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Pro-business, pro-profit
Published in The Week, March, 13th, 1994
When Finance Minister Dr Manmohan Singh rose to present his fourth consecutive Union budget on February 28, 1994, in the Lok Sabha, the entire nation, perhaps as never before at budget time, held its breath! Economists wondered whether their forecasts would be accurate. Investors worried about the post-budget value of their portfolios. Astrologers hoped their clients would continue to return. And of course, the long suffering 'common man' braced for a new round of travails. As a confident, poetry-spouting Dr Manmohan Singh began to reveal the budget, bit by tantalizing bit, everyone seemed to be heaving a collective sigh of relief! Political and ideological blinkers apart, this budget is an impeccable exercise that confirms the future direction of the Indian economy while retaining, for the present, the Prime Minister's by-now-famous 'middle-way'. The present situation has sounded a few warning bells, but overall, the position is extremely promising. Economic growth has been slower than expected at 3.8 per cent in 1993-94. This has mainly been due to the continuing sluggishness in the manufacturing sector, which grew only by about 2.5 per cent. Many analysts feel that recession is the culprit. My own view is that the entire industrial sector is in the throes of a massive and long-term restructuring. Therefore, a reduction in imports is due not so much to a lack of demand as it is to a postponement pending the evaluation of new technologies and strategies. The fact that new projects are being launched in large numbers clearly points to burgeoning buoyancy in the industry. The impact of this will be translated into higher industrial growth in 1994-95. The current year has undoubtedly been a year of readjustment. This has particularly been true of the capital goods industry, which actually experienced a decline in output. The heat of global competition is already being felt in many industries and a shakeout is not only inevitable, it has already begun.
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