In the event the principal concern of the Economic Survey is not to derive the implications of recent trends in economic performance for budgetary policy but to make the document another attempt to defend reform. Much time is spent on making a comparison of growth during the pre-reform (1980-81 to 1991-92) and post-reform (1992-93 to 2000-01) years. There are three points to be made about this comparison. First, the figures suggest that though GDP growth “improved” from 5.4 per cent in the first to 6.4 per cent in the second, almost all of this is the result of a sharp increase in the rate of growth of services. The rate of growth of services GDP rose from 6.4 to 8.2 per cent between these two periods whereas in the case of agricultural and industrial GDP, the comparable growth rates during the two periods were 3.9 and 3.3 per cent and 6.3 and 6.5 per cent respectively. That is, if at all the Survey’s delimitation of the post-reform years is acceptable, there is no evidence of a revival of growth in the commodity producing sectors after reform.

Second, the sharp rise in services GDP is by no means largely a reflection of new dynamism in sections of the services sector such as financial services and software & IT-enabled services. Rather, it appears to be in significant part due to increases in public sector incomes ensured through the much-delayed implementation of the Pay Commission’s recommendations. Not surprisingly, after the three years (1997-98 to 2000-01) during which these recommendations have been implemented in staggered fashion at the central and state levels, there are signs of the rate of growth of services GDP decelerating.
 
Finally, the choice of what the Survey terms pre- and post-reform years is driven by the need to dress up the post-reform figures. The year 1991-92 is included in the pre-reform years, though the reform was launched in July 1991 and the IMF-stabilization induced compression in growth occurred in 1991-92. GDP growth in that year stood at 0.9 per cent, industrial growth at – 4.5 per cent and agricultural growth at – 2.0 per cent. A case could have been made to drop 1991-92 altogether from the growth comparison. But to have chosen to make an extremely poor year the terminal year of the pre-reform growth calculation is to resort once more to the many ways in which statistics are being doctored by the government to defend the reform. Unfortunately for the mandarins at the Finance Ministry, even this has not proved too helpful.
 
This strenuous effort to defend the reform is not without purpose. It is aimed at shoring up a bizarre three-step argument incorporated in the survey. The argument goes as a follows. First, it is argued that post-reform growth has been better than pre-reform growth. Second, it is shown that more recently growth has been slackening. Third, it is argued this calls for an acceleration of reform in the form of accelerated trade liberalization including agricultural trade liberalization, massive privatization, removal of small-scale industry protection, drastic revision of labour laws, and a host of other similar initiatives. The Economic Advisory Council in its recently released report had launched this campaign for an acceleration of neoliberal reform, despite the strong evidence that it has been a failure. The Survey only carries further that campaign to enrich segments of domestic and international capital at the expense of the country’s poor agriculturalists, workers and small producers.
 
The implication is clear. This budget would fail to take up a major opportunity offered by current economic circumstances to redress the further depredation of the poor unleashed during the years of neoliberal reform. That opportunity stems from two sources. First, the accumulation of huge stocks of foodgrains, estimated at close to 45 million tonnes, with the government. Second, the comfortable foreign exchange reserves position of the central bank, with its foreign currency assets alone amounting to $41 billion. When foodstocks are aplenty and foreign reserves comfortable, the maneuverability of the government is substantial. It can undertake expenditures without the perennial fear that plagued it in the past that such expenditures, by raising employment, incomes and the demand for food, could create a food shortage that triggers an inflationary spiral. And even if the economy, in the wake of such expenditure, runs into temporary supply bottlenecks in particular sectors (such as say, sugar, edible oils or onions), the available foreign exchange reserves can be used to resort to imports to ease supply and dampen price increases. The danger that expenditure increases on the part of the government would trigger inflation hardly exists.
 
This ability to increase expenditure without triggering inflation constitutes an opportunity because it arises in a context where demand in the economy is sluggish and poverty remains high. And there is little disagreement on the fact that the sluggishness in industrial growth is a result of slackening demand growth in the system.
 
Since a decade of reform has not triggered the promised export boom, which would have served as an external stimulus to growth, domestic demand generation is a must for a revival of growth. There is no other instrument that is likely to be more successful in stimulating increases in demand then higher government expenditure. And such demand increases are unlikely to spur inflation, given the comfortable food stock and foreign exchange reserves position referred to earlier.
 
What is more, the availability of food stocks with the government can be used to ensure that a part of state expenditure could raise employment substantially, by being allocated to food-for-work programmes that build much-needed rural infrastructure. Higher employment in such programmes has and will impact positively on poverty, the incidence of which the available comparable estimates show, has remained stubbornly unresponsive to growth during the 1990s.
 
But given the interests the current government serves this opportunity would be left unexploited. Change after all is not driven by economic logic. It requires the creation of a political environment that can advocate and implement reform of the kind that serves the interest of the majority of Indians.