Date:04/03/2006 URL: http://www.thehindu.com/2006/03/04/stories/2006030417420700.htm

Tamil Nadu - Chennai

Budget missed out on reform agenda, says Yashwant Sinha

Staff Reporter

Says inflation not out of control, but rising world oil prices may push it up

No fresh incentives to perk up housing sector
Government did not touch pension reform under pressure from Left

No attention to infrastructure development

CHENNAI : The former Finance Minister, Yashwant Sinha, on Friday said the Union budget for 2006-07 has missed out on pushing forward the reform agenda and does not address the underlying concerns of the economy, particularly inflation.

Though the inflation was not yet out of control, there were underlying factors, especially the rising international crude oil prices that could push it up he said, delivering a lecture organised at the Indian Institute of Technology here.

Noting that the prices of petroleum products, as recommended by the Rangarajan committee, were unlikely to be increased in view of Assembly elections in five States, he said whenever that is done it would have a cascading effect.

A rise in inflation would lead to higher interest rates, he said, adding that two of his important contributions as Finance Minister were controlling inflation and softening interest rates.

No fresh incentives

Hardening of the interest rates would dampen the consumer demand, he said, while blaming budget for not offering any fresh incentives to perk up the housing sector.

Mr. Sinha raised doubts about some of the figures provided in the budget, to highlight the achievements of the present government, including those pertaining to industrial production, domestic savings and revenue deficit. He said P. Chidambaram had missed an opportunity to carry forward the reforms agenda. Stating that the Government had given up on disinvestment and privatisation (of public sector units) and not touched pension reform under pressure from the Left, he said the Minister had an opportunity to implement some difficult and contentious reforms.

Mr. Sinha criticised the budget for not paying attention to infrastructure development. He said the national highway development work, initiated by the NDA Government, had slowed down and financial allocation to the department reduced. The philosophy behind the taxation measures announced in the budget were not clear, he said, pointing out that though the excise duty on aerated water and ice cream had been reduced, the levy on handmade soap and umbrella had gone up.