Sinha hopes slowdown will be checked soon

By Our Special Correspondent

NEW DELHI, NOV. 6. The Union Finance Minister, Mr. Yashwant Sinha, today expressed the hope that the economic slowdown would be checked soon.

Interacting with some MPs attached to his Ministry's consultative committee, he said his optimism was based on the reality of high foreign exchange reserves, large stocks of foodgrains, the low inflation rate and the soft interest rate regime. Some incipient signs of revival were also visible in certain sectors.

Sharing his concerns with the members, Mr. Sinha said there had been below average monsoon for consecutive years now; that there was a downturn in industrial growth after signs of revival in 1999-2000; there had been droughts and floods in various parts of the country and the Gujarat earthquake which caused largescale devastation. Global events were also not conducive for healthy growth, he said.

The Minister shared information with the members that the increase in the variability of production in the latter half of the 1990s (growth of foodgrains production had swung between a high of 10.5 per cent in 1996-97 and a low of 6.1 per cent in 2000-01), falling capital formation leading to large revenue deficits and a sharp decline in compound growth in the yield of all principal crops had contributed to slower growth in the agriculture sector.

In industrial and manufacturing sectors, the slower growth could be attributed to higher real interest rates, fall in public investment and increase in the prices of fuel groups. Similarly, the services sector and infrastructure had also performed below expectation.

Talking about the Government's action plan to check the slowdown, the Finance Minister listed the introduction of lower interest rate regime, cut in taxes, the policy of spending on productive growth as some of the steps already taken.

Moreover, to carry forward the economic reforms programme, discussions with State Governments were continuing.

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