The finance minister has placed his bets on growth through rapid technological development, but critics say he should proceed with caution
FINANCE minister Manmohan Singh
has turned his back on International
Monetary Fund-imposed financial
discipline and given India a growth-oriented budget that pushes for further globalisation of the economy.
But, given the high fiscal deficit and
inflationary trends, there may be many pitfalls ahead.
The budget stresses rapid technological advancement, opens up the
country to foreign investment and
offers incentives to indigenous
research and development through
publicly funded institutions.
Acknowledging the role of science
and technology, Singh clamped a
5 per cent cess on royalty payments
for imported technologies that will
help to develop commercial applications of indigenous technology.
Department of Science and
Technology (DST) officials feel this
will encourage projects that have
been kept on the backburner.
However, K Narayanan of the
Institute of Economic Growth (IEG),
Delhi, says, "Singh has failed to give
private R&D incentives. The largesse
has gone to DST." Additionally,
Singh has loosened the purse strings
for publicly funded science and technology and the department
of atomic energy.
Allocations for the departments of space, biotechnology, electronics and scientific
and industrial research, Project
however, remained more or
less stagnant.
Singh has hiked the budget for rural development
by Rs 2,000 crore - from
Rs 5,010 crore - as well as
for employment schemes.
Not surprisingly, Singh
has many critics. Says former finance
minister Yashwant Sinha, "In the late
'80s, industrial growth rate was high,
exports were booming and
price rise was moderate. But
soon we landed into the worst
financial crisis we have known.
Therefore, there is need to
move with caution." Former
finance minister Madhu
Dandavate adds: "This is a
GATT-shadowed budget,
which will give developed
countries liberal access to the
Indian market." And, former
railway minister George
Fernandes says, "It is all a
tamasha as elections are
round the corner."
But Singh has his supporters, too. Economist
Y K Alagh, vice-chancellor
of the Jawaharlal Nehru
University in Delhi, says:
"There is slack in the
economy, price rise is
moderate and there are
adequate foreign exchange
reserves. The lowering of customs duties and other incentives
will bring in technologies that
are more eco-friendly."
The budget has failed to
please environmentalists. The
outlay for the ministry of environment and forests (MEF) has
been increased only marginally.
Pollution control projects
have been granted 100 per cent
tax deduction. But Gopal
Kadekodi of IEG says, "Most polluting industries are established
in backward districts and investments in these areas already
receive a tax rebate. Instead., disincentives on polluting units should
have been considered."
In the non-conventional energy
sources sector, there is a shift from
subsidised rural energy programmes
to commercialisation of renewable
energy technologies. The outlay for
horticulture, with its emphasis on
exports, has been hiked by 42 per
cent from Rs 130 crore.
However, what is worrying is the
indirect impact of the budget on the
environment. Alagh points out there
are no efforts to control conspicuous
consumption. Said an MEF official,
"This was not a clean-up or pay-up
budget."
RURAL
PRIORITIES Increased allocation for rural development |
||
1993-94 in Rs crore |
1994-95 in Rs crore |
|
Rural development | 5620 | 7025 |
Employment programmes | 3906 | 5055 |
Water supply & sanitation | 770 | 951 |
Wasteland development | 50 | 60 |
MARGINAL RISE Budgetary allocations for environment protection |
||
1993-94 in Rs crore |
1994-95 in Rs crore |
|
Ministry of environment anf forests | 399 | 418 |
Forestry & wildlife | 199 | 219 |
Pollution control | 111 | 128 |
Prevention of Ganga pollution | 60 | 73 |
INCENTIVE
TO IMPORT Reduction in custom duties proposed in the 1994-95 budget |
||
Existing rate | New rate | |
Project imports & capital goods | 35% | 25% |
Steel | 75-85% | 50% |
Coal | 85% | 35% |
Computer parts | 80% | 50% |
Application software | 85% | 20% |
Optical fibres | 85% | 40% |
S&T ALLOCATIONS | ||
Major outlays (in Rs crore) | 1993-94 (Revised estimates) |
1994-95 |
Atomic energy | 1505 | 1253 |
Space | 718 | 754 |
Electronics | 178 | 154 |
Non-conventional energy | 204 | 226 |
Ocean development | 56 | 59 |
Biotechnology | 88 | 90 |
Science & Technology | 339 | 386 |
Council of Scientific & Industrial Research | 343 | 360 |
Indian Council of Agricultural Research | 457 | 473 |
Indian Council of Medical Research | 56 | 58 |
Ministry of environment & forests (for zoological & botanical surveys of India) | 399 | 418 |
Total | 4343 | 4231 |
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