'Liberalisation has achieved little'

By Our Special Correspondent

NEW DELHI, JUNE 18. The former Prime Minister, Mr. S. Chandra Shekhar, today alleged that the policies of economic liberalisation initiated in 1991 at the suggestion of the World Bank and the International Monetary Fund had not resulted in any significant improvement in the 1990s over the 1980s. On the contrary, there were significant declines in important economic indices pertaining to subsidies, tax revenues, employment potential, etc.

A presentation prepared by Mr. Chandra Shekhar indicates that in most cases, Indian interests have lost out to foreign companies and that there were pressures on the Government to reduce subsidies and cut expenditure even as the percentage of subsidies have been rising in the developed countries. ``A most disturbing fact is that while at the Centre there have been change of ruling political parties and their combinations - from the Congress to the United Front to the BJP (each with claims of having differing political philosophies) each successor Government swore to carry forward the process of liberalisation. It is indeed a wonder that while political philosophies are different, economic policy frame and the direction of change is the same! Was it because of the pressure from outside India was the same and carried decisive weight.''

Giving out the growth rates in principal sectors during 1980-81 to 1990-91 and 1990-91 to 1999-2000, the said the primary sector grew by 3.4 per cent in the first decade and 3.2 per cent in the second, the secondary sector by 7 per cent and 6.8 per cent, in the two comparative decades and the tertiary sector by 6.7 and 7.1 per cent. The overall growth of the gross domestic product (GDP) was 5.6 per cent in the first decade and 5.7 per cent in the second. So was there growth or stagnation?

On subsidies, it says that while the share of subsidies and other transfers in total current expenditure slipped from 43 per cent in 1990 to 40 per cent in 1997 in the case of India, it increased in case of most of the developed countries. For instance, in the U. S. it rose from 50 to 60 per cent, in U. K. from 52 to 58 per cent, Australia from 56 to 61 per cent, Belgium from 56 to 60 per cent and France from 63 to 65 per cent.

Turning to the issue of tax to GDP ratio, Mr. Chandra Shekhar alleged that ``there is a general approach by the World Bank that the rate of taxes be reduced. In line with this approach, in India the tax rates are being reduced drastically.'' He brought out statistics to show that the ratio of current tax revenues as a percentage of the GDP was 41.5 per cent in case of Belgium in 1990 which rose to 43.3 in 1998. In case of France, the percentage went up from 37.6 to 39.2 per cent in the respective years while in the U. K. it went up from 33.3 to 36.3 per cent and from 18 to 20.4 per cent in the U. S. In India, however, it dipped from 9.9 per cent in 1990 to 8.6 per cent in 1998.

Mr. Chandra Shekhar also listed out data to show that the marginal rate of tax was the lowest in India as compared to the rates in a few select developed countries; that the exchange rate of the rupee had declined progressively during the liberalisation phase and that the number of registered job seekers has increased considerably between 1990 and 1999.

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