Lesson 8 Don't Stop Now

1. Lesson 8 Don't Stop Now

2. I．Teaching Points: • 1. the economic reform in India • 2. the ruling Congress Party's losses in recent state elections • 3. the prospects for the Indian economic reforms • 4. the terms: the currency floated, Gross domestic product, fiscal deficit, foreign exchange reserve, current-account deficits • 5. the difficult sentences in the text

3. II. Teaching Aims: • 1. let the students understand the situation of the Indian economic reform • 2. let the students understand the influences of Congress Party's losses in state elections to the economic reform • 3. let the students understand the different viewpoints about the prospects of the Indian economic reform • 4. let the students understand the terms: the currency floated, Gross domestic product, fiscal deficit, foreign exchange reserve, current-account deficits • 5. let the students understand the difficult sentences in the text

4. III. Teaching Process • 1. Introduction to the Text • India has been undergoing economic reforms since Narasimha Rao took office as the Prime Minister in June, 1991. In the past three and half years, some achievements have been made. But with the ruling Congress Party's losses in recent state elections, what are the prospects for the economic reforms? // This is the key question dealt with in this article.  // In the course of discussion, the author makes it clear to the reader that with the political pressure from the opposition party and some economic problems such as inflation, the pace of reform will slow down and no major steps will be taken in the near future. •       This article is characterized by heavy quotations from many people showing their different opinions. It is necessary to help the students to make out where the author stands.

5. 2. Reading for gist • Read the text with about 15 minutes, and then try to answer the following questions: 1)．What progress has India made in its economic reforms in the past 3 and a half years? 2)．What happened recently that gave rise to doubts on the pace and scope of the reform? 3)．What’s the government policy on food prices and subsidies? How does opposition politician Rama Rao take it? How do most economists look at it? 4)．What actions do many businessmen and economists want the Indian government to take? Does the author think the government will act accordingly? 5)．How serious is inflation in India today? How differently do pessimists and optimists predict its future? 6)．What is the effect of foreign investment on Indian economy? 7)．Why can’t the budget deficit be reduced since tax revenue this year is the best? 8)．What does the current pace of reform mean for India in general?

6. 3. Detailed Study of the Text • India is three-and-a-half years into a transformation (reform) of its economy. Licensing procedures (procedures for approval of the use of licenses) have been simplified, the currency floated (the Indian currency has been floated. The foreign exchange value of the currency has been permitted to vary in accordance with market demand,实行了浮动汇率制度), and large areas of the economy opened to foreign investment. Prime Minister P. V. Narasimha Rao's government has also started selling minority stakes in public enterprises(sums of money invested in public enterprises. Once invested in an enterprise, they are turned to be assets of the enterprise. So stakes in public enterprises actually means assets of public enterprises expressed by shares 公有企业的资产) (selling a small part of stakes. This helps raise funds from the private sector to strengthen public enterprises without giving up the state control over them). As a result, capital flows (capital flows consist of capital inflow and capital outflow. Here it refers to capital inflow or net capital flows, i.e., the result of inflows minus outflows) have risen exponentially (greatly. This meaning is derived from algebric word "exponent <指数>", and the word "exponent" has other meanings, such as 解释者, 说明者, 代表者, 典型.  e.g.,  an exponent of a theory (explainer), an exponent of self-education (a typical example), an exponent of the civil rights movement (an advocate)) since 1991, GDP (See note 2) growth is expected to be a healthy 5.5% in fiscal 1994-95 (1994-1995财政年度，See note 3) (ending on March 31) and industrial output (工业产出) is expected to climb (increase) 11% . • --------------------presents the facts: Indian economic reform and its achievements.

7. But for all this progress(in spite of, although there is, this progress), the pace and scope of reform look increasingly uncertain. The doubts have risen since Rao's ruling Congress Party (Rao is the leader of the Congress Party <国大党> which is the ruling party at the time, that is, forms and controls the government) suffered jarring election defeats (unexpectedly shocking defeats in state elections. jarring: adj.刺耳的, 不和谐的) early in December in two big southern states. In a sign of populism's (politics based on an appeal to popular sentiments 民粹主义. Its supporters are called populists) receptive (receptive: adj.善于接受的, 能接纳的) chord (figuratively: metal feelings, sentiment) among voters (in a sign of a populistic sentiment among voters who are ready to accept new ideas for their interest), opposition politician N.T. Rama Rao rode to victory (went to victory, gained victory) in Andhra Pradesh state with claims that reforms rob the poor to benefit foreign investors and the wealthy (选民中出现的民粹主义变革情绪，使反对派政治家拉马·劳在安德拉· 布拉德希州大获全胜，声言改革是劫贫利洋，是劫贫济富。). • ---------------------the ruling Congress Party's losses in recent state elections---political pressure---affected the economic reform (政治对经济的影响)

