Exchanging ideas

Indeed, the more some prescriptions fail globally the more we cling to them. And so President Bush is now a 8220;socialist8221; because he has implemented with conviction a strategy to not let his economy crumble. But we must have 8220;market reform8221; 8212; regardless of whatever that may mean. The more a particular mindset is shown as irrelevant, the more it is clung to. That India is a large country, one which has and can create differing options in so many fields 8212; including how it opens to the world 8212; is sadly missing in the thought process. The first thing is to build a firewall to those operators who might be able to chip away at India8217;s financial strength. Sometimes, perhaps, one needs the defiant rhetoric of a Venugopal Reddy. The monetary authorities have to work in tandem with the government; but the treasury and the central bank each have their own karma. I remember when I attended the joint meeting of the International Monetary Fund and World Bank in Hong Kong in 1997 I was horrified to find that the East Asian meltdown, the scare then cascading through the global financial network, didn8217;t create so much as a ripple in our own Economic Survey. Indeed, one had to get all the way to page 60 to see a mention. India8217;s chief economic advisor, Arvind Virmani, has advised caution on India8217;s exposing itself to complex derivative products, with which we don8217;t yet have expertise; I think he is to be congratulated for that. I remain completely unrepentant on laying down in the Plan developed during my time in the Planning Commission that India must go in for capital account convertibility, but this is a strange time to hasten it, as some seem to want.

We need to realise that we have options: in security, in finance, even in how we strategise politics and ideals. Elections can be fought by strategising ideals 8212; Garibi Hatao and others showed that, at least. The jobs created in the National Rural Employment Guarantee should have a political dividend 8212; good politics should be about policies above all. We haven8217;t been able to convince people about jobs for growth yet: IRMA8217;s 8220;State of Panchayati Raj8221; report made the point that the states and even local bodies are flush with tied funds from the Centre, but can8217;t innovate since they don8217;t have the resources to manoeuvre. This can be easily remedied, and the consequent flurry of infrastructure in rural areas will help industry too. If big ideas are needed, politically, why not reform public transport and invest in carbon-saving sustainable technologies? Why not reform in markets and tariffs to improve the profitability of rabi agriculture so that it gets really going? How long will we be self-congratulatory about a two and a half per cent growth?

We have options. Instead of worrying about investment here, we should realise that this is the time for India to invest abroad. In energy, this means unshackling ONGC and its overseas operations, IOC and Indian companies more generally. An electricity economy growing at half of the rate in the last decade 8212; which itself was half of that in the previous decade 8212; needs a little more than sage advice on appropriate pricing. The fatal blow was knocking off the requirement of a minimum rate for rural power of a rupee and a quarter in a 1998 ordinance from the NDA, which was based on a bill introduced in Parliament in August 1997. The sector never recovered; but this can be taken up now only after the next elections.

The objective of closing the fuel cycle by nuclear power must be stated and investments put there as soon as the nuclear deal is signed. The government8217;s supposed 8220;energy policy8221;, completely half-hearted on this point, misses the wood for the trees. Sad. Here, as in other fields, the forest is all ours.

The writer, a former Union minister, is chairman, Institute of Rural Management, Anand

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