More spending on 'people's economy'

More spending on 'people's economy'

From Neraca

On Jan. 5 President Habibie unveiled the 1999/2000 draft state budget. Irrespective of the controversy over the deficit and large financial sources as cited in the draft budget, it is wise to take into account the worries expressed by our economists about what the government's small spending budget should be spent on.

At present the government's chief income earners are sales taxes and income taxes, and the proceeds from the sale of state enterprises. Much of the budget will be used to cover the interest on bonds for banking recapitalization (Rp 35 trillion) and foreign debt installments (Rp 75 trillion).

Large funds have also been allocated for civil servants and Armed Forces members and. The government has also been planning to lift its subsidy on aircraft fuel and maintain its subsidy on petrol for people in the lower income brackets.

All in all, the government has dramatically cut spending in comparison with last year's budget. The government should in fact allocate more funds for the people's economy, namely to open up employment opportunities and promote people's purchasing power.

Stronger purchasing power will indirectly help the economy as a whole. According to data compiled by the Central Bureau of Statistics, consumers have been spending less and less. Although the proportion of spending on household necessities has risen this year, the overall demand for household needs has declined, as reflected in the sales figures.

If funds can be made available to boost the grassroots economy, one benefit will be wealth equity, that is, a narrowing of the gap between rich and poor. In this way, economic oppression and human rights "robbery" may be overcome.

So, if the government's spending budget is geared more towards the "people's economy", it will benefit the country both economically and socially. This is a belief not based on a hatred for business tycoons, but rather on social theories aimed at eliminating poverty and improving on the outdated economic policies, which emphasized growth but proved to be a failure for the country.

ANANG

Jakarta