ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Shortage of Saving

ON the country's macro-economic performance, there is a sudden change from euphoria to barely concealed unease. Only a few months ago government spokesmen and industry associations alike were exuding confidence that, after three years of stabilisation and structural adjustment, the economy had finally locked into a high-growth trajectory. According to this view, 1994-95 had been the turning point, with overall growth touching 5.3 per cent and industrial growth coming close to 10 per cent; from 1995-96, the economy should be expected to achieve GDP growth rates of 6 to 7 per cent per annum and industrial growth of more than 12 per cent. This exuberance seems to have been surprisingly short-lived and newspapers and other media arc full of expressions of anxiety and foreboding over the acute shortage of liquidity, the tribulations of the stock markets, the adverse impact on industrial growth of the RBFs ban on bridge loans against shares, the slowing down of the pace of economic reform in response to political pressures and so on. The government, though it says it wants to push ahead with the reforms, is clearly not so sure any more, not with parliamentary elections due in less than a year. There is visible lack of enthusiasm for many of the reform measures contemplated earlier, from opening up the insurance sector to private and foreign companies to the resumption of a modified system of forward trading in the stock exchanges. Instead, as exemplified by the budget for 1995-96, the priority is to demonstrate that the government's heart beats for the poor.

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