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Economy facing problems, says Sinha

Union Finance Minister Yashwant Sinha on Tuesday said the economy was facing 'problems', and the government was taking measures to revive growth by pumping investment in rural infrastructure to reverse the slowdown.

"There are problems in the economy. Nobody can deny that we have a problem of industrial and infrastructural slowdown", he said adding there was, however, nothing to worry as the country was sitting on a record $44.4 billion foreign exchange reserves and mountains of food stocks.

Replying to a debate on Supplementary Demands for Grants for 2001-02 in the Lok Sabha, Sinha strongly favoured a national consensus on public sector units.

He said government was looking at reviving them on unit-wise basis. Giving examples, he said restructuring plans for NTC and IDPL were being considered on a unit-wise basis and not as a whole.

"We will see which unit can be revived .... we will try to revive any unit in which there is still some life left," Sinha said, adding that government has to withdraw from certain areas of activity.

Attributing the slide in growth to steep international crude and petro prices and sluggish agricultural performance, Sinha said the country faced a very flat agricultural growth of about 0.2 per cent in 2000-01.

Foodgrain production declined substantially by about 12 million tonnes from 209 million tonnes in 1999-2000 to about 196 million tonnes in 2000-01, he said, adding the economy still depends on agricultural as demands of 70 per cent of population living in rural areas provide impulse to it.

Describing low growth and slowdown as a global phenomenon due to petro price hike, he said despite difficulties foreign exchange reserve was stable, inflation under check and balance of payment position comfortable.

Referring to a member's criticism that the budget for current fiscal was passed without debate, the finance minister asserted that "the budget is not dead. It is alive and kicking and is being implemented. All promises made in the budget will be fulfilled".

On public sector units, Sinha said budgetary support of Rs 117.85 million had been given to PSUs this year and it had revived and restructured 26 units so far.

Refuting charges that the government was 'anti-PSU', he said Rs 83.35 billion worth of loans and interests of these units had been written off.

Of the total 232 central PSUs operating at present, 106 were loss-making and 67 more, whose net worth had turned negative, had been registered with the BIFR, he said.

While a total of Rs 357.80 billion had been invested in these PSUs, their total accumulated loss stood at Rs 386.48 billion, Sinha said.

Referring to fiscal deficit, Sinha said it was not the real culprit and what is of more importance is the revenue deficit, which should be under check.

Sinha said the government would bolster the rural economy to step up the momentum of the economy as a whole.

As far as resources are concerned, the government would make available money for investment, particularly for infrastructure.

Citing an example, he said he has told the civil aviation minister to come out with a plan for a state-of-the-art airport in Delhi.

On road sector, he said the non-lapsable cess fund created from one per cent surcharge levied on diesel now has Rs 25 billion to be provided for rural roads.

He said that the government should be spending about Rs 150 billion on roads alone of which a sizeable amount would be devoted to building rural roads.

Stating that the Pradhan Mantri Sadak Yojana was being advanced by a year, Sinha said MPs would now be authorised to recommend construction of rural roads in their constituencies and the money was available with the ministry of rural development for the purpose.

He said this massive scheme would now be completed by March 2003 and contracts have already been awarded. "For the first time the country will be able to boast of roads of international standards," he said.

On small savings, the finance minister said that Rs 1,760 billion worth had been transferred to the National Small Savings Fund, of which 20 per cent would be used for tackling Centre's fiscal deficit and the rest to meet the states' fiscal deficit.

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