Economists stress farm sector growth

By Our Special Correspondent

NEW DELHI, JAN. 10. Leading economists today met the Finance Minister, Mr. Yashwant Sinha, and expressed the view that reforms had helped reduce poverty and led to increased growth rate of the economy.

Participating in a pre-budget meeting organised by the ministry, the economists also suggested that growth in the agricultural sector was vital for sustaining the six per cent plus growth in the economy.

There was a focussed discussion on the issue of competitiveness of the manufacturing sector and the general view was that the trade reforms should be continued and tariffs reduced in a time- bound manner. For the small-scale sector, the economists suggested that the Government promote ``flexible specialisation'' so that entrepreneurs could compete and collaborate with other industries.

The sustained increase in fiscal deficits of the Centre and the States came in for criticism and the feeling was that accumulation of public debt had led to a high interest rate structure which was impinging on vital economic factors including private investments, servicing cost of public debt, etc.

In this context, the introduction of the Fiscal Responsibility and Budget Management Bill 2000 was appreciated as it would provide an institutional framework for bringing down the fiscal and revenue deficits. However, some economists said the Bill might restrict the flexibility of the Government to deal with changing global environment.

The economists criticised squeeze on public investment said that increased public investment in infrastructure could boost employment opportunities and rural development.

They emphasised that the rate return on risk free capital was very high in India and this should be brought down.

This in turn would lead to reduced interest rates. Similarly, transaction costs were considered high in India and many economists felt that possibilities of reducing the intermediation margin of banks needed to be explored.

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