With the trust vote won, a reinvigorated government is keen to revive its stalled reforms before its allotted term comes to a close. That is music to our ears at a time reforms are desperately needed to keep double-digit inflation under check and to bolster flagging growth. In Parliament on Tumultuous Tuesday, the Prime Minister had stated that the ‘trust vote debate’ was a ‘diversion’ from high priority areas of national concern like tackling imported inflation without hurting growth. The good news is that oil prices are declining. But they remain high. How the government deals with this problem is worth watching as monetary measures have so far not checked runaway inflation.
Among the reforms, disinvestment or partial sales of equity of public sector undertakings (PSUs) is the one that can get off the blocks the quickest. This can also serve to boost business confidence and revive the stock market. The Finance Ministry is contemplating selling minority stakes in 10 central PSUs by listing them on the bourses. At a time when the bellwether Sensex has been rising by over 2,300 points over the last five days, the D- word will certainly buoy market sentiment. Such an exercise also raises resources to fund another pressing priority: firming up flagship programmes like the National Rural Employment Guarantee Scheme and Bharat Nirman.
During the next three months, further liberalisation of the regime for foreign direct investments in retail, telecom, insurance, banking and more flexible labour laws are also likely. But these will take time to pass through Parliament. To make up for this delay, the government must fast-forward the deliberations of the 80-odd Group of Ministers that went into every major policy issue that eluded consensus (read: blocked by the Left). The UPA must take advantage of its newly acquired ‘independence’ to push these through to revive investor interest and put the economy on a faster, steeper growth trajectory.