Road map for reform

The government should explain what it will do next

If cheers have attended the United Progressive Alliance government’s apparent new lease of life over the past fortnight, that is only because it had pretty much played dead for the years preceding that time. The economic measures announced were not earth-shattering reform; they were more the bare minimum needed to stave off crisis.

Yet, that the government bestirred itself sufficiently to do even that much is welcome. More creditably, it stuck to its guns and saw off the challenge from its troublesome former ally, the Trinamool Congress. There was not even the slightest roll-back of the measures, even though the entire political spectrum was opportunistically united in protesting it. Finally, the most encouraging sign is that Prime Minister Manmohan Singh himself went on television to defend the need for the changes, invoking the reforms of 1991, warning against “fear and false information” and promising to “do more”. It is unfortunate that, till now, only a few in the United Progressive Alliance (UPA) leadership have chosen to speak firmly in defence of the reformist project.

The departure of the Trinamool Congress means, of course, that the UPA, re-energised or not, will find the passage of legislative changes even more difficult than hitherto. Since much of the most productive reform will require passage through Parliament and will meet with objections from an obstructionist Opposition, the prime minister surely could not have been referring mainly to the pending legislative agenda when he talked of “hard decisions”. Yes, the land acquisition Bill, the pension and insurance legislation, and the goods and services tax are all major reformist moves, but a wise government would focus on what it can get moving without requiring wide political support, and before it presents its last full Budget in 2013.

The government would do well to outline an action plan for the next few months, laying out what it seeks to implement through administrative mechanisms. The most important objective should be to demonstrate a commitment to fiscal consolidation. Freeing up petroleum product pricing is certainly a hard step, but one towards which the government should consider how to move gradually but surely — of course, after ensuring that an Aadhaar-based system of cash transfer of subsidy to the targeted poor is put in place. Fixing fertiliser subsidies and their linkage to Aadhaar, too, can be speeded up.

Another major administrative reform – and “hard decision” – is implementing changes in the power sector, including the linkage of reforms to the proposed debt restructuring of state electricity boards. Raising coal royalties and notifying a transparent and fair process immediately for evaluating windfall gains from natural resources will be a clear indication that the government intends that a reformist narrative should replace the resource-based corruption story that has been dogging its footsteps for the past few years. Finally, much-discussed administrative reforms to the approvals process for infrastructure are overdue. Dr Singh, who is not the world’s most natural communicator, did well to defend the relatively minor measures his government has already taken. But the most important part of his speech was the promise to do more, and he must not now disappoint the expectations he raised. A road map for further “hard decisions” is awaited.