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Manmoha sympathises with FM, admits reforms slowdown after '92 - The Observer

Observer Political Bureau ()
20 December 1996

Title : Manmohan sympathises with FM, admits reforms slowdown after '92
Author : Observer Political Bureau
Publication : The Observer
Date : December 20, 1996

Former finance minister Dr Manmohan Singh feels that political compulsions of
a 13-Party government at the Centre was preventing it from taking hard
economic decisions thereby giving an impression to the world community that
economic reforms have stopped.

In an interview to Sunday, Dr Singh said: "I think the problem is one of
political uncertainty. Business people are not sure where this 13-party
coalition stands on many of the issues or on the policies that it will
follow. The Left says one thing, the finance minister says another."

Sympathising with finance minister P Chidambaram, he said "the finance
minister's is the lonliest job in the country" and on many issues like the
petrol prices, the finance ministry had been willing to take hard decisions,
but the political compulsions prevented them from going ahead.

Warning that foreigners were affected by the prevailing uncertainty in India
as they felt that reforms had stopped, Dr Singh admitted that the speed of
reforms had slackened after the first couple of years of his tenure. "The
reforms stopped because politics took over after December 6, 1992 (Babri
Masjid demolition)... there was not a single year since 1993 when you did not
have elections... therefore, short-term political considerations influenced
the running of the economy to a much greater extent than I would have liked,"
he lamented.

Refusing to blame or lecture Chidambaram on the current economic scenario, Dr
Singh said: "I have lot of respect for Chidambaram. He faces a very difficult
task, and at this stage instead of criticising him and making his task more
difficult, I think we should be more supportive." Accepting the collective
responsibility on the slackening of reforms since end 1992, he, however,
said: "I can't reveal what happened exactly in cabinet. Within the limits of
what I can say, I will tell you that I tried repeatedly to make my point."

At the same time, Dr Singh said he was not willing to become a finance
minister again and instead preferred to do the job of human resource
development minister or handle the energy portfolio or be associated with
telecommunications.

He admitted that the slowing down of reforms in the last two years of his
tenure was a source of frustration saying subsidies were allowed to rise,
expenditure went up and for a finance minister committed to reforms, it was a
very unhappy time.

Asked whether the political establishment of his period was never really
committed to liberalisation, Dr Singh said that there was an element of truth
in that. "Because the balance of payments situation has improved, there is no
enthusiasm for tackling the long overdue problem of low Productivity."

While admitting that Congress government really could not cut back on the
fiscal deficit, dr Singh, however. emphasised that the United Front
government had inherited a very healthy economy with low inflation and a six
per cent GDP growth.

"When we left, there was no crisis of confidence, he asserted while stating
that investors and business people lacked confidence in the economy at
present. Apart from political compulsions, there were other uncertainties
affecting the economy including those relating to the inability to find a
government in Uttar Pradesh, he said adding that there was also an
unwillingness to invest at the moment.

He refused to take any blame for erosion of confidence he admitted that a
more coherent policy for reforms should have been adopted instead of
case-by-case liberalisation.



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