'Protection is not a good way to look after farmers' incomes'

, professor of economics at the Australian National University.

Poverty alleviation is best done by giving benefits in ways which do not tie the poor to staying on farms, he told Mamata Singh.

How would you compare the differing pace and intensity of economic reforms in China, India and Australia?

The different constitutional arrangements in the countries is one of the reasons for the difference. Once China decides to do something, it can do it with fewer constraints.

Australia and India both have a democratic, federal system, which means that you have to go slow. Public education has to be a part of policy.

In Australia, there was active discussion and research on reforms for 15 years before anything far-reaching was done. Without public discussions, it would not have been politically possible to do what we did.

Another reason for the fast pace of Chinese reforms is that it made a bigger mess before reforms. The period between 1957 and 1976 was particularly bad. There was a widespread feeling, including within the Communist Party, that things had to change.

Australia and China have opened up to foreign trade more than India has, as a result, they have got a bigger lift in productivity and growth.

The changes in India since reforms have also been very big, particularly in terms of export growth. If India goes further, it will be surprised at the big pay-off it gets, both in terms of growth and alleviation of poverty.

How much of a difference have the liberal labour laws in China made in making it an attractive destination for foreign investment?

In China's case, it is the absence of laws rather than labour laws. But that is not the decisive difference. China went much further in liberalising foreign trade and investment.

This helped the country become aware of global best practices in many areas. Having to compete in an international economy is very helpful in encouraging growth.

There has been a big debate in India on whether reforms have bypassed the poor, particularly in the countryside.

The Indian countryside could do very well out of free trade. The prices that farmers get for their products could be higher and there could be more export growth for some products.

Free trade would ensure more efficient production overall. Some products would fetch lower prices, but overall, farm incomes would be higher.

The experience of many countries shows that if you want to raise the income of farmers, raising farm prices is not a very efficient way. It raises the incomes of the non-poor and encourages use of expensive inputs. You would get better welfare benefits by providing services like education and health with the resources used to artificially beef up farm prices.

In India and China, to give people in the countryside a good standard of living, you have to give them benefits which do not tie them to staying on farms. Protection is not a good way to look after farmers' incomes.

Infrastructure is a problem area for India. How has Australia handled the sector?

You have to think through the regulatory regime very carefully for private investment to give you benefits. Sometimes, privatisation is done without thinking through the regulatory regime and that can get you into a bit of a tangle.

In Australia, the government has done most of the provision of infrastructure. It has led to the usual problems of inefficiencies in state enterprises.

However, in some states, we have gone a long way in private investment. The most dramatic example of success is the civil aviation sector in Australia.

Central civil aviation authorities tend to be rather rigid. Now, we have sold off rights to private businesses and to local governments in some cities which have a big interest in promoting local traffic and upgrading airports.

Reforms have been painful. One of the two airlines operating before de-regulation collapsed. It was quite disruptive as we did not have adequate capacity on some routes.

But now, there is a new airline, providing cheaper services and the general feeling is that the sector is more responsive to community demand now.

The railway network is still owned by the State, but we have deregulation of use of the network. Private rolling stock has led to a reduction in costs. In power, costs have come down, but in some cases, there has not been much private investment.

There has been criticism of deregulation, but by and large, there is acceptance of the fact that deregulation of electricity has led to efficiency in resource use and lower costs.