Survey bats for more reforms, PSU sell-off

Ambivalence about property rights and the private sector, deficiencies in state capacity, especially in delivering essential services and inefficient redistribution are the important challenges ahead of the Indian economy.

Having embarked on major economic reforms, India has reached a crucial phase where the governments cannot stop from thrusting more of the same on the nation and the people unmindful of the consequences. Rolling out of the GST, demonetisation and the proposed reforms to the realty sector are just indicators of the more important moves ahead.

The Economic Survey presented in the Parliament here on Tuesday is very categorical about the direction that the country should take. It sounds alarming no doubt to note that it clearly hints at privatisation of public enterprises.

The Survey highlights difficulties in privatising public enterprises, even for firms where economists have made strong arguments that they belong in the private sector. In this context, the Survey points towards the need to further privatise the civil aviation, banking and fertiliser sectors.

Railways is all set to scale newer heights in privatization. It has already lost its own Budget too and all developmental plans of the Ministry talk in terms of PPP models and MoUs. The Survey points out that the capacity of the State in delivering essential services such as health and education is weak due to low capacity, with high levels of corruption, clientelism, rules and red tape.

At the level of the states, competitive populism is more in evidence than competitive service delivery, the Survey adds. Constraints to policy making due to strict adherence to rules and abundant caution in bureaucratic decision-making favours status quo, the Survey cautions.

The Survey admits to deficiencies in the redistribution system in targeting the poor. The Survey notes that over the past two years, the government has made considerable progress toward reducing subsidies, especially related to petroleum products.

Technology has been the main instrument for addressing the leakage problem and the pilots for direct benefit transfer in fertilizer represent a very important new direction in this regard, the Survey adds.

Noting that India has come a long way in terms of economic performance and reforms, Economic Survey 2016-17 says that there is still a journey ahead to achieve dynamism and social justice. Completing this journey will require broader societal shifts in the underlying vision, the Survey adds.

As the Economic Survey presented today stated categorically that unless further tax reforms and a fast remonetisation are effected, the gains would be short-lived. But a bigger question awaits the nation.

Politics in India stems from the people. Political consensus in our country cannot be taken to mean only the various political parties. It is true that the various political parties in our country agree that the economic reforms are essential. Most object to the stand taken by the government when they are out of power, but they themselves further the same policies when in power.

Thus, even if not in words, in deed there is a definite political consensus, so far as political parties go observers have long noted But, as far as the people of this country are concerned, only a minuscule urban middle and upper class have benefited from the reforms.

Most of India still lives in her villages, and even the cities have a large number of people living below the poverty line. How far the reforms benefit these people should be a matter of concern.

They have so far not found any advantage in the New Economic Policies, and their consensus on them is definitely missing. Not just all political parties, but also all sections of society should have consensus on the reform policies before they are instituted in India. Regrettably that is not the case till date.

Amid all this MoUs' that we are going to witness more and more in future due to the further and formidable opening up of our economy, only one MoU seems to be conspicuous by its absence - the one between the Government and the people to ensure real development.

By W Chandrakanth