Address

President Kalam Outlines UPA Growth Strategy

NEW DELHI: The President, Dr. A.P.J. Abdul Kalam, on 7 June outlined the economic agenda of the United Progressive Alliance government which promises to ensure that the economy will grow by at least seven to eight per cent a year for a sustained period and in a manner that generates employment and provides assured livelihood for every family.

Addressing the joint session of Parliament, the President said his Government would focus on improving income and the welfare of farmers, farm labour and workers. At the same time, economic reforms would be speeded up and further reforms carried out in agriculture, industry and services. "The reforms will have a human face and will ensure that the benefits flowing from such reforms reach the urban poor and rural areas, where the vast majority of our population lives," he said.

STEP UP IN PUBLIC INVESTMENT

Mr. Kalam said the Government would substantially step up public investment in agriculture with the focus on the backward and poor regions, and ensure that the credit-lending institutions covered the small and marginal farmers extensively. Steps would be taken to mitigate the farmers’ debt burden and the entire rural credit system would be restored to health. Investments in agro-processing industries to reduce wastage and encourage value addition would be encouraged.

The Government would ensure that farmers received fair and remunerative prices. For farm labour, effective implementation of the minimum wage law had been promised.

The address focussed on another area of concern – that of shrinking employment opportunities for the youth. The Government would adopt policies to expand employment opportunities by creating a climate conducive to investments in the organized sector; vastly expand credit facilities to the small-scale industries and self-employment and provide full support to the services sector to realise its true employment potential.

NEW JOBS PROMISED

The Government would create new jobs in other areas such as village industries, textiles, handicrafts, horticulture, aquaculture, forestry, dairying and agro-processing to benefit rural and urban youth. Besides, to keep the promise of providing guaranteed employment for 100 days in a year to at least one-able bodied person in every rural household, a National Employment Guarantee act would be legislated and implemented in a phased manner.

On health and education, the President promised on behalf of the Government to increase public spending to 2-3 per cent of the gross domestic product over the next five years in case of health and at least six percent in case of education, with half earmarked for primary and secondary education. A cess would be imposed on all Central taxes to finance the commitment to universalize access to quality basic education. The Government also promised to take steps to ensure the availability of life-saving drugs at reasonable prices.

PRIVATE SECTOR AND SC/ST

On social justice, the President said the Government would initiate a dialogue with political parties, industry and other bodies on how best the private sector could fulfil the aspirations of the Scheduled Castes and the Scheduled Tribes.

For the unorganized sector, the promise is to expand social security, health, insurance and other schemes for workers such as fishermen and fisherwomen, toddy tappers, leather workers, plantation labour and beedi workers.

The Government’s stance on labour laws has been reflected in the address. Acknowledging that some changes were needed in labour laws so that the manufacturing sector could grow rapidly with concomitant expansion in employment opportunities, the President, however, said these changes must ensure that workers and their families were fully protected. Specific proposals would be made only after consultations with industry and trade unions.

For industry, the address had some broad formulations such as actively encouraging overseas investment in the hydrocarbon industry, facilitating private sector participation in the power sector and continued encouragement to foreign direct investment. A specific proposal, however, is to provide incentives for boosting private investment. The commitment to rejuvenate the capital markets and encouragement to foreign institutional investors has also been mentioned by the President.

MAJOR TAX REFORMS

The President promised that the Government would undertake major tax reforms to significantly expand the base of taxpayers, to increase tax compliance and make tax administration citizen-friendly. But tax rates would be stable and conducive to growth, compliance and investment. Value Added Tax would be introduced in close cooperation with trade and industry.

The commitment to eliminate the revenue deficit of the Central Government by 2009 has been reiterated along with the promise that subsidies would be targeted sharply at the poor and the needy.

The Government’s stance on public sector disinvestment also finds reflection in the President’s address where it has been stated that privatization will be considered on a case-by-case basis while chronically loss-making companies would either be sold off or closed.

Successful, profit-making companies operating in a competitive environment would be granted full managerial and commercial autonomy.

Priority would be given to the development of infrastructure with encouragement to public-private partnership to expand infrastructure such as roads, ports, airports, power, railways, water supply and sanitation. Public expenditure on infrastructure would be raised and subsidies in such investments explicitly provided for in the budget.