmers, an innovative measure is the scheme for setting up agri-clinics andagribusiness centres by agriculture graduates. The finance minister has madea determined attempt to step up public expenditure through the centralallocation of Rs 4,500 crore over the current and the next year for ruralroad development. This massive injection of funds should percolate down tothe rural poor in the form of employment opportunities.

However, the food subsidy bill has gone up to an unprecedented level of Rs12,125 crore, which will put a strain on central finances. To what extentthe benefit of low-priced foodgrains ill be received by the below thepoverty line families, will depend on the efficacy of the public deliverysystems of the state governments.

The main thrust of the second generation reforms is to move towardsrationalisation of user charges, primarily in the field of powerdistribution. The non-merit subsidies are accounting for over 10 per cent ofGDP, which is over and above the central and state government subsidies. Itis indeed heartening to take note of the finance minister's resolve tostreamline the power sector by initiating a time-bound programme for 100 percent metering, energy audit, elimination of power theft andcommercialisation of distribution. A massive investment of additional Rs10,030 crore in power utilities during 2001-02 should help in bridging theshortfall in supply of power which is so critically needed to enable theIndian economy to record a growth rate of 7 per cent.

To give the requisite boost to the information technology sector which is inthe forefront of the second industrial revolution, the government has takenpositive measures by corporatising the department of telecom and by doublingthe teledensity and reducing the price of telephone services.

The finest piece of legislation which is to be introduced shortly is theConvergence Bill to cover telecommunications, information technology and thebroadcasting sectors. India will be in the forefront of this innovativepiece of legislation.

The further liberalisation on capital account in foreign exchangetransactions will benefit progressive Indian companies which propose toglobalise by making foreign investments. The fact that Indian companies arenow permitted to list on overseas stock exchanges by sponsoring ADR/GDRissues, will truly give an international flavour to Indian multinationals.

The reduction in the span of price control in the pharmaceutical sector willnot only enable such companies to reap the benefit of higher profitability,but will also ensure availability of life-saving drugs to the people. Thevalue of shares of pharmaceutical companies should, therefore, recordgradual increases on a sustainable basis.

The boldest measure announced by the finance minister is in respect oflabour laws and permitting industries to close down without the approval ofthe government where the number of workers is less than one thousand.

The increase in the separation compensation to one and a half month's salaryfor every completed year of service, will provide adequate safety net forworkers and provide them with sufficient capital to rehabilitatethemselves.

In conclusion, industry has been given every incentive it clamoured for. Theball is now in the court of the Indian industrialists, investors and thepublic at large to rise to the occasion and take advantage in full measureof the incentives and policy initiatives announced by the financeminister.

The government has indeed set the tone and pace for second generationreforms and created the right environment for growth and prosperity. Thepeople will now have to face the challenges and take on the world.