Addressing the managing committee of PHD Chamber of Commerce and Industry (Phdcci), Ramakrishna criticised the Union Budget 1998-99 stating that it did not prepare the Indian economy for facing the impact of sanctions. Had the government resorted to disinvestment through strategic sale of shares of the 105 loss making units running up losses of Rs 6000 crore per year, it would have managed to generate interest of foreign investors in India and Moody's could have taken note of this, he added.

Ramakrishna stressed that along with strategic sale of shares, the transfer of management of the PSU to the highest bidder -- foreign or domestic -- should have been taken up in the Budget itself, since Pokhran-II had given rise to the impending sanctions scenario.

The Disinvestment Commission has recommended 21 cases of sale to strategicbuyers, and three cases have been taken up. However, no financial adviser for the sale has been nominated and work has not progressed.

Since, strategic sale of PSUs did not depend on capital market conditions, the government should expedite its decision making on this proposal and implement it in a professional way, he said.

Regretting that one common feature of all Union budgets is that every finance minister leaves the burden on his successor, the Disinvestment Commission chairman said that the dream Budget of 1997-98 failed and there was a reduction in every aspect of revenue generation. "Only revenue deficit went up as did the fiscal deficit (by 47 per cent) by the year-end."

Ramakrishna added that one aspect which needed careful handling was the area of direct taxes wherein income tax has been reduced to 30 per cent. The US has a income tax rate of 52 per cent. It was thought that reduction in income tax rate would generate more revenue. Sadly, income tax collections were down by 14 per cent evenafter VDIS.

Ramakrishna said the current Budget is inflationary and flip flop in nature as the advise of the industry was taken too seriously. The government did not take into account the depreciation of the rupee. However, other factors like stepping up investment in power and agriculture sector, reform in the electricity tariff, incentives to NRIs, repeal of Urban Land Ceiling Act, opening insurance sector and some major decisions in the financial sector should prove beneficial. If the government takes the right decisions and introduces reforms further it can achieve a growth of 6.5 per cent, he told Phdcci.