8. Jar:She was greatly jarred by the sad news. (be shocked)The giant's heavy footsteps jarredmy table. (cause to shake)We did not get on well together; his opinions always jarred with mine. (disagree with)His laugh jars on my ear. (has a harsh, unpleasant effect)Family jars are not uncommon. (quarrel) •         Such claims prosper because the government has found it difficult quantify (quantify: vt.确定...的数量, 表示...的数量; 用数量表示/使量化) reform's rewards for the common man (to indicate benefits brought about by reform for the ordinary people in terms of quantity). (这种说法之所以盛行是因为政府很难以具体数字表明改革给民众带来的好处。) "That 11% industrial growth must be creating jobs (must mean the increase of employment), " says a senior Finance Ministry official. "But we don't have any reliable employment figures. "

9. The government's problem is partly that reforms are incomplete. Rama Rao, for instance, promised voters in Andhra Pradesh even heavier subsidies on rice, responding to the pinch ordinary consumers feel (the suffering or stress that ordinary consumers feel.  pinch: 困苦；穷苦 feel the pinch 苦于缺钱) from the 60 % increase in grain prices that the government has given farmers over the last three years. (farmers---the producers of rice/ grain,,, ordinary consumers---the consumers of rice/grain, who are at the same time the voters------pay attention to the different"interested groups" here. 注意这里不同的“利益集团”以及这些“利益集团”对选举的影响------经济对政治的影响) • Pinch:to feel the pinchof hunger (feel very hungry)to be pinched with cold and poverty (suffer from)to bepinchedfor cash (be short of)

10. Economists point out that for New Delhi (capital of India. Here it stands for the Indian government) to follow Rama Rao with more food subsidies (主语)would swell the government deficit (increase the government spending than its revenue. More food subsidies mean an increase in government spending, which increases the aggregate demand, thus being a cause of inflation)—itself a cause of inflation—and would probably be ineffective. Most central-government food subsidies are enjoyed by middlemen, notably the 200, 000 bureaucrats in the Food Corp. of India (officials in governmental institutions at all levels in connection with food in India) who administer (v. manage, run, operate) government stockpiles (stockpiles of food, reserves of food for use during a shortage 粮食储备) (This sentence implies corruption of officials is rampant in India).

11. Upcoming elections in other states may reinforce the government's caution. An opinion poll (a survey to discover trends of public opinion) for Frontline, a Madras-based magazine that correctly predicted the southern reverses (predicted the southern reverses in election, referring to the defeats of the Congress Party in election in the two southern states), points to a Congress Party loss (shows the Congress Party will be defeated) or a hung state assembly (a suspended state assembly 悬而未决的州议会, which happens when no party gets the necessary number of seats required by law), in February's elections in Maharashtra, India's industrial and financial power­house (industrial and financial center). Either outcome would dampen the party's chances (Either the Congress Party's loss or a hung state assembly would reduce its chances to win in national elections) in national elections next year.

12. The questions Indian businessmen ask now: "Will Prime Minister Rao's resolve on the reforms waver (Will Rao become less determined in carrying out the reform?)? Could he be toppled by (could he be overthrown by) more compromising, populist Congress rivals even before the elections? In an interview with the REVIEW in January, he confidently declared " There is no worry at all of any kind. " Earlier, at the Confederation of Indian Industry's centenary meeting (at the meeting to mark the 100th anniversary of the Confederation of Indian Industry 印度工业联盟) in Calcutta, he vowed reforms would continue.

13. Yet doubts persist (doubts continue to exist) about the momentum of change (the impetus, the driving force of change 变革的势头).  "It's just brave words, " a director of one of India's biggest business groups says of the Calcutta speech. "It has to be backed up with action.”   • The situation should soon become clear. Finance Minister Man rnoharn Singh, Rao's chief reformer, is now preparing the 1995-96 budget for delivery in late February. This is the government's last chance to usher in major changes before the national election contest heats up (to announce major reforms before the national election contest becomes intense).

