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We have been taken for a rid by smooth talk - The Sunday Observer

Jay Dubashi ()
15-21 December 1996

Title : We have been taken for a ride by smooth talk
Author : Jay Dubashi
Publication : The Sunday Observer
Date : December 15-21, 1996

It is unusual for a prime minister to criticise his own
finance minister, and that too in such savage terms. But
that is what H D Deve Gowda did, though indirectly, in
his speech in Ahmedabad on 7 December when he said that
Narasimha Rao and Manmohan Singh had ruined the nation's
economy.

The criticism applies as much as to Finance Minister P
Chidambaram as to the other two gentlemen. For Chidambar-
am was a member of the trio that is responsible for
'running' the economy in the name of reforms.

That the economy is in a bad shape goes without saying. I
have been saying so, in this column as well as elsewhere,
ever since 1993, when it was clear that we were being
taken for a ride.

The ride came to an end in May last year when the voters
kicked the reformers out, lock, stock and barrel.

Manmohan Singh and his friends are now blaming the Deve
Gowda government for the current mess. This is ridicu-
lous. You cannot destroy an economy in six months, even
if you wanted to.

The arch culprit for the present mess is the Narasimha
Rao government.

Unfortunately, under Chidambaram, it is getting worse,
for Chidambaram is also a chip of the old block. His
policies are no different from those of Manmohan Singh &
Co.

He believes, as did Singh, that only foreign investors
can save us and there is little he can do to stop the
rot.

It is this defeatist philosophy that got us trouble in
the first place. Foreign investors certainly have their
place, but what we Indians do at home is equally import-
ant.

A vast country like India cannot go on depending on
foreigners to bail us out, everytime we are in trouble,
as if we had no faith in ourselves.

Foreign investment can never be more than 10 per cent or
so of our own savings. This means that the bulk of the
effort, as much as 90 per cent, has to be made by us,
without waiting for foreign investors.

Yet both Manmohan Singh and Chidambaram have been chasing
foreigners like mad, as if they alone provided the key to
our salvation.

A major part of domestic effort has to come from the
government, because the government sets the pace for what
the rest of us do. It has to get its budget right, cut
out all unnecessary waste, spruce up public sector compa-
nies and invest more in agriculture as well as in-
frastructure.

Yet this is precisely what the Rao government ignored
during the five years it was in power, in the belief that
none of this is really called for once foreign money
starts flowing in.

Manmohan Singh conceded the other day that he should have
allotted more money for power projects, and not rely so
much on foreign investors. What he did not tell us is
that he could not allot more funds because he was broke
and had run out of funds.

The Indian government is so keen on foreign funds because
it is broke. But it has never asked why it is broke.

Five years ago, it was the nasty situation on the balance
of payments front that led the government to reverse the
Nehru model. Now it is the turn of the internal debt.

The country is in a debt trap and the government is close
to bankruptcy, just as five years ago it was close to
defaulting on foreign debt.

There is absolutely no money in the central treasury. It
is a miracle that salaries are being paid in time.

It is not generally known that the Centre's revenue
receipts are not sufficient to service national debt.
Last year (1995-96) revenue receipts totalled Rs 110,000
crore while debt servicing charges exceeded Rs 123.000
crore.

The government has to borrow money to service its huge
debt which has more than doubled in the last five years,
and about which Manmohan Singh did nothing.

We need reforms to reform the government, not only the
economy. And we should start with reforming the finance
minister himself. Why should Indian finance ministers
spend so much time in Singapore and Tokyo while the
economy is collapsing at home?

Deve Gowda is quite right in blaming his predecessor for
the mess, but that is not enough. He should appoint a
committee to find out what exactly the reforms have
achieved, and how we have been taken for a ride by a
bunch of clever 'reformers' and their smooth talk.

Only after that can we start clearing up the mess.



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