Chennai: Expressing concerns over current economic situation, India Cements Vice Chairman and Managing Director N Srinivasan on Friday said UPA II government at Centre was suffering from "what people refer to as policy paralysis". He, however, also lauded the economic reforms initiated by the Narasimha Rao government in 1991.
The result of the economic reforms proposed by Prime Minister Manmohan Singh, then Finance Minister in the Rao government, allowed Indian consumer to make a choice among brands and services hitherto not available. Srinivasan was delivering the T S Narayanaswami Memorial Lecture on 'Growth of Indian Industries-Post Independence' at Alagappa College of Technology here.
Singh "instituted a lot of reforms which brought about a sudden about-turn. After nationalising banks in the 1960s, in the 1990s, government was licensing private banks. Caps were lifted on foreign investment and FIIs could come into the country," he noted.
Such reforms, necessitated in the wake of weak Forex reserves then, amounted to not only "allowing the bird out of the cage, but also to fly," he said. However, little seems to have been learnt from that experience as UPA II was suffering from "what people refer to as policy paralysis", he said while expressing concerns over the current economic scenario.
"There is large fiscal deficit, high inflation and the interest rates are flying high. The economy needs a real doctor like there was in 1990 to cool down inflation, bring down interest rates and increase productivity which is very very important."
Srinivasan said government expenditure has to be pruned as "wasteful expenditure has to go." On the rupee depreciation issue, he called for steps from the government, saying its value had come down drastically over the years, from Rs 5 against USD 1 to the latest of over Rs 60.
Srinivasan traced the growth of Indian industry after Independence, recalling the government investment on heavy industries in the first three Five Year Plans, later Indira Gandhi adopting certain socialist measures like nationalisation of banks and the Rajiv Gandhi government giving better priority to the Industry sector.
He also praised the growth of the Indian IT sector, but said little effort has been made to develop indigenous technology in various fields. To address this issue, he called for more industry-academia collaboration, like in countries such as US where companies sponsor lot of research activity.
"We are tough and brainy but are not working in the right direction," he said.
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