Not just rollbacks

While Singh reacted with alacrity in this instance,he must now read the riot act to other ministries. Some of the problems that the telecom and coal ministries are wrestling with have been created by a bureaucracy over which the ministers have lost all semblance of control. Beyond undoing the tax measures,Singh now faces the difficult task of addressing these distortions and then taking appropriate steps to guide the economy back to a faster growth path. These options were always before him. But now,arguably,he has a stronger opportunity to bring in substantial changes. The agenda includes moving ahead with the setting up of transparent allocation mechanisms for resources like natural gas,telecom spectrum,coal and even water and land. He must also address the deepening emergency in the education sector that is contributing to the debilitating skills shortage a subject this government has waxed about only to get sidetracked into petty skirmishes in the higher education sector.

What is needed at this stage is for Singh to announce his priorities for the remaining term of this government in detail. The prime minister provides an overarching vision but the finance minister moves the money and so has the responsibility to break down priorities into achievable objectives. Since Singh has chosen to take on the latter role too,he has to show his hand soon. That will include his estimate of growth rates,inflation,current account movements and subsidy reduction targets. The economy will demand these if catchwords like restoring confidence and reviving animal spirits have to play out. This will be necessary even if there is to be a new finance minister at some stage. The stamp of the prime minister has to be made visible in a clear agenda for the economy. Anything short of that will again push the economy back into the stagflation zone,from which a rescue will be very difficult.