Retrospective contemplation over the developments in the past
few decades raises a fundamental question as to why we allow
ourselves to take decisions on crucial matters only in a driven to
wall situation.  We are aware that the path breaking decision in
1991 for liberalization of Indian economy was not a part of well
thought out strategy.

With nil foreign exchange reserves and the possibility of country’s gold being mortgaged
was indeed a moment of serious crisis.  Since we were without an option, we did it.  Again,
initially at the time of signing of WTO agreement, it happened the same way.  The industry
was not taken into confidence before signing.  The government decided it and industry was
informed about it.  One may not dispute the merit of the decision, but the desirable principle
or methodology of consultation should not be ignored.  There are quite a few similar
instances of this nature.

Refraining from citing any further illustrative examples, the fundamental issues is that the
industry is as much a part of the national mainstream as any other sector, and as such,
should be essentially consulted, particularly on matters which directly impact it.

Why cannot the government, on crucial matters, take the Chambers of Commerce into
confidence for ascertaining the problems trade and industry would face. We urge the
government to take the Chambers of Commerce into confidence on all economic matters
including legislation, changes in taxation systems, investment policies and so on.  This
would afford the government to ascertain the problems trade and industry would face and
to consider the suggestions industry may have to offer.  In any case industry gets educated
on the policy perspectives the government might be intending to pursue.

Vexatious issues of reduction of agricultural subsidies and the Singapore issues remained
the core subjects at the last WTO meet at Geneva.  While the success achieved by India at
the meet is indeed welcome, it remains to be seen as to how the developed economies
would commit themselves for reduction of agricultural subsidies.  Three Singapore issues
have been dropped but it appears that this state of suspended animation may be a
temporary phase.

The rising trend in the price of crude oil is again a matter of grave concern. The recent
reduction in the customs duty is only a peripheral action, viewed from the long term of point
of view.  Apart from the cosmetic corrective measures, it is time to contemplate for a more
effective solution.  It calls for greater emphasis on development of alternative sources of
energy, both petrol/diesel and electricity.  It is imperative that encouragement is given to
greater utilization of bio-gas, other non-fossil sources like use of industrial alcohol and
tapping solar untapped hydro and wind sources.  Oil prospecting also needs to be speeded
up.  Conservation could not have been more relevant than now.  It should be adopted and
implemented as a national cult.

Another matter of concern is the rising inflation, even though, we are told this may last, for
a short term.  Inflationary pressures, it has been observed, do not disappear so quickly.  
Even in the medium term, the increased inflation would certainly impair the competitive
capacity of Indian industry and might cast shadows on the economic growth targets.  We all
know that the present inflation is driven, in the main, by rising commodity and oil prices as
well as an increase in the prices of primary products owing to deficient rains.  While
appropriate policy responses to a difficult international situation per se would be difficult,
some fiscal correctives would certainly be in order.  While the government should be
complimented for slashing duties on petro products and steel, this needs to be followed up
by reducing duties on edible oil as well.  The government has so far refrained from taking
recourse to monetary policy instruments of changing bank rates which is welcome at this
juncture as rise in interest rate would be countryproductive especially at a time when
industrial recovery is still at a nascent stage.  Presently, this is not even necessary as there
is no sudden spurt in money supply growth.

The Independence Day speech of Dr Manmohan Singh, Hon’ble Prime Minister of India
spelled out the seven point strategy to spur country’s economic development was indeed
reassuring.  Also, the Presidential address on the eve of Independence Day laid stress on
strengthening the education system to encourage high value and productive employment
opportunities is indeed welcome and the industry looks forward to a strategic action plan.  
We, at PHDCCI, are determined to extend full support and cooperation to the action plan.

We do look forward to the important announcement of the Foreign Trade Policy and hope
that the policy would inter alia include measures which would enhance Indian Industry’s
competitiveness.  Measures are called for supporting exporting community’s efforts to
diversify entry in new markets as well as enlargement of export basket.  Export transaction
cost, as per Chamber’s study, is close to 15 per cent and steps and therefore called for
reduction of this negative factor.

(Ravi Wig)
President