BJP TODAY

May 16--31, 2003 - Vol. 12, No. 10

BJP Supports free economy with strong private sector
Freedom in business is freedom of human spirit
Venkaiah Naidu's address at CII annual session
Excerpts from the speech:

To the BJP a free economy is part of a greater ethos:

The BJP has always stood for the development of a free economy, which will give full support and encouragement for private enterprise and people's initiative to grow and flourish. That is why I can say in clear and unmistakable terms that under the NDA government- of which my party is the leading constituent- the Reforms are irreversible. Our support for a free economy with a strong private sector working in a globalised competitive environment is nothing new. It is based on our roots in Indian tradition, which has always held that a free system of commerce and industry is, but a facet of a free society. Two thousand years ago sailors from the south took their ships into what we now call Indonesia and the Far East and set up sophisticated business enterprises making them perhaps the first multinationals of this planet. Our silks adorned the wardrobe of Cleopatra and our gems the crowns of Roman emperors. We regard Chanakya as one of the most important political and economic thinkers that ever lived and draw inspiration from him. In his Arhashastra he defines the role of the state as one, which essentially defends the country, maintains law and order and collects taxes, which it spends, on the poor. For us freedom in business is but a part of the larger freedom of the Human Spirit. A free.. nation has to have a free economy.

We as a nation did not live upto our full potential in the first 50 years after independence because of the Permit Raj and Licence Raj followed by the Governments of those days. By putting such controls we stifled the creative forces of the Private sector. The result was that we remained backward, unable to meet even the basic needs of our people. On the other hand right from the beginning we in the BJP have stood for an open economy with the Government playing the role of a facilitator. It may come as a surprise to some of you, we were the first to talk of privatisation in our manifesto long before anyone else. We however want the reforms to have a human face and freedom to do business can never mean freedom to exploit. For this consistent support, which the BJP has given for a free economy, so-called intellectuals have ridiculed us as a Party of Traders. They forget that trade is an important component of nation's economy. Without trade we cannot prosper.

The word competitiveness should be used carefully, with due consideration for the national and international context. There can be no free and fair competition in an uneven playing field in which the framework is defined by someone who has access to capital, technology and intellectual resources far in excess of others.

Therefore, the first answer to the question How is that India should keep maximum control over its capital management. We should be in a position to decide how, where and for what purposes our capital should be deployed.

Such deployment should be in alignment with our overall national objectives such as poverty eradication, employment generation, elimination of regional and such imbalances in development, etc.

Which is why, our Prime Minister has defined the objective of economic reforms as : Development, Faster Development, and Development with Employment and Equity.
In this effort, foreign capital and foreign technology certainly have a contribution to make. Where we deem necessary, we invite foreign investments. Where necessary, we can buy foreign technology.

But the point to remember is that the main thrust of our developmental strategy has to come from our own domestic investments and from our own intellectual and managerial resources.
In this sense, Swadeshii and Self- Reliance have not lost their relevance in the era of globalisation.

We should even now heed Gandhiji's sage advice:

"I want to keep the windows of my house open so that I do not deprive myself of the fresh air and good ideas that I can receive from the outside world. However, I do not want the walls of my house to be so weak that they cannot withstand the force of the winds and squalls that occasionally threaten to blow my house away."

This shows that Swadeshi is not isolationist. It does not argue that in today's inter-dependent world, India can shut her doors to the outside world. That was never how Swadeshi was ever defined, not even in Gandhiji's time.
But these days we often hear voices that deride and condemn Swadeshi and selfreliance as "outdated" and "irrelevant" concepts. The BJP differs with such critics. We are in favour of using foreign investment to our own advantage, just as the foreign investor also benefits from investing in India. A good example of such partnership is Sunil Bharti Mittal himself. India favours mutually beneficial foreign investment.

We are proud of the achievements of the NDA Government

A strong economy

I will now turn to the next theme in my speech and that is the progress we have made in the last five years under the able leadership of our beloved Prime Minister Atal Bihari Vajpayee. The inflation rate has been totally controlled and is now at an average of 3-4% range. This has been achieved in spite of the most severe drought, natural calamities like earthquakes and super cyclones in Orissa and Gujarat, in addition to the increase in oil prices in the international market.

