favourable for the economic reformers lobby. The reformers seem now determined not to brook any dithering or hesitation on the honouring of the international obligations of the government or the logic of the privatisation-globalisation process. Finance minister P Chidambaram sees the inflow of foreign funds by way of direct and portfolio investments, deposits and credits as the only panacea for the ailing and stunted Indian economy. The adverse implications for the balance of payments position do not bother him. This is the same mindset that has driven him to cut domestic taxes for the rich without making in his budget 'conventional' estimates of the revenue losses for the government on this account. But the balance of payments problem is not something which can be cavalierly wished away. India's exchange reserves are only seemingly large. They arc not composed of dollars earned. They are almost entirely based on the accumulation of borrowed funds which have been frozen by the Reserve Bank of India and have not been used as in the past for investment or social welfare, albeit inefficiently. The major portion of reserves is composed of the volatile portfolio investment and unreliable NRl deposits. The reckless commercial borrowing to push up the economic growth rate in the second half of the 1980s resulted in the external payments problem in 1991. The imprudent reduction of tariff barriers and lifting of quantitative restrictions on imports in the second half of the 1990s may in the prevailing conditions when reserves can easily melt and exports are not picking up, push India into a far more grave balance of payments position into a couple of years. Combined with the planned decline and, eventually total stoppage of public investment in industry as well as agriculture, prospects for economic growth, let alone social justice, will be blighted.
