Vajpayee's spirited presentation enthused industryPrime ministers are known to leave the task of running the country's economy to their finance ministers and the mandarins who run the Finance Ministry in North Block. Atal Bihari Vajpayee believes differently.Eight months into office, he is desperate to dispel the general impression that his Government is floundering. With skyrocketing prices, the stock market downturns and disturbing revelations about the net worth of savings with Unit Trust of India taking a heavy toll on his Government's credibility, Vajpayee, it seems, has decided to take matters into his own hands.Last week, it was the prime minister and not Finance Minister Yashwant Sinha who was making a spirited presentation of the Government's plans to revive the economy before the select gathering at the annual meet of the Federation of Indian Chambers of Commerce and Industry (FICCI).Earlier in April, he had announced a series of measures aimed at reviving the economy at a meeting of the Confederation of Indian Industry (CII). Unlike his pronouncements in April, which many believed were hurried through - his government had been in office for barely a month then - much homework had gone into the current spate of announcements. Sources said that preparations were on for over a month and a half and the results of these painstaking efforts were evident in Vajpayee's final presentation. He tried to address every crucial issue raised by the corporates.From permits for buy-backs to freeing up inter-corporate investments to radical moves in the telecom sector, Vajpayee covered them all. "You will see an accelerated and firm pace of action in the coming months," he said hoping it would also give a push to the sagging image of his Government.Industry was overwhelmed. "There was a feeling that the coordinated approach to economic issues was getting diluted. Now there is a reiteration that the economy will be the key focus of the Government," said Amit Mitra, FICCI secretary-general. .preferred-source-banner{ margin-top: 10px; margin-bottom:10px;}So moved was Sunil Mittal, chairman and managing director of the Bharti group, with the prime minister's speech that he stood up and kept applauding till he was asked to take a seat. The Sensex moved up a heady 105 points on the first day of trading after Vajpayee's speech. But the dismal half-yearly results of companies that had been trickling in had a sobering effect. The Sensex gained just 6.13 points the next day, indicating that improved secondary market sentiments were not enough to reinvigorate the primary market where money is raised for new projects. The issue is to get the small investor to return to the capital markets. "I am doubtful," says L.C. Gupta, member on the SEBI board. "The remedies do not touch the heart of the problem - investor protection.A study by Prime Database shows that 3,872 companies raised Rs 25,210 crore as equity between April 1992 and June 1996. But shares of 80 per cent of the companies were trading at below their offer price (meaning the investor's gain is nil) and scrips of 118 others were not traceable at any major exchange. Click here to EnlargeWith accountability systems weak and a negligible number of promoters being brought to book, analysts feel it will be long before the promised vibrancy can be restored to the markets. There are many other proposals mooted by Vajpayee which if acted upon could give the economy the necessary push.But as Professor V.M. Pandit of the Delhi School of Economics points out, the Government has made such commitments earlier: "The problem lies in the ability to carry them out," he says. Videocon Managing Director Venugopal Dhoot agrees. "Too many statements have been made in the past which are forgotten with time," he says.Vajpayee's charter at the CII meet included assurances that the Prime Minister's Office would directly monitor all infrastructure projects costing over Rs 100 crore; drastically overhaul the Companies Act and Foreign Exchange Regulation Act (FERA); announce a national housing policy in 60 days and a national infomatics policy to enhance competitiveness; and empower the Foreign Investment Promotion Board (FIPB) to take decisions in 60 days.But six months later, there is still that gap between rhetoric and reality. Though the Government has made some headway on some fronts like getting an information technology strategy in place and overhauling FERA, it is yet to act on many other promises. The monitoring of projects is being done essentially by administrative ministries but it is not as if there is a nodal officer pushing for permits. Says the chief of an American consultancy firm: "It's just not enough. Investors are not going to wake up and say where is my man in Delhi who will hold my hand and get me permits in 48 hours." The national housing policy may be on but the promise to overhaul the Companies Act has been reiterated at FICCI and the less said the better about empowering FIPB - a move that could have saved the Government from the embarrassment over the Tatas' withdrawal from the aviation project.To be fair, many of the problems faced by the BJP Government have been inherited. In each of the cases, there are the usual set of solutions. The corporates rejoice every time a reassuring announcement reiterating a possible solution is made, only to be rudely reminded of the ground realities.According to CII, 47 per cent of the 524 corporate houses it surveyed recently were unhappy about the general business conditions while 37 per cent believed the trend would continue. Only 16 per cent were hopeful that the conditions would improve in the next six months. To make matters worse, the World Economic Forum competitive index recently rated India 50th, down from its 45th position last year - the only countries ranking lower being Zimbabwe, Russia and Ukraine. In such a scenario, Vajpayee may mean very well, even mean what he says, but it is doing what he means that will make all the difference.Published By: AtMigration Published On: Nov 9, 1998--- ENDS ---
