Statement on the Indian Economy^
The India economy is facing a serious crisis. Its manifestations are: the burgeoning external debt estimated at more than Rs.100,000 crore; the fiscal crisis reflected in the mounting excess of the Government's expenditures over its income financed by deficit financing and internal borrowing; a phenomenal growth in luxury consumption that aggravates the social divide and leaves labour and equipment unutilized in many sectors; a return to a period of rapid rates of price increase; the serious strains in an already inadequate public distribution system as a result of the inability of the Government to procure adequate stocks; and, finally, a sharp increase in unemployment.
The Government's claim that these distortions in the economy can be easily managed is false and deceptive. The problems of unemployment, poverty, slow rates of agricultural growth and external vulnerability have aggravated over the recent period. The fact is that the future of this country is being mortgaged and its economic sovereignty threatened. External debt has reached magnitudes where the Indian Government is susceptible to the dictates of international agencies, commercial bankers and foreign governments.
A host of interrelated factors have brought about the present situation. Principal among them has been the unwillingness of the Government to finance development by mobilising resources from the rich and thereby simultaneously pursuing the goals of growth and greater equality. Notwithstanding the extremely unequal distribution of assets and incomes in the country, the Government has over the years permitted increasing concentration of economic power as well as sharply reduced the rate and spread of direct taxation; the rates of indirect taxation on a host of luxuries have been drastically cut, even while basic necessities have been brought into the net of indirect taxation. And such taxes as are levied are widely evaded.
Meanwhile, non-developmental expenditures have increased rapidly on account of growing transfers to the affluent, profligacy and extravaganzas, widespread misappropriation of public funds and sharp
* Statement adopted at a seminar on 'Indian Economy and Debt' organised by Social Scientist at New Delhi on August 7 and 8,1989.