The foreign exchange reserves have doubled in the last five years and stand around USD 75 billion. For the first time ever the current account has shown a surplus in 2001-02 and the trend has continued in 2002-03. Exports are rowing at 18.5% and exports as a percentage of GDP has doubled in the last decade. India now accounts for 0.8% of global trade, double what it was five years ago.

The external value of the Rupee has been strong and the depreciation of the currency during the last five years has been the lowest since the Rupee was allowed to float. This has allowed the country to even prepay some of the high cost foreign debt contracted in the early 90s and given us leeway to resort to imports to keep prices under check.

Economists always watch interest rates. We have succeeded in bringing down interest rates from around 15% to around 10%, a remarkable achievement. This has made Indian manufacturing more competitive and able to withstand competition in an increasingly global environment.

Foreign Direct Investment regulations have been liberalised. The FDI inflow have surged and in 2001-02 alone recorded a growth of 66% to cross USD 4 bin. Important sectors like insurance, mining have been opened leading to increased FDI flow and employment.

Public sector units, which do not have a strategic role in the economy are being disinvested.

Infrastructure

As the word itself implies, infrastructure is the most important prerequisite for the development of a nation and realising this we are paying maximum attention. The period saw the commissioning of two of the largest infrastructure projects in any part of the world. The Golden Quadrilateral and the North/South-East/Westt Corridors are being constructed. The Golden Quadrilateral is likely to be completed by December 2003, a year ahead of schedule. The Programme is providing direct employment to 2.5 lakh workers and 10,000 supervisory staff every day and the first phase would have generated 18 crore man days of work by the end of 2003. The Golden Triangle alone will result in a direct saving of Rs 8,000 crores every year in fuel costs and reduced wear and tear of vehicles.

Telecom

In the last 5 years the entire telecom map of this country has changed dramatically. The New Telecom Policy of 1999 ushered in a new era in Telecom. Availability of telephones has improved by leaps and bounds and today there is hardly any waiting list for telephones anywhere in the country. Rates for long distance calls and internet services have fallen from 50 to 90% bringing telephones in the reach of the common man. The teledensity has more than doubled to 4% and this will go up to 7% by 2005. This boom is leading to more employment opportunities in different sectors.

Power

To create a proper regulatory environment for making this sector viable, the Electricity Bill is being put on the statute book. The State Electricity Regulatory Commissions have been set up for purpose of ensuring licence free generation, distribution, etc. The Accelerated Power Development Programme initiated from 2000-01 provides financial assistance to states for undertaking renovation and modernisation programmes and also for strengthening transmission and distribution works.

We have also set up a Task Force to take up the dream project of Indian people of linking of rivers. This will really change the face of India and accelerate the growth and take care of regional disparities also, putting an end to flood and drought problems.

Financial Sector

Capital Markets have been deregulated still further and a modern Derivatives market for trading Futures and Options has been put in place. The country can now boast as one of the most modern stock markets In the world with number of shares traded second only to the U.S. Transparency has been improved for investor protection and strict Code of Corporate Governance set in place.

The health of public sector banks has been improved and most of them fulfil the Capital Adequacy norms of international standards. To improve the recovery of bad loans, a modern Securitization Law has been passed. This will improve the recovery and will make the financial system even stronger.

Cornpany Law has been streamlined and made easier for small companies. A modern Competition Act to regulate monopolies and ensure fair markets has been passed.

