The Hindu : Deja Vu on Economic agenda

Online edition of India's National Newspaper
Wednesday, Jul 17, 2002

Opinion

Opinion - Editorials

Deja Vu on Economic agenda

IF THERE WERE any hopes that last week's meetings of the Prime Minister's twin economic and business advisory councils would reveal a new determination on the economic agenda, then, going by the Prime Minister's speeches to the two bodies, these will surely have been dashed. A sense of drift has been the prevailing mood in recent months, occasioned, first, by the Government's preoccupation with external matters and, second, by the uncertainty about the position of Yashwant Sinha at the Finance Ministry. But last week's meetings do not signal any revival on policy formulation or implementation. What we have instead, soon after the change of guard at the Finance Ministry, is a sense of deja vu. Priorities that were listed before, not just in earlier meetings of the Advisory Council on Trade and Industry and the Economic Advisory Council, were laid out once again, with the occasional new idea borrowed from abroad. Economic agents who may have hoped that the Government would capitalise on the stirrings of a revival in the economy to give a new thrust to policy will be left wondering if there is indeed any road map for an acceleration in growth.

The eight-point agenda that Atal Behari Vajpayee presented to the EAC for attaining an 8 per cent annual growth rate is a familiar one. The need to promote employment-oriented growth, reduce subsidies and institute independent and transparent regulatory mechanisms have, for example, been heard a number of times in the past. If yet there has been little progress in this direction, then surely there are some major difficulties in implementation which have to be addressed up front. Implementation indeed heads the Prime Minister's eight-point agenda. But other than taking credit for speedier implementation of the disinvestment process and the National Highway Development Programme and a reference to an ongoing review of the regulatory processes, there is no indication that the Government has definite ideas about how to clear the cobwebs that now surround policy implementation and project execution. On employment, Mr. Vajpayee outlined quite different priorities in his consultations with business leaders and later with the EAC. At the Advisory Council on Trade and Industry the talk was of labour reforms, while at the meeting with the economists the reference was to the findings of the recent report of a Special Group of the Planning Commission on generating 10 million jobs a year. It is well known that the latter took a very different approach to employment generation, compared to an earlier Planning Commission Task Force which placed considerable emphasis on the need to relax existing laws that protect industrial labour.

The Prime Minister's observation that the Government will have to bear the dominant "though not exclusive" responsibility for physical and social infrastructure is a welcome reiteration of the continued importance of state provisioning of certain services. There is a possibility, however, that the agenda on the twin issues of reduction of subsidies and management of infrastructure could end up in contradictory policies. While once again the Prime Minister has spoken of the need to cut down on certain subsidies (as on power) so that the fiscal deficit can be reduced even as social services for the poor are protected, the idea of a "public-private partnership" in health care, sanitation, care for the aged and other areas where subsidies will have to continue could lead to a different outcome. The idea of a partnership between the public and the private sectors in provision of services has been recently mooted in the United Kingdom as a way to get round the deficiencies in the public sector. But it is yet to be successfully tested in the U.K. Besides, this partnership is not expected to provide subsidised services. To suggest the same approach for areas where, in the Government's own admission, user charges cannot cover full costs indicates that the Government is not very clear about what it has in mind. This could be said as well about the larger eight-point agenda placed before the EAC.

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