06-29-2005, 08:39 PM
Financial Times Editorial:
Indecisive India
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->India's Congress-led government seems likely to survive the boycott by its Communist allies of the coalition's main co-ordinating body in protest over plans to sell 10 per cent of a state-controlled electrical equipment group. <b>With no essential legislation pending that requires their support, the Communists' action appears largely symbolic</b>. However, it is a sharp reminder of the severe political constraints facing the country's economic reformers.
Having embraced privatisation at state level, the Communists cannot credibly attack it at federal level. In any case, the dispute is as much about how the proceeds are used and about Communist demands for binding commitments to fund poverty programmes. It should therefore be soluble.
However, it comes when the government's reform programme looks increasingly embattled. Political opponents have forced it this year to strip legislation for special economic zones of a key proposal to relax application of India's rigid labour laws. Plans to relieve chronic electricity shortages by encouraging private generation and distribution are in a mess, and other vital infrastructure programmes are treading water. <b>Little has been done to cut back strangulating bureaucracy.</b>
In fairness, Delhi has continued the last government's policy of lowering industrial tariffs. It has also eased some restrictions on inward investment, though its efforts to open retailing to foreign supermarket groups have yet to succeed. However, <b>action has been haphazard and piecemeal: there is no evidence of any grand master plan and - notably in the case of electricity - implementation has been weak.</b>
Ministers respond that in India, reform is best advanced by stealth. Yet even Manmohan Singh recently awarded himself only six out of 10 for his first year's achievements as prime minister. With almost four years of his term left, he can afford to be bolder. Given the feeble progress to date, he will need to be.
The notion that effective reforms could be enacted by a fragmented multi-party coalition always looked dubious. It will become more so as elections approach. The government should take a firm stand, rise above partisan obstructionism and make its case for reforms directly to the people. It does not lack for persuasive arguments. <b>Liberalisation of airlines and telecommunications, both initiated by its predecessor, have proven successful and popular</b>. There are many more instances where removing the dead hand of government from the economy would yield equally beneficial results.
The Communists and their supporters would doubtless object. They need to be shown for what they are: defenders of the privileges of trades union barons and other powerful vested interests. Mr Singh's administration came to power on a reformist platform and promising to govern in the interests of the country as a whole. It had better start doing so soon, or voters will begin wondering why they put it in office.
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Indecisive India
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->India's Congress-led government seems likely to survive the boycott by its Communist allies of the coalition's main co-ordinating body in protest over plans to sell 10 per cent of a state-controlled electrical equipment group. <b>With no essential legislation pending that requires their support, the Communists' action appears largely symbolic</b>. However, it is a sharp reminder of the severe political constraints facing the country's economic reformers.
Having embraced privatisation at state level, the Communists cannot credibly attack it at federal level. In any case, the dispute is as much about how the proceeds are used and about Communist demands for binding commitments to fund poverty programmes. It should therefore be soluble.
However, it comes when the government's reform programme looks increasingly embattled. Political opponents have forced it this year to strip legislation for special economic zones of a key proposal to relax application of India's rigid labour laws. Plans to relieve chronic electricity shortages by encouraging private generation and distribution are in a mess, and other vital infrastructure programmes are treading water. <b>Little has been done to cut back strangulating bureaucracy.</b>
In fairness, Delhi has continued the last government's policy of lowering industrial tariffs. It has also eased some restrictions on inward investment, though its efforts to open retailing to foreign supermarket groups have yet to succeed. However, <b>action has been haphazard and piecemeal: there is no evidence of any grand master plan and - notably in the case of electricity - implementation has been weak.</b>
Ministers respond that in India, reform is best advanced by stealth. Yet even Manmohan Singh recently awarded himself only six out of 10 for his first year's achievements as prime minister. With almost four years of his term left, he can afford to be bolder. Given the feeble progress to date, he will need to be.
The notion that effective reforms could be enacted by a fragmented multi-party coalition always looked dubious. It will become more so as elections approach. The government should take a firm stand, rise above partisan obstructionism and make its case for reforms directly to the people. It does not lack for persuasive arguments. <b>Liberalisation of airlines and telecommunications, both initiated by its predecessor, have proven successful and popular</b>. There are many more instances where removing the dead hand of government from the economy would yield equally beneficial results.
The Communists and their supporters would doubtless object. They need to be shown for what they are: defenders of the privileges of trades union barons and other powerful vested interests. Mr Singh's administration came to power on a reformist platform and promising to govern in the interests of the country as a whole. It had better start doing so soon, or voters will begin wondering why they put it in office.
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