Sep 10, 2001|
Will the government deliver?
Last fortnight the PM took up series of initiatives to kick-start the economy. It appeared as if the government has woken up to the idea that it is high time the government puts second-generation reforms in place.
The PM sent clear signals to the industry that the government is worried about the slow down in the economy and is ready to take all steps to boost demand in the economy.
To start with the government announced a reshuffling of ministerial portfolios. The move was seen as a part of the process to speed up the reform process. Induction of Mr. Arun Shourie, divestment minister in the cabinet team was a hint from the PM that the government is serious on the divestment front. Further, the labour portfolio rebalancing was a clear admittance that the reforms process has been a victim of politics till date and it was ready to clear all hurdles on its way.
The PM held detailed discussions with economic ministries, advisory councils on trade and economy and a close door meeting with the RBI governor. The government admitted for the first time that the economy was slowing down and it was high time the polity puts their act together before things get worse. The ministerial team also invited McKinsey & Co. to inquire whether they had any magic sticks to achieve double-digit growth rates in the economy.
After doing his homework, the PM invited industry bigwigs to contribute their views on preparing a strategic plan. In less than three months time, this was second such meeting with industry honchos to discuss a revival plan.
The government cheered up the industry leaders by assuring a series of initiatives.
- Acceleration of government spending, measures to improve liquidity and remove bottlenecks in government expenditure. It was proposed that the excess funds with banks and FIs to be pumped in the economy immediately to ensure a quick revival.
- Large scale public and private investments in agriculture and steps for fast recovery of rural demand.
- A reform process for railways, speeding up investments in building transportation infrastructure, removing hurdles for implementation of airports and fast track spending on highway projects.
- Labour reforms by the end of current year.
It was for the time that the government is seeking active involvement from the industry. Industry stalwarts gave a thumps up to the government with a view that recovery could just be a couple of quarters away if the proposed measures are implemented in the right earnest. The government has assured action in a couple of week's time. If the government actually lives up to its promise, there are enough reasons for the markets to cheer especially when both the sensex and the business confidence levels are testing new low. Let's hope for the best.
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