A minister calls

Finance Minister Yashwant Sinha may have appeared to take with him a well-worn message to Washington: India remains open for business. So what, his audience might have shrugged in reply, accustomed by now to that promise from successive Indian governments. No matter. Given the shrill and jingoistic pre-election noises in the BJP and the confusion it strategically creates about its own policies, this was a necessary exercise. It was very much a question in the minds of several foreign investors whether or not India would remain even as open as before, leave alone become a more liberal economy. These doubts should have been somewhat relieved by what the Finance Minister had to say. But the proof of the pudding is in the eating and especially so in India8217;s case where investors have learned that good intent does not automatically translate into ground-level liberalisation. What Yashwant Sinha did to ease the frustration of those who already have experience of doing business in India, or have been scared away bythe experience of others, is less clear. The frustration investors feel about India8217;s continuing and legendary obstructionism on the ground is best summed up in the remark of one of his audience that perhaps the Indian government should change the nomenclature quot;fast-track clearancequot; to save itself embarrassment.

Sinha had two mitigating factors in his favour. He was visiting so soon after taking charge that it might have been unreasonable to expect anything more than the barest policy outline from him. Second, as he emphasised, he was not at liberty to announce policy initiatives which rightly belong in the forthcoming budget. Yet the minister could have been a little more specific about the BJP government8217;s policy in different sectors. Better still, for his visit to have more substance, it could have waited until after the Budget which the finance minister promises will hold a number of quot;surprisesquot; 8212; although the Fund-Bank meeting at this time gave him a good pretext for his sell-India-and-the BJPexercise.

That leads to the question whether anyone looks to Sinha to deliver surprises in his Budget 8212; unless meant in the entirely positive sense of unexpectedly bold steps to liberalise and boost the economy. What is really required, and surely what the Finance Minister was himself at pains to stress, is a taking forward of the work of a series of finance ministers before him in deregulating and freeing up the economy. Even with that, India can hardly afford to be sanguine. Sinha is right to claim that India escaped possible infection from the Asian epidemic through sensible policies. But India can expect on the one hand to suffer from Asia becoming suspect in the eyes of certain kinds foreign investors and on the other to be pushed from the minds of those investors who are focused on picking up cheap bargains in East and South-East Asia. Indeed, it is time it dropped its ill-advised comparisons with China which can only show it up in a bad light and are in any case untenable, and get on with creating amore attractive and open economy for investors. Sinha has sought to raise expectations from his Budget. Let him now live up to them. That, much more than a sales pitch abroad, will set the pace on investments internal and external.