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     II      PP                       SS      GG     GGGGG  
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     II      PP               SSSSSSSSS          GGGGGGG


   Newsletter of the Indian Progressive Study Group, Los Angeles

                             August 1996

India's Budget: A New Push 
for Economic "Reforms"

The newly elected government of India presented its budget proposals and 
a host of other policy initiatives to the Parliament for approval in late 
July. It had been anticipated that the budget will give a glimpse of how 
the new government will change the direction of "liberalization and 
privatization" pursued under the Congress(I) regime. The budget and all 
other initiatives have confirmed that there is no substantive change in 

The policies of the UF government build upon the measures that already 
had been taken by the previous government to privatize different sectors 
of economy; banking, infrastructure and agriculture sectors are being 
brought into this "market oriented" approach under the new government's 
policies. A plan to sell off major public sector units has been 
initiated. To deepen the "privatization and liberalization" programs, the 
state governments are also being brought into play. Both revenue sharing 
channels as well as the Planning Commission mechanism are being fine-
tuned for the purpose. The withdrawal of the central government from 
direct responsibilities in sectors such as transport and commerce, 
education, health care etc. is continuing under the new government, and 
the private sector is being given tax concessions and other incentives to 
develop these sectors. 

A large section of people were opposed to reforms of the previous 
Congress(I) government. The image of a "left leaning" government is now 
being used to create an illusion that they need not reorganize their 
forces or challenge the continuation of these "structural adjustment"