14. Many businessmen and economists want more action. Singh introduced several reforms after the 1991 debt crisis, and spelled out others (worked out other reforms) in July 1993. But the pace has slowed. Critics say the government hesitates to disturb powerful vested interests (interested groups that are vested with, or given by law, special interest 既得利益集团) like farmers' associations and public-sector unions. • "Everyone thinks great reforms have been done, but that is not absolutely true, " says Ashok Desai, Singh's chief economic adviser until he quit two years ago in frustration at the slowdown. "All that has been done is stabilization. Proper reforms mean creating competition, creating an arms-length relationship (creating a not-too-close relationship. In such a relationship, the government does not control businesses too tightly but let businesses do their own business. This expression derives from "keep sb. at arm's length", which means to "avoid being familiar with sb. or keep sb. at a distance".) between government in­stitutions and business, changing employment patterns, freeing trade. These things the government has hardly done. "

15. Economists mainly want the government to start putting consumers above farmers. Desai advocates (speak publicly in support of) dumping grain stocks (supplying large quantities of reserved grain at a lower price) to slash prices and curb inflation (to cut down food prices greatly and restrain or hold back inflation), as well as freeing food and consumer-goods imports from bans and controls (lifting bans or restrictions on, or removing controls over imports of food and consumer goods). "Who matters more electorally, farmers or consumers? It seems to me consumers would win hands down (consumers: would win easily, are more important in the election). There are far more consumers than sellers of grain, even in rural

16. S. L. Rao, director-general of New Delhi's National Council Applied Economic Research (新德里全国应用经济研究理事会理事长),   suggests lifting restrictions on farm Products.   "I would like to see a complete reform of primary products (agricultural products 农产品. Primary products may also refer to agricultural products, minerals, and other raw materials as a whole 初级产品 that are used for producing manufactured products.), to allow free imports of edible oils,   pulses, even rice and coarse grains (食用油、食用豆类、大米和粗粮) so we can get the benefit of lower prices. " • Unlikely.   More  probable  are  attempts  to  raise  benefits  for lower-income groups in response to the election setbacks. Government leaders have already talked of putting a more "human face" on reforms (giving more consideration to, or showing more sympathy for the poor in reforms). The research council's Rao foresees "a substantial increase in programes for cheap food for the real poor. " But the govern­ment is so inefficient it cannot translate more funding into better welfare, he says.

17. If the government goes this route without taking supply-side action (taking actions on the supply side, that is, to increase the supply of products) such as releasing food stocks, inflation would remain unchecked. At 10%, it's already punishing the bulk of (more than half of, the greater number of) India's 900 million people, who have little to sell but physical labour in an over-supplied market. • Desai, now an investment consultant (an expert who provides advice on investment 投资顾问) and one of India's most rigorous pro-market commentators (a person who speaks or writes in firm support of market economy), thinks inflation could hit 15% by mid-year "if the government makes enough mistakes/ This could widen the trade imbalance, as exporters would get better prices by selling their goods at home? imports are already growing far faster than exports. "The best news was 19945 1995 will not be as good and 1996 will be worse, " says Desai. He predicts the trade deficit will double to about $ 2 billion in 1994-95.

18. Some analysts are less pessimistic. "I don't see an inflationary crisis looming for India (don't see an inflationary crisis threatening to come for India), " says Ajay Shah, director of Bombay's Centre for Monitoring the Indian Economy (孟买印度经济监测中心主任). • Finance Minister Singh also insists inflation isn't a worry. He recently predicts the rate will fall in coming months, citing bumper crops, a "recovery of industrial production, sustained upward trend (trend that continues to go upward) of infrastructural sectors, comfortable foreign-exchange reserves (See note 4) and liberal trade regime (a free and open system of trade). "

19. For sure, inflation is partly the result of rising capital inflows (Why so? When foreign capital flows in, it is converted into Rupees for use in India. More capital inflows increase the demand for Rupee, which tends to cause Rupee to appreciate and its exchange rate to go up. However, if Rupee's exchange rate should go up, it would be harmful to India's export and further inflows of foreign capital. So the central bank maintains the exchange rate by putting in more money to increase the money supply, thus causing inflation to occur. Notice that the whole process is not as simple as is described above, and it is a dynamic process rather than a static one. And there are other factors such as interest rates that influence capital flows.) -- a sign of strength. Foreign investment-in India hit  $6.5 billion in the first 10 months of 1994, tip from $338 million in 1991. To maintain the exchange rate, the central bank gives 31. 37 rupees for every dollar brought in, creating additional money.

