----- Original Message ----- From: "Soren" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Sent: Friday, July 07, 2000 12:33 AM Subject: (50 Years) India: IMF Urges Faster Reforms > ECONOMY-INDIA: IMF URGES FASTER REFORMS > By Ranjit Devraj > > NEW DELHI, Jul. 4 (IPS) -- The Indian government is under pressure from the > International Monetary Fund (IMF) to speed up economic reforms that some > fear could seriously harm the country's small-scale industry. > > After consultations between Fund directors and representatives of Prime > Minister Atal Bihari Vajpayee's Bharatiya Janata Party (BJP)-led government, > the IMF has demanded opening up of India's highly protected small-scale > industry and further tariff reductions. > > However, economists warn that complying with the IMF's demand means that > thousands of small-scale industrial units, sustained by government > subsidies, would be edged out by cheap imports from countries like China. > > Fund directors said in their report that India could gain from the growing > globalization of goods and capital markets only by "more rapid deregulation > of the industrial and agricultural sectors." > > According to the Fund, the present economic environment allows the > government with a rare opportunity to press ahead with economic reforms in > key areas. > > The IMF directors were optimistic that India, buoyed up by a revival of > exports, increased industrial output and a surge in domestic demand, would > enjoy a growth rate exceeding the 6.25 percent it forecast in May. > > This tallies with the seven percent growth forecast by the Asian Development > Bank (AsDB) which rates India as one of Asia's three fastest growing > economies along with South Korea and China. > > When Fund chairman Horst Kohler visited India in June, he was optimistic > that India could reach an eight to 10 percent annual growth rate, provided > the reforms were accelerated. > > India's economic growth has been helped by its 13th successive good monsoon > that is expected to yield a 42 million-tonne foodgrain surplus by the end of > the year. > > In April, conforming to commitments made to the World Trade Organization > (WTO), India lifted quantitative restrictions on 714 items, including > consumer goods. The government also pledged removal of restrictions on > another 815 reserved items by April 2001. > > The directors of the Fund, in their report also called for a drastic > widening of the tax base by reducing exemptions and bringing the services > sector into the tax net. > > Presently, less than two percent of the one billion Indians pay income tax. > However, widening the tax base needs considerable political will from a > multi-party ruling coalition that depends heavily on powerful regional > parties. > > The Fund also wants the federal government to tighten up lending to the > state administrations to check a yawning budget deficit. It wants the fund > transfers to be linked to financial performance of the states. > > Against a 5.75 percent federal deficit budgeted by the Vajpayee government > in 1999-2000, the deficit grew to seven percent which, the Fund noted, was > mainly on account of government salaries and debt servicing. > > Looking at the 2000-2001 budget, the Fund said despite measures to boost tax > receipts and reduce food and fertilizer subsidies, deficit reduction would > be "marginal at best." > > As part of its bid to raise funds, the government decided, this year, to > reduce its ownership of several "blue-chip" public sector companies, > including the national carrier Air India and the domestic Indian Airlines. > The disinvestment is expected to fetch $2.5 billion this year. > > But criticism from Left parties and the BJP's own associates that champion > economic nationalism, have forced the government to put off disinvestment in > other profitable state ventures in telecom and automobiles. > > The proposed privatization of India's 200-odd public sector enterprises is > also being fiercely resisted by trade unions of employees in these > undertakings who fear lay-offs. > > > Successive governments since then have been criticised for mismanagement of > "social safety net" funds provided by multilateral funding agencies to help > workers affected by the restructuring of state enterprises. > > When India began its reforms nine years ago, the World Bank financed a $500 > million National Renewal Fund meant to help retrenched workers find new > skills and placements. But most of the money was used for "golden > handshakes." > > > =========================================================== > 50 Years Is Enough Network http://www.50years.org > To unsubscribe, email [EMAIL PROTECTED] with > unsubscribe > in the body of the message. Questions? email [EMAIL PROTECTED] <A HREF="http://www.ctrl.org/">www.ctrl.org</A> DECLARATION & DISCLAIMER ========== CTRL is a discussion & informational exchange list. Proselytizing propagandic screeds are unwelcomed. Substance�not soap-boxing�please! These are sordid matters and 'conspiracy theory'�with its many half-truths, mis- directions and outright frauds�is used politically by different groups with major and minor effects spread throughout the spectrum of time and thought. That being said, CTRLgives no endorsement to the validity of posts, and always suggests to readers; be wary of what you read. CTRL gives no credence to Holocaust denial and nazi's need not apply. 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