(1888PressRelease)
March 09, 2007 - New Delhi, 8th March, 2007: Assuming that the annual budget proposals and economic survey of the Government's appraisal of the economic barometer of the country, observers say there is many a slip between cup and lip.There are many sectors mentioned that could be on the ascendant, but many others that belie the optimism of the economic survey and budget finalisers.
All policy defining items inflation, growth, special economic zones, infrastructure, pension reforms have been discussed in the economic survey, but it seems it is all due to the political compulsions of the future two years.
One cannot fault Finance Minister Mr. P Chidambaram with uninhibited exaggerated statements. The survey is optimistic and at the same time cautious, bringing down optimism with emphasis on problems created by inflation.
While the Finance Ministry has been jumping from one defence to another to justify rising inflation – from blaming industry to inflation being a natural ally of a growing economy in this survey, there some attempt at coming to terms with data based analysis and conclusions. The high rate of price rise in primary articles food including cereals and pulses which rose 9.76% in the last week of January this year, compared to 5.78% one year ago contributed to more than one third of the overall inflation. Major items like pulses, groundnut oil, onions rose by an average of 25% many of which are reflected in global prices, resulting in price shocks.
Every year the Economic Survey gives an accurate picture of the financial status of the power sector. This year too there a table that paraphrases into a story of slow reforms, of mounting losses and therefore of ever-increasing state government subsidies. A media report indicates the rate of return in the sector has fallen from minus 24.84% in 2005 – 06 to minus 27.43% in 06-07. In financial terms this translates into all India losses of Rs. 26000 crores as against Rs. 21110 crores. But like in all surveys, it holds out promises of better results next year – touching -19%, close to the levels envisaged in the 1990s.
Moreover, the unemployment rate of the country may become the biggest headache after inflation for the UPA government, especially the urban jobless rate, survey data has shown. The way out - stepping up employment in the private sector, absorbing the extra manpower that is jobless due to a dip in the agricultural employment, pushing labour intensive and export oriented manufacturing industries and imparting skills to improve the employability of the youth.
Citing examples and finding of National Sample Survey Organisation the survey found that though employment increased faster between 1999-2000 and 2004-05, as compared to the period from 1993-94 to 1999-2000, the labour force expanded faster, leading to greater unemployment. While employment grew annually by 2.48%, the labour force grew even faster at an annual rate of 2.5% between 1999 and 2005, the survey noted. As a result, unemployment was higher at 3.06% of the labour force in 2004-05 compared to 2.78% in 1999 – 2000 it said.
Despite the higher employment growth, the survey stressed on the need for faster growth to not only absorb the addition to the labour force, but also reduce the unemployment rate. Women seem to be losing out in the high growth performance listed in the Economic Survey. Data showed while the jobless rate for men have either remained stable or gone down, unemployment among women have gone up during the 1999-2005 period.
During the period while jobless rate for rural males remained stable at 2.1%, the unemployment rate for females has more than doubled from 1.5% to 3.1%.
Similarly, while the unemployment rate for urban males has gone down from 4.8% in 1999 to 4.4%, the unemployment rate for the urban females has increased from 7.1% to 9.1% during this period, which is about double the rate for urban males. The economic survey acknowledged the gender imbalance in rising unemployment rate during this period and attributed it to an increase in unemployment incidence for females.
According to agro-scientist M S Swaminathan, though the economic survey has highlighted the many significant highlights of the last three years, it has admitted that the farm sector, which provides livelihood for 115 million families, is in distress. It points out the mid-term report card correctly points out that constraints in the supply of essential food items such as wheat, pulses and oilseeds could upset macroeconomic stability.
Having identified the problem in both human and statistical dimensions, the budget fails to provide a strategy for agricultural revival. The budget has provided funds for bringing 2.4 million hectares more under irrigation. The expansion of farm credit to cover an additional 50 lakh farmers and total credit availability of Rs. 225,000 crores are also welcome steps, although such figures are not going to prevent farmers affected by economic penury from committing suicides, Dr. Swaminathan has warned.
The economic survey has stressed that low productivity is one of the important causes of economic distress of small farmers. He has pointed out the lack of will for repeating the success of the milk revolution in the country in the case of pulses, oilseeds and millets that would save the farmer and his family.
Despite all the dark spots, Economic Survey optimistic about India's progress in infrastructure building, despite all horrors endured by its people on a day to day basis. The makers of the survey i.e. Finance Ministry – feel the holes in the infrastructure services across the nation will now be addressed through private production with appropriate government regulation or instructions. Observers say the outlook unlike previous years, is optimistic. Infrastructure will give a fillip to economic growth and robust economic growth in turn, by enhancing willingness to pay appropriate user charges, will promote investment in infrastructure, the survey has said.
The economic survey this year seems in a mood to push impediments away in a way assuming that they will be surmounted, regardless, the survey authors seems to give the impression that if the funds necessary for urban infrastructure are found through a vibrant bond market and pension and insurance reforms, the task would well be half done.
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