Reformist trapeze is a tough act

  • HT Correspondent, Hindustan Times, New Delhi
  • |
  • Updated: Mar 17, 2012 01:36 IST

In the summer of 1991 India flew out 67 tonnes of gold to Europe to get $600 million dollars to tide over a dire import payment crisis. Twenty years later, it was ready to help Europe crawl out of a debt crisis as it stares into the prospect of sovereign default by Greece, the cradle of  western civlisation. The symbolism is inescapable.


Historians are likely to describe the latter part of the first decade of the new millennium as the period of coming of age in which India's economy, aided by a well-designed structural reforms programme, have come to a man's estate after two decades of adolescent angst.

But with manhood comes greater responsibility: to see modern aspirations, and the means to achieving them, are cast wider for a nation of young Indians. The trickle of welfare must rise to a flood. Above all, a new maturity must show itself in the way we go about governing ourselves.

The first term of the UPA government was about proof of concept - growth with equity - with successfully executed programmes such as the Mahatma Gandhi National Rural Employment Guarantee. Roller-coaster elephant economy

The next term will about proof of delivery.

Fertiliser and fuel prices are in the process of being fully decontrolled; negotiations are on to simplify the tax regime; disinvestment is on track with the promise of more floating stock in our bourses.

Each piece of structural adjustment faces its own dynamics of resistance, pacing out its passage through departments and ministries. The Centre is in the last stage of discussions with states for a unified goods and services tax, wider consultations as in the direct tax code and half measures like freeing petrol prices while keeping the lid on diesel.

This gradualism is more sensible than a big-bang approach. With one caveat: half measures tend to linger. A countrywide strike over fuel price hikes and protests over Big Retail will influence the pace, if not the direction, of these reforms. With the economy's growth yet to reach the levels India was used to before the meltdown, the government should turn its attention to factors that ought to raise the trend line.

 

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