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Economic slowdown temporary, says PM

Our Bureau

NEW DELHI, Aug. 15

THE Prime Minister, Mr Atal Bihari Vajpayee, on Wednesday said that the current economic slowdown was a ``temporary phenomenon'' and ``there is no need to get too worried on this score because the fundamental indicators of India's economy are quite stron g.''

In his customary Independence Day address to the nation, Mr Vajpayee said that inflation was under control, the country's foreign exchange reserves were at a record high and ``our godowns are bursting with foodgrains.''

And on top of these reassuring fundamentals, the prospects of a good crop due to bountiful monsoon rains and the recent steps taken by the Government to increase investment in infrastructure areas ``will help in bringing the economic slowdown to an end'' , said Mr Vajpayee.

The Prime Minister also said the present slowdown was a ``global phenomenon not limited to India alone'' and the country was still among the world's 10 fastest growing economies while being counted among the four largest in terms of absolute size.

Noting that the current year marked a decade of the ``new economic policy of India'', Mr Vajpayee said that there was ``no doubt'' that economic liberalisation had benefited the country, with the proportion of its population below the poverty line fallin g from 36 per cent to 26 per cent during the 1990s and literacy rates registering a ``quantum jump''. Although the country has not been able to eradicate poverty rapidly enough, ``I am confident that abject poverty is on its way out in India.''

At the same time, the Prime Minister pointed to some of the grey areas of the economic reforms process. ``The fruits of liberalisation have not adequately reached the poor and people living in rural areas. Inequalities have increased,'' he observed, whil e stating that his Government was committed towards giving a ``new pro-poor, pro-village and pro-employment orientation to our economic policy''.

Mr Vajpayee also drew attention to other problems, including the perceptible weaknesses in the country's financial and capital markets, the absence of a ``new corporate ethic'' consistent with liberalisation and the inadequacy of bank credit to the unorg anised sector of the economy.

``Recent developments have highlighted some of the weaknesses in our financial and capital markets, which has made people feel rather worried. We have taken several steps to remove these weaknesses and we shall take more steps in the future. The function ing of the stockmarkets and financial institutions will be reformed to protect the interests of small investors,'' he added.

Mr Vajpayee also pointed out that ``profits earned by hook or crook cannot be the sole criterion for judging the success of a business'' and the success of liberalisation ``requires the steady development of a new corporate ethic.''

The Prime Minister expressed concern over the low credit-deposit ratio of the banking sector, which, he felt, presented a ``strange paradox''. On the one hand, nearly all the savings of the country's population was being deposited in banks. On the other hand, the banks were unable to use these funds fully for development projects.

The unorganised sector of the economy, he noted, was not getting adequate bank credit, despite constituting two-thirds of the economy and its repayment record being better than that of big industries. ``We are considering some institutional measures to m ake resources available to the unorganised businesses and industries,'' Mr Vajpayee said, while claiming that the Government had so far succeeded in making available Kisan Credit Cards to over 1.5 crore farmers.

He further added that the Government has taken a ``major decision'' to make public sector banks earmark 5 per cent of their net bank credit, amounting to Rs 17,000 crore, to women entrepreneurs.

The Prime Minister also used the occasion to announce a host of new ``ambitious'' developmental schemes: A Rs 10,000-crore Sampoorna Grameen Rozgar Yojana towards rural employment generation, a Rs 3,000-crore Ambedkar Valmiki Malin Basti Awas Yojana to p rovide affordable housing for the urban poor and a National Nutrition Mission for adolescent girls and expectant and nursing mothers.

Pic.: The Prime Minister, Mr Atal Bihari Vajpayee, with the Defence Minister, Mr Jaswant Singh, the Minister of State for Defence, Mr Krishnam Raju, and the three service chiefs, after addressing the nation at the Red Fort in New Delhi on Wednesday.

Picture by Kamal Narang