20. But this pressure is easing (the pressure from capital inflows is becoming less tense). Net foreign investment in Indian stockmarkets (the difference between foreign investment made in India's stockmarkets (by buying securities) and that withdrawn from India's stockmarkets (by selling securities)) reduced to a trickle (reduced to a tiny amount. trickle: a thin flow in drops) in November and December, and many Indian companies delayed Euro-issues (postponed issuing stocks in Eurocurrencies). Economist Desai thinks "heavy-handed regulation (severe and unjust regulation)" has dealt stockmarket liquidity (stockmarket's ability of being liquid, the buying and selling on the stockmarket) a funda­mental blow. But Pradeep Shah, head of Bombay-based Ind-Ocean (Indian Ocean) Venture Capital (risk capital such as capital invested in equities 风险资本), says the slump is temporary (business inactivity of India's stockmarkets will last for a short time only). "A correction was long overdue (There should have been a change for a long time) and there was an enormous supply of new issues (there was a large supply of newly-issued stocks available for investors), " he says. "There's perceived uncertainty in politics (He seems to refer to uncertainty in politics in India. When people have perceived the scope of uncertainty in politics, they can take pre-cautions to deal with it). U. S. interest rates went up, then Mexico happened (When U.S. interest rates went up, American equity investors would find it less profitable to invest in the stockmarket at home and would therefore seek to invest in overseas markets. The Mexico financial crisis that happened recently (Dec. 1994) has the similar effect on equity investors here. The two cases imply that international investment environment is favorable to Indian stockmarkets). I see a turnaround at budget time (I think Indian stockmarkets will turn for the better in late February when the government makes its 1995-1996 budget). "

21. heavy-handed: severe, domineering, treating others harshly. (e.g. a heavy-handed father); awkward, clumsy (e.g. heavy-handed humor) • The unprecedented inflow has left many local analysts content with partial reform. The trade and current-account deficits (See note 5) are still tiny, and more than covered by the capital that has come into the country. Companies still have to borrow from banks at 14% interest, but that's 5 or 6 points lower than three years ago. • Industrial-output figures to be released soon will show an 11% expansion. Combined with good harvests, this means GDP growth could build to an average of 6. 5% a year for the rest of 1990s. This may not be much for people used to the growth rates of China or South Korea, " says the senior Finance Ministry official. "But it's definitely not a level associated with India. That's the reforms. " (GDP growth in 1993 was just 3% .)

22. Buoyant tax receipts (increased tax revenues 税款收入) allow the government to feel relaxed about its budget-deficit target.   Revenue (government income received from tax collections) has been running about  18% above projections (above the budgeted figure) as a result of lower and simpler tax rates (How can lower tax rates result in higher revenue rather than lower revenue? This is explained the Laffer Curve 拉法曲线, which shows that raising tax rates may not necessarily always increase revenue. Above a certain rate, the higher the tax rate is, the lower the revenue).  And Singh is expected to take further adjustment this year.   In theory, says Desai, this could allow him to eliminate the "primary" deficit— the gap between receipts and spending before interest payments (payments of interest by the government for due national debts) are counted.

23. Hardly does anyone think this will happen, though, because of pressure for higher social spending. "I don't see an opportunity for much progress on the fiscal deficit, " says the economist Shah. "This is the best year for revenue collection, but this happy state of affairs (referring to the highest revenue collected this year) is likely to be squandered in terms of expenses (to be wasted on government expenses. If revenue is wasted on more government spending, there will still be fiscal deficit). " • Most analysts expect the forthcoming budget to contain only incremental (having to do with an increase in quantity only) or token reform (to limit itself only in quantitive or symbolic reform) in areas like banking, customs duties, non-tariff barriers (非关税壁垒, all government measures except tariffs that restrict free trade, such as quotas, voluntary export restraints, discriminatory government purchase policy, and discriminatory technical standards), taxes and subsidies—meaning competition will increase only slightly.

24.    "There's too much of these policies being worked out in smoke-filled rooms, "  says Shah.   "It should be made more transparent." What does the current pace of reform mean overall to India?  " I think it's good enough,   given our number of extremely poor and destitute (having no food, clothes and other things that are necessary for life) people (considering, taking into account, the number of our poor people)," says the economist Rao. Shah thinks GDP growth of 5 % or so is the poor scenario (is a poor picture of, a bad description of development);  the better one is a return to the faster pace India briefly hit in the 1980s. But perhaps it's a sign of how far India has come that in the midst of a political crisis,  people expect a high level of fiscal discipline and well-mapped reforms. •                         ( Far Eastern Economic Review, Feb. 2,  1995)

25. Homework • 1. Exercise II, V. • 2. Oral Work: • (1). Try to retell the text from your own angle / the different angles • (2). Your viewpoint on the Indian economic reform under the situation that the ruling Congress Party lost the recent state elections • (3). Taking the text as an example, discuss the relations between the economy and the politics or the interaction between the economy and the politics.