Some Implications of "The New Economic Policy "
THE Government that came to power in December 1984 has announced a number of new economic measures, besides presenting a Budget for 1985-86 which has been hailed in some quarters as heralding a new era for the Indian economy. Together these initiatives as well as policy statements have been taken by experts and lay-men alike to constitute a "new economic policy". While one may legitimately question the characterisation of the new government's economic policy as being entirely new, there are no doubt distinctive aspects to it. In what follows, we first briefly review the new government's economic policy measures since it took office. Next, we note the policies pursued by earlier governments. We then examine the implications of the new government's economic policies for employment, inflation, self-reliance and poverty removal. In the concluding section, the need for an alternative economic policy is explored.
It is obviously neither possible nor necessary to describe the details or all the nuances of the present government's economic policies. But the main thrust can be deduced by considering the 1985-86 budget, the major industrial policy initiatives and the policy towards foreign trade, import oftechnol-•ogy^nd foreign investment. Let us consider each of these in turn.
The budget for 1985-86 is characterised by three main features.* On the revenue side, major tax concessions have been offered to the wealthy in general and the corporate sector in particular, while a large additional dose of regressive indirect taxation (on top of various pre-budget imposts and the burdens imposed by the Railway budget) has been resorted to.
Despite such imposts, however, the plan outlay for 1985-86 shows only a marginal, nominal rise over that for 1984-85 and given the present rate of inflation, this marginal rise in nominal terms would certainly turn out to be a decline in real terms. Also, outlays on rural anti-poverty programmes show a decline even in nominal terms.
Further, despite additional imposts and near-stagnant plan outlay, and what has been termed 'falsification and underestimation' the budget estimate of the deficit is alarmingly high at Rs 3349 crores.2 The gross underestimation involved has already been revealed by a whopping supplementary demand for grants presented recently to the parliament, this itself being only
Professor of Economics, Bharaodasan University. Tiruchirapalli, Tamilnadu.