Real or illusory?

Not a week goes by without a new cabinet committee on economic affairs decision seemingly to reform some sector of the economy and speed up growth. Is it for real or is the momentum of reform somewhat illusory? The answer is, both. A tally of the first 100 days is likely to show forward movement as well as piece-meal decisions, the failure to follow up on others and various kinds of contradictions. Earlier this month in a major decision the limit on FDI in the pharmaceuticals sector was raised to 74 per cent but it was suggested confusingly that a higher ceiling was possible too. Now FDI up to 74 per cent is allowed in satellite systems which makes possible rapid expansion of telecom and Internet services and broadcasting. But illogically the cap on FDI in satellite-based telecom services stays. Then again, whatever happened to Urban Affairs Minister Ram Jethmalani8217;s plans for 100 per cent FDI in the housing sector?

As the government8217;s plans for airports show good ideas are not enough, how they are givenconcrete shape matters. Fortunately it has not taken too long for the government to realise that it simply does not have the resources and skills for modernising India8217;s major airports. Technical upgradation and expansion and improvement of facilities for passengers and cargo require very heavy investments. More so since major domestic and international airports have not benefitted from a constant programme of upgradation. Such renovations as some have enjoyed have been rather like face-lifts to hide the ravages of time. Little has been done to improve overall efficiency or prepare for future growth. Add to that poor maintenance. In order to push things forward the government has had to abandon plans to corporatise8217; major airports and to settle instead for leasing the major airports of Mumbai, Delhi, Chennai, Calcutta and Bangalore.

Corporatisation as practiced has meant the creation of entities partially independent of the government. Many internal factors and externalities rema-ined unchanged labourlaws, government practices. Consequently the results have not on the whole been encouraging. Now that the government intends to experiment with leasing out assets, in this case airports, it must do what is necessary to improve the operating environment. It is sensible to lease so long as the government is clear about the end results it hopes to achieve and goes about the process of leasing systematically.

Presumably it will be open to any domestic or foreign company to apply for a lease. Will it be entirely up to the lessor, who pays a licence fee and also raises resources for infrastructural improvements, to turn these airports into viable propositions? If so, are the Airport Authority of India8217;s expectations realistic, that the fees will be hefty enough to subsidise the upgradation of smaller airports? Lessors will need to know what sort of growth in aviation is envisaged, whether policy restrictions will be placed on the opening of new airports and so on. Is a comprehensive aviation policy in themaking or will the consultants the government has already advertised for set the parameters?