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More govt investment to avert eco crisis, revive confidence: PM

Prime Minister Atal Bihari Vajpayee on Friday vowed to bring more funds for public investment in the infrastructure sector as part of the strategy to avert the economic crisis and revive the sagging business confidence.

"The crisis can be ended only by dramatically stepping up public investment and enabling private investments to ride on the back of higher public investment," he told the Advisory Council on Trade and Industry, while outlining a 14-pronged strategy for increased public investment in infrastructure and other development projects.

"We have decided to mobilise large-scale additional resources for investment in various developmental projects and programmes through a combination of non-budgetary and budgetary sources. We will make full use of the availability of surplus credit in our banks and financial institutions," Vajpayee asserted.

The meeting with the council, comprising captains of industry and trade, is part of a series of efforts led by Vajpayee to revive the economy amidst the lowering of India's currency rating and reports that the slowdown was a culmination of lacklustre reforms and a sharp decline in demand.

Earlier this week, Vajpayee had announced a slew of measures including a time-bound programme for downsizing of government and implementation of Expenditure Reforms Commission's recommendations, an effective project monitoring mechanism and creation of a cabinet think-tank for strategy.

"We recognise that at the heart of the slowdown is the crisis of productive investment in the economy. We also need an urgent action plan for the immediate revival of our economy and business. I wish to assure you that the government is working both the tracks simultaneously," Vajpayee said.

He said that Indian Railways, which has been neglected maximum so far, would get high priority in the coming year and emphasised that 'railway reforms will begin in right earnest'.

"We have recently announced a Rs 170-billion Railway Safety Fund to be spent in five years. The first year's spending plan will be finalised soon," he said, adding that a comparable amount of investment would also be mobilised for accelerated completion of many critical and remunerative railway projects, which have languished for a long time for want of resources.

The meeting was attended by key economic ministers Yashwant Sinha, Murasoli Maran, Arun Jaitley, Suresh Prabhu, Arun Shourie, K C Pant and industrialists including Ratan Tata, Kumaramangalam Birla, Mukesh Ambani, Sanjeev Goenka, and Raghu Modi among others.

The National Highway Development Project, which is set to take off in a big way, would see the spending going up to Rs 50 billion in the coming year and to be doubled in the following year.

This would enable Phase-I of the NHDP's Golden Quadrilateral project to be completed on time by the end of 2003, Vajpayee said.

Emphasising to move ahead with power sector reforms, Vajpayee said that 'the central government, in co-operation with the government of Maharashtra, financial institutions, and other partners, will facilitate an early and amicable resolution of the vexatious problem surrounding the Dabhol Power Project'.

He also said that all hurdles in implementation of major airport projects would be speedily removed.

Identifying small-scale industries as a potential area, Vajpayee said: "Reservations in those small-scale industries that have an enormous potential for exports and employment generation will be removed."

Promising to facilitate public and private large-scale investments in agriculture and in all segments of the food economy, Vajpayee said government would step up public rural development programmes having potential to create large-scale employment and also stimulate demand in the rural economy.

"The Pradhan Mantri Gram Sadak Yojna will see an investment of as much as Rs 50 billion this year," Vajpayee said.

Pointing out that current low levels of capital and labour productivity would pose a serious threat in the growing challenges of global competition in the wake of the WTO agreements, Vajpayee said: "Labour reforms are a much-needed initiative to boost investment and improve management in Indian businesses."

In this regard, government would bring forward the necessary amendments to the labour laws in the winter session of Parliament, Vajpayee said. more

Vajpayee, however, ensured that changes in labour laws would not be at the cost of the interests of labour. "We have ample global evidence that these changes will actually create large-scale new employment, which is indeed the need of the hour."

He asked the business houses to ensure that the workers get their rightful due, both financially and in terms of useful retraining and redeployment opportunities.

Outlining the plan to infuse large-scale public investment and take other legislative and administrative measures to kickstart the economy, Vajpayee announced to observe the coming year as the 'Year of Implementation'.

"What I would like from each one of you, and from the business community as a whole, is resolute reciprocal action to step up private investments, complete ongoing projects on schedule and also take up new projects," he said.

The Centre, in consultation with state governments, will soon prepare an action plan for the removal of regulatory and other non-financial barriers impeding growth in the Indian economy.

Highlights of PM's economy revival strategy

• Mobilisation of large-scale additional resources for investment in various developmental projects and programmes through a combination of budgetary and non-budgetary sources.
• Fully utilising surplus credit available in banks and financial institutions, through low and declining interest rates.
• Surplus funds with banks and financial institutions to be channelled into innovative and productive public spending, combined with a prudent strategy of fiscal management and inflation control.
• Railway reforms to be taken up in right earnest.
• Rs 50 billion would be spent on national highway development in the coming year.
• Plans to revive and reform the state electricity boards would be implemented.
• Centre to facilitate amicable resolution of Enron issue.
• All hurdles in implementation of major airport projects would be speedily removed.
• Priority to modernisation of urban infrastructure for increased public spending.
• Innovative use of vast surplus land with different government agencies to generate resources for capital investment and housing for poor.
• Centre to facilitate public and private large-scale investments in agriculture and all segments of food economy.
• A set of projects of national importance to be identified from ongoing and new projects.
• New monitoring and implementation mechanism for speedy completion of identified projects.
• The cabinet secretary to prepare blueprint for faster and effective approval of all developmental projects and programme.
• National Tourism Policy by year-end.
• IT-enabled services to be promoted.
• Domestic market for IT to be expanded, especially through a strong push for e-governance.
• Reservations in those small-scale industries that have an enormous potential for exports and employment generation would be removed.
• Public spending in rural development programmes capable of creating large-scale employment and stimulating demand in the rural economy would be stepped up.
• Rs 50 billion would be spent under the Pradhan Mantri Gram Sadak Yojana.
• Rs 100 billion Sampoorna Grameen Rozgar Yojana within this month.
• Rs 50 billion worth of foodgrains in food-for-work programme to create durable rural assets.
• Labour reforms bill in winter session of Parliament to boost investment and improve management in Indian businesses.
• Removal of regulatory and other non-financial barriers to increase gross domestic product growth by at least 2-3 percentage points.
• 2002-03 will be Year of Implementation.

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