Economic
indicators for the year depict that India is at the threshold
of becoming one of the largest economic powers in the world
in the next two decades. It has proved that it is the largest
and stable democracies of the world. The government’s
efforts to initiate peace dialogue with Pakistan are laudable
and may help both the countries to allocate more economic
resources for developmental purposes.
The economic fundamentals
of the economy are strong and a matter of pride for Indians
and the government. The second generation of economic reforms
introduced has started yielding good results. The year has
witnessed a massive increase in the foreign exchange reserves
crossing over a land mark figure of 100 billion U.S. dollars.
The rupee value has been rising for the last six months despite
the excessive intervention of the Reserve Bank of India and
other foreign exchange dealers to keep the value of Rupee
at a lower level. The international value of the home currency
reflects its economic strengths. GDP growth rate which expected
to be around 5 to 5.5 % at the beginning of the year is expected
to be over 6 -6.5% during the year. The growth in agriculture,
industry, and services sectors has been very encouraging,
and is expected to be higher than the forecast at the beginning
of the year. Both mid-term of Indian Economy by ministry of
finance and Monetary and credit policy announced by Reserve
Bank of India presented a rosy largely realistic picture
of economy.
Deregulation of interest rates both for lending and borrowing.
Monetary and credit policy have been tuned to the needs and
requirements of the economy to increase its efficiency and
international competitiveness. The companies, banks and financial
institutions have reported good results in their quarterly
and half yearly rep orts. The banks which were suffering from
high level of Non performing assets, low profitability, inefficiency,
low capital adequacy ratios have improved tremendously. They
are ready to give impetus to the economy. They are flushed
with excess liquidity and are chasing borrowers reversing
the trend which existed in the Indian economy all along ever
since independence. The financial markets have shown resilience
sensex crossing 5700 mark the highest in the last four
years. The mood in the capital market is upbeat. Gold and
silver prices have touched highest prices in the recent past.
The regulatory mechanism in the capital market and banking
sector has become more effective. Tax regime has become more
simple and people friendly
The government
has made serious efforts to improve upon the existing infrastructure
and even to create new infrastructure to meet the future needs
of the economy. There has been an improvement in quantity
of education, health care and insurance with private public
initiatives. The literacy rate has gone up. However, serious
efforts need to be made to improve the qualitative aspects
of social service sector services and provision of merit goods.
The proposed University Higher Education Development Act to
replace UGC Act is a step in the right direction to improve
upon the quality of education in the more than 300 universities
and more than 12000 colleges of the country. It is the quality
of human resource which makes nations great and increases
its international competitiveness and efficiency. On social
security front the government’s insurance scheme for
people above 55 years has served a useful purpose particularly
in wake of falling interest rates.
The government
has been able to generate goodwill in the international arena.
The team led by Arun Jaitley to WTO meeting at Cancum has
successfully generated enough support of international community
to safeguard the interests of developing countries. The India’s
position on external front has also improved during the year
with a positive balance of payments position. Some of the
high cost debts have been retired with a view to make such
funds available to less developed countries and also to reduce
the cost debt servicing.
The year has witnessed
the discovery of multi crore scams involving highly influential
people from politics, bureaucracy, judiciary, police and business
and industry. For the first time in the history of independent
India, there has been a massive crackdown on corruption. The
actions of the government clearly proved that no body irrespective
of his position, influence, and affiliation is above law.
A sense of confidence is emerging amongst the polity that
law is supreme. The efforts in this respect are required to
be deepened to provide relief to the honest and innocent people
from the menace of corruption particularly wherever there
is a public-government interface. Accountability on the part
of most of those who are employed to serve needs to be made
more effective.
Disinvestment has
picked up in the first six months of the year but got stalled
partially in the recent past. The Inflation rate is going
up recently and if effective steps not taken immediately may
eat away some of the benefits reaped during the year. The
position of fiscal deficit is also not very encouraging. It
might be more than 5.5.% for the year disturbing the macro
economic stability. The level of unemployment is another matter
of worry in the economy as not much has been done to generate
employment particularly for the educated youth. Reducing the
retirement age of government employees may help the government
to generate more jobs at the entry level at lower cost and
also reduce the cost of high paid senior staff. Senior staff
develops enough capabilities to gainfully employ themselves
than young graduates. Although the ratio of people living
below poverty has reduced, yet more serious efforts are required
in alleviating poverty.
There is a need
to develop effective mechanism involving people to solve the
problems and issues meet the challenges related to unemployment,
poverty alleviation, illiteracy, outdated technology, inefficiency
and low productivity, corruption, money laundering, black
money and lack of accountability.
The country has
moved in the right direction during the year in its efforts
to built up its economic strengths, macro economic stability
and efficiency.
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* Text of the talk relayed on All India Radio, National Channel
on 31st Dec. 2003 at 8.05 pm. The talk was recorded on 29th
Dec. 2003.
