“Stalled Economic Reforms: Reasons and Solutions”

“Stalled Economic Reforms: Reasons and Solutions”

"The slogans have changed over the years; the latest war cry being inclusive growth, but without much effect. The only difference is that these disparities were tolerated when India was growing at the Hindu rate of growth. It has become unacceptable when India is growing at 8 per cent. Therefore, impact of reforms should be visible at all levels, right from rural India to metropolitan cities."

More than 20 years have been passed since the economic reforms were initiated in India and almost decade has passed when the reform process was halted. Now, the economic growth is sluggish, domestic as well as foreign investment is falling, current account deficit and fiscal deficit is widening, high inflation, and lack of infrastructure development. Thus the need of hour is to unleash a new set of reforms. Many intellectuals oppose   the   reforms   and   support   various   welfare   schemes   as alternative as they directly benefit the target group. However, there is no point in trying to guarantee food security if it is provided with a leaky, broken public distribution system. There is no point in enforcing a right to education if government schools remain hopelessly unable to deliver education and there is no point in announcing a Rural Health Mission when rural hospitals and health centers are in terminal decay. But reforms in health, agriculture, market, education which will give impetus to free growth will assure better quality of service. For instance, if telecommunication sector is not much controlled by the government, we can see a mobile handset with even poorest of poor but not electricity, food, health benefits. Recently, government announced slew of measures like FDI in multi-brand retail and diesel price hike which are late but a right step. However, such reforms are opposed by many, even those who need it most. The majority of people in India still live in utter poverty, misery and deprivation. Sixty five years of independence and twenty one years of economic reforms have made very little difference to their wretched lives. If the people have no employment, no potable drinking water, no roads, no sanitation, no schools or hospitals, you can hardly expect them to stand up and clap when the government announces 51 per cent FDI in multi- brand retail. Another reason about reforms is that they are considered as responsible for accentuating regional disparities, income disparities and class disparities which is up to some extent correct also. The unrest that we see in the rural areas, including left Wing Extremism, can be directly ascribed to this sense of deprivation. A major weakness in our planning process has been the top down approach. However, the fact is that rural areas were neglected even in the socialist era as they remain neglected even in the era of liberalization. Pro-reformers have also damaged the cause of reforms by always identifying economic reforms with foreign investment alone. The recent announcements of the government of India are a case in point. They have been hailed as historic, path-breaking and earthshaking. The common people do not have any interest in them. Reforms are not just about attracting foreign investment but about making positive environment which is business friendly. A holistic reform which includes health, infrastructure, and energy will attract foreign investment automatically.