Social and Rural sectors

Agriculture and Food ProcessIng

Through continuous encouragement to farmers, huge buffer stock of food grains exceeding 70 million tonnes has been created. In spite of the worst drought in more than a decade, comfortable situation ensured that there was no price increase. All export restrictions on several agricultural commodities removed and agricultural exports in 2001-02 were around Rs 30,000 crores, constituting about 14% of India's exports. India has emerged as the second largest producer of wheat and the largest producer of milk products. Credit flow to the farmers has been improved considerably. 3 crore Kisan Credit Cards have been issued and Rs 50,000 crores of credit provided through them. The total direct credit flow to agriculture stands at around Rs 1,65,000 crores. To provide quality seeds on a timely basis and to protect the farmars the National Seeds policy has been put in place. and the Seed Crop Insurance Scheme has been introduced. Realising the criticality of storage two schemes have been launched; under the Cold Storage Scheme, 25 lakh tonnes of capacity have been added and under the Grameen Bhandaran Yojna about 20 lakh tonnes of rural storage have been created.

Rural Development

Under the Sampoorna Grameen Rozgar Yojana considerable rural employment has been generated in the last two years. under the Swarnajayanti Gram Swarozgar Yojna lakhs of self-help groups have been assisted.

Under the Pradhan Mantri Gram Sadak Yojna launched in December 2000, about 13000 road works have been taken at a total cost of over Rs 7500 crores and will change the face of Rural India.

The Annapurna Scheme has provided food security to senior citizens in rural areas and the Antyodaya Anna Yojana has provided highly subsidized foodgrains for the poorest of the poor.

The Challenges Ahead

One area where India can build a very strong competitive edge is higher and professional education, using our large educated and skilled manpower as a resource.
India has a huge pool of young men and women -indeed, by 2020 we will have the largest reservoir of young human resources in the world.

If we strengthen India's already large educational and training infrastructure, we can build a large army of young professionals with skills and knowledge in diverse fields.

These young people will mainly help India's domestic economy. But a fairly large number of them will also find employment in foreign countries because of their competitive edge.
Many of the problems that India has been facing in foreign trade are common with other developing countries. Therefore, we are using WTO platform effectively to voice our common concerns.

Even bilaterally, our Government has been taking up issues wherever our industry is facing unfair and anti-competitive hurdles. Such as our steel exports to USA.

Our commitment is to make India as a Developed Nation by 2020.

For the first time, political leadership has given a slogan that is not limited to its own tenure -but for an entire Generation of Indians.

We are very conscious of the challenges ahead and are determined to move forward. You would have seen that efforts are being made to streamline the tax system in the country. The Kelkar report on Taxation is an excellent blue print and the latest union Budget has already introduced several reforms in Tax administration that will reduce paper work, remove harassment and improve tax collections. We have decide to introduce the value Added tax system to replace the various state level taxes. This will bring uniformity, reduce disparities among states and improve compliance. We are also moving in other directions to take the structural reforms forward. A Commission appointed by the Government has already made recommendations to modernise the labour laws in the country and improve productivity. We fully support the efforts of the Government in all these areas. We recognise that in a democratic set up like ours there will be transitional problems and we cannot ignore them. There will be compulsions and pressures as we move forward. Change is never easy and if what is being changed has lasted for decades it is even tougher. But our commitment to structural changes in complete since we believe that is the only way the country can move forward and we can bring about greater prosperity for our masses.

Personally speaking the nation has to give up negativism, evolve consensus and avoid contentious issues. Politicians have to give up competitive populism like offering free power and bring in a blend of development and welfare. The States have to adhere to financial discipline. We need to take steps like reducing administrative expenditure, optimum use of resources and services available, reduce holidays, etc. We should reduce the size of Ministries both in Centre and States to 10% as recommended. We should put down with an iron hand mercilessly terrorism and militancy as peace is key to progress. Drastic steps to be taken to control population by way of incentives and disincentives. That is why, as soon as I took over as President of the BJP, I gave the call to my partymen "Nation first, party next and self last". This applies to industry also.

The challenge of making India an economic superpower can be addressed only if Government and industry work hand in hand. We have created specialised cells in our party to improve interaction with the business community. We were happy to note that many representatives came forward and met my colleagues and me and gave us their views. We got a good appreciation of your viewpoint and we were also able to explain to you some of the constraints in the political system. This is a continuous dialogue and can accelerate the pace of change. The task ahead of us is stupendous but even more stupendous is the resources at our command. Let us join hands to make our nation strong and prosperous where all citizens can live with dignity and without want.