Opinion “They (economic reforms) happen when political leadership decides to back them… bureaucratic hesitation is no impediment if political leadership is clear”

The 1991 reforms did not happen suddenly. They were preceded by a push in that direction in the second half of the 1980s,by the Congress government under the leadership of Shri Rajiv Gandhi. The Congress manifesto in the 1991 election also gave a very strong reform message. When the Congress government was formed in 1991,under Prime Minister Shri Narasimha Rao,his leadership and support for reforms was equally crucial.

After 1996,we had a non-Congress government with Left Front support,under the leadership of Shri Deve Gowda and later,Shri I.K. Gujral. The policies we had implemented in 1991-96 were not only not reversed,they were in many respects even taken forward. This must have been helped greatly by the fact that Shri Chidambaram,as Union finance minister in the United Front government,contributed to a continuity of policy. But I also like to think that it reflects the fact that beneath the loud disagreement and debate that is characteristic of democracies,there is also a growing consensus.

In one of the essays in this book,Montek Ahluwalia has given a detailed account of Shri Chidambaram’s role in the trade policy reforms of 1991. Montek draws six lessons from that experience… I think these lessons are worth recounting.

First,for reforms to take place,ministers must be willing to give up their discretionary power in support of a system with much less discretion. Montek rightly says that Shri Chidambaram’s readiness to give up his discretionary power was absolutely critical.

Second,there has to be a willingness to take political risks in launching new initiatives. Third,bureaucratic hesitation is not an impediment if the political leadership is clear about what it wants done. Fourth,it is easier to bring about change when there is sufficient prior discussion and a reasonably wide consensus. Fifth,one must adopt a holistic approach to reform,rather than pursue piecemeal efforts.

Finally,our system has the capacity to act quickly when it decides to. In those days,changes in import policy needed the approval of the commerce minister,the finance minister and the prime minister.

These lessons are relevant today because we are at a critical juncture. Over the past decade,when the economy had absorbed the full benefit of the reforms that began in 1991,our economy has grown at close to 7.5 per cent. Our growth rate has slowed down to 5 per cent in 2012-13. But this should not make us feel disheartened and imagine that we have slipped back to our old growth path.

The last couple of years have been challenging not only for India,but for the whole world. We must now view this as a short-term deceleration. Our government is determined to once again accelerate the pace of change. Once again,we will prove the naysayers and Cassandras of doom wrong.

The policy agenda for bringing back India’s growth momentum has been outlined in detail in the 12th Plan. We have to deal with the macroeconomic imbalances that have developed. We also have major challenges in key sectors such as energy,water,and land. Infrastructure is today a key constraint,with many large projects held up. The Cabinet Committee on Investment that we have set up gives us a mechanism to overcome bureaucratic delays. Urbanisation is a new challenge that deserves greater attention.

Our strategy must not only aim at faster growth,but must also ensure that the growth processes are more inclusive. There are many policies that can help achieve this objective. This also calls for special programmes to meet the needs of hitherto excluded sections,especially the Scheduled Castes and Scheduled Tribes,the OBCs and minorities. We have many such programmes. These need to be expanded and made more effective.

An important achievement of the past five years is that growth has been much more inclusive. Agricultural growth has accelerated from 2.4 per cent in the 10th Plan to 3.6 per cent in the 11th Plan. Poverty is falling faster,even though there are disputes going on among the professional colleagues about the pace of change. Per capita consumption in real terms in rural areas has increased four times faster from 2004-05 than it did earlier. The erstwhile BIMARU states are doing much better.

I have no doubt that we will deliver results and once again place India on the path of high and socially inclusive growth. The people of India expect this. The world expects and awaits this. Let me assure you,we will not disappoint.

I do not underestimate the task before us. As the 12th Plan points out,our preferred scenario of strong inclusive growth at an average rate of 8 per cent per year will not come from business as usual policies. We have to act boldly and decisively.