People first, tax later

panaji: the bjp on saturday agreed with the assessment that the government has to tighten the belt to manage the current economic crisis, but told finance minister yashwant sinha that these measures would have to be undertaken within politically permissible limits. in other words, sinha should ensure that demands of the reforms agenda don’t collide with the aspirations of their politcal constituency. this clear reminder to the minister that he would have to factor in political risk in his economic decisions came at the national executive of the bjp here. at the same time, the party took care not to give impression that it is — or will be — turning its back on reforms by offering familiar platitudes that their “commitment to the process is binding�. that sinha has to negotiate some tricky terrain the coming days was clear when the bjp asked him to reconsider “politically unviable� measures and restore the 20 per cent tax rebate under section 88 for taxable incomes between 1.5 lakh to rs 5 lakh. while appreciating the economic rationale behind the interest rate cut, the party also said the government would have to offer special incentives to the affected sections. the discussion on the economy at the bjp conclave began with the finance minister making an hour-long presentation on his budget and the inputs that went into the making of the document sinha, defending measures like the interest rate cut, told the executive that it was accepted methodology — the only one that can boost demand in sectors like housing. forcefully rebutting charges that the government had “abrogated contracts with domestic constituencies like employees and pensioners,� he said it was untenable to offer higher interest rates on savings. senior party leader bhairon singh shekhawat, seeking to counter this argument, said the concern of a democratically elected government should be to reach out to the common man. “he should have the feeling that we are mindful of his concerns and without his support no policy can succeed�. summing up the discussion, party president jana krishnamurthy echoed this feeling and said as a political party, the bjp would have to take into consideration the political impact of the government’s economic decisions. on his part, sinha reiterated that tough measures were required to take india out of the present mess. referring to the subsidy bill he said the government would have to prune it as the nation cannot afford to waste a single investable rupee. “the slowdown is posing a challenge. the country is facing rising burden of interest payment. the fiscal situation is such that the total revenue receipts of rs 2,12,572 crore in 2001-02 would fall short by rs 17,982 crore to meet even debt servicing at rs 2,30,554 crore let alone enabling the government to meet current and developmental expenditure. it is a difficult situation,� he said. while agreeing with sinha, the members said there was a need for right sequencing. they said the first target should be the recovery of tax arrears - income,corporate, excise and custom duties - with tough measures. they also called for steps to contain npas. it also asked the government to clearly distance itself from the pricing process of petroleum goods.