Sir,

It is unfortunate that none of the political parties has suggested what steps it will take to reduce deficit financing, external debt and internal debt in its election manifesto. On the contrary, each manifesto has given promises, which will make the country bankrupt and fall into the debt trap.

In 1980-81, the deficit financing added up to only Rs.281 crores. In the 1990-91, deficit financing of about Rs.7,250 crores for the year was estimated but at the end of the year, there was a deficit of Rs.13,000 crores. The external debt service ratio has deteriorated from 9.2 per cent in 1980 to 24.2 per cent in 1990. It means that 30 per cent of the earnings from exports will have to be utilised in the payment of interest. The position of internal debt is also precarious. In the 1990-91 budget, interest payment of internal debt in a single year has increased by Rs.5,000 crores and we have to pay Rs.27,000 crores towards interest on internal debt per year, namely, on Public Provident Fund, National Savings Scheme and other such borrowings.

The new government will have to take unpleasant and hard decisions regarding reduction of subsidies, freezing of wages and dearness allowances removal of monopoly of public transport and adopt ways to utilise petroleum products economically. The new government will also have to introduce new schemes for black money and reduction of income tax to 35 per cent and delete deductions which create liability of payment of interest and also reduce collection of income-tax. Implementation of planning should be postponed for two years, because only 15 per cent of moneys reach to the poor and the rest is distributed amongst politicians, bureaucrats and middle-men. The new government will have to establish maximum austerity measures, failing which, India will enter into debt trap in the year 1993-94 from which there will be no escape road to survive.

VASANT J. DESAI
AHMEDABAD.

DATE : 10/05/1991.
TIMES OF INDIA.