Formula for growth

Some clarity, at last. The Prime Minister did wonders at the annual conference of the Confederation of Indian Industry (CII). With so many sensible things said, confidence in the government’s ability to manage a difficult economic situation is sure to improve. Atal Behari Vajpayee laid to rest all the nonsense about swadeshi, correctly identified archaic laws and regulations among the chief obstacles to industrial growth, buried fears of politically-inspired action (remember Enron?) and committed his government to prompt and transparent procedures. Better still was his statement: "My job is not to harp on the past but to look to the future, not to complain but to rule." Many will be pleased to hear it. The economy is fraught with problems, no doubt about that. The country expects to see a government ready to do battle not one hiding behind alibis and meaningless nationalistic rhetoric. It does not want fanciful theories, it wants to hear about achievable goals. The one dubious idea was on giving thePMO oversight of all large projects. Is there only one able man in the government?

Yashwant Sinha has done his bit to move away from protectionism and gut hostility towards foreign investment and to bring economic reasoning into the debate. Now Vajpayee rounds off that effort with a list of areas where foreign direct investment (FDI) will be beneficial for the country: the infrastructure and hi-tech, of course, but also where better management practices are introduced, product quality upgraded to improve export prospects and critical global marketing linkages occur. It is as pragmatic an approach as anyone would wish for. It will not open the floodgates to just about everything; the Foreign Investment Promotion Board remains in place to give case-by-case clearances but, reassuringly, within a 60-day deadline. With this, and more expertise introduced in the FIPB, both the yea and nay-sayers should be content.

Presumably the proposed commission to examine all administrative laws and regulations affectingtrade and industry, will review the United Front’s intended amendments to the Companies Act, FERA etc. This would be proper but decisions should not be delayed merely because the BJP wants to put its dhobi mark on the legislation. Having quite unnecessarily scuttled the patents Bill when it was in the opposition, the BJP now has to introduce a virtually identical Bill itself. The lesson is that legislation should be judged by its own virtues or lack of them and not by the political hand that drafted it. As Vajpayee says today, "We cannot afford to play politics with the nation’s economy". Sinha makes no secret of his budgetary strategy. Everyday brings direct and indirect confirmation of an inflationary spending spree. His latest spend-and-tax-compliance formula is deceptively simple: the growth impulse will come from heavy public expenditure and when the economy is ticking over nicely, tax-payers will do their patriotic duty. One will have to wait for the budget for evidence of more rigorous thinkingon resource-raising and for the BJP’s party deliberations on Saturday on the insurance sector to see how far the government can go to mobilise domestic savings for investment in the infrastructure.