More committees

The Prime Minister is reported to have sounded an upbeat and positive tone during his meeting with his council on trade and industry, Saturday.

He referred to the broad optimism, at home and abroad, about India's medium-term prospects. He also indicated that his government's own aspirations for economic performance were not limited by this sense of comfort.

It had to do better than was currently expected and, therefore, several things would have to be done differently.

He emphasised the fact that, in order to achieve the government's own target of a sustainable 7-8 per cent rate of growth in GDP, the agriculture sector would have to ratchet up to 4 per cent from its current 2 per cent or less, and the industrial sector would have to climb equally dramatically from its current 7 per cent to the 10-12 per cent range.

These are unexceptionable remarks. But when it comes to the steps needed, the inspiring rhetoric has to make way for the mundane realities of the country's experience with reforms.

To take industry to the required rate of growth and to ensure that large numbers of people simultaneously benefit from it, several things need to be done.

The Economic Survey put out by the ministry of finance last July said very explicitly that without a substantial streamlining of regulations and procedures, and some big steps towards infrastructure and labour market reforms, it would be naïve to expect industry to take off.

The first of these issues has now been entrusted to a standing committee, which will make recommendations on a revamp of the regulatory framework for industry.

Why we need another such body is not clear; from the UNDP-sponsored Project LARGE to the bodies set up periodically by industry associations, there is already a huge body of recommendations and supporting analysis. Action, not further deliberation, is he crying need.

On infrastructure, there is visible progress on some fronts, either in the form of public investment or by way of progressive legislation. However, on others, there is still incessant debate on the fundamental questions of ownership and regulation. Yes, a council has been set up for infrastructure as well, but here again there is the risk that critical actions will be further delayed.

On labour, the tendency to favour bypass solutions instead of dealing with the constraints head-on has come to full fruition in this council. World-class training institutes will turn out highly skilled workers, whom nobody may hire, because industry is hardly hiring anyway.

The private sector is being persuaded to voluntarily practise affirmative action, but even if they do, the number of industrial jobs being created is so small that the effective impact on employment of the intended beneficiary groups will be negligible.

But, there is no mention of the central problem""how to create large numbers of new jobs in industry and elsewhere, such that an employment guarantee programme becomes largely superfluous.

Collective thinking and oversight, which these councils are expected to do, are unquestionably an essential requirement for effective implementation. But the government should not look at them as representing action. Administrative and legislative action must follow, in quick order.