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Economic slowdown prevails over political concerns for BJP

Deepshikha Ghosh in New Delhi

The Bharatiya Janata Party, which leads India's ruling coalition, is worried about the sharp economic downturn that some say needs more drastic measures than the possible axing of Union Finance Minister Yashwant Sinha.

Prime Minister Atal Bihari Vajpayee is reportedly under pressure to remove Sinha due to the poor state of the economy and severe criticism over a multi-million-rupee financial scam in the state-run Unit Trust of India, the country's largest mutual fund manager.

According to BJP leaders, the party has been embarrassed over the government's apparent delayed response to the declining industrial growth. In Parliament last week, ministers failed to ward off a strong opposition challenge.

The BJP's image has suffered a major blow because this has come on top of criticism from both its allies and opposition on the alleged moves to introduce Hindu values into the educational system, admit BJP leaders.

The economic slowdown is the main agenda for the prime minister's Economic Advisory Council meet September 10, a BJP leader said. The meeting will discuss the poor industrial growth, fiscal and monetary measures to revive the economy and the all-round slow down, be it in services, industry or agriculture.

Industrial production has grown only by 2.1 per cent in April-June 2001, the worst in seven years. "I think it is more visible for the first time as the fall in industrial growth has been very sharp, from 7-8 per cent to 2 per cent," noted business economist D H Pai Panandikar said.

The slowdown will also be the central issue before the prime minister's Council on Trade and Industry, which includes industry captains like Ratan Tata, Mukesh Ambani and Nusli Wadia. The council meets September 7.

BJP's economic cell chief Jagdish Shettigar said: "The party is concerned about the slowdown, but an individual need not necessarily be entirely to blame. The government has to take very strong policy measures to remedy the situation."

He admitted that in the first quarter of this year beginning April, the industrial growth had touched almost rock bottom. "The main reason was the agricultural sector, specially the fall in the purchasing power of the farmers. But we still have three more quarters to go."

Asked whether the party was satisfied with Sinha's performance as finance minister, Shettigar declined to comment. "It is the prime minister's prerogative to judge the performance of his ministers. The party cannot comment."

But many BJP MPs have demanded that Sinha be replaced so as to at least give the impression that the government is alive to the economic crisis.

The BJP is concerned about the industry's grouse that projects have been stalled or delayed in the infrastructure sector. These cover the fertiliser, refinery, petrochemicals, port, roads and power sectors.

Economist Pai Panandikar remarked: "Sinha only acknowledged recently that his government was concerned about the economic slowdown. What were they doing all this time?"

According to an assessment by the Confederation of Indian Industry, the signs of a slowdown are evident in every sector. It said the government had revised its estimates of GDP growth for 2001-02 from 6 per cent to 5.2 per cent.

The industry has expressed dismay over the lack of progress on infrastructure development, which is hampering India's global competitiveness. The quality of power, ports, roads, airways continue to be dismal.

Divestment Minister Arun Shourie had publicly lamented about the declining reputation of India as a destination for foreign investors due to the delays in implementing government policies.

The reasons for delays have been multifarious: cancellation of environmental clearance, dispute among co-promoters, machinery supply, local agitation or even non-availability of land.

CII economic advisor T K Bhowmick felt changing the finance minister now would be like changing the captain of the Indian cricket team. "We are basically having a holiday on reforms. The government is more tied up with its political problems."

Indo-Asian News Service

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