| Speaking last week at a function where he released the first title to be brought out by Business Standard's new books division, the Prime Minister acknowledged the criticisms that this newspaper has been making about the slow pace of reform, but thought that we should also be giving credit for the reforms that have already been put in place. It was a fair point, and there are two ways of looking at reforms. Commentators usually look at what has been done to help producers become more efficient, competitive and profitable. The other way is to look at what it has done for consumers, and one useful indicator for this is what one might call the duty-free index. |
| Twenty years ago, what did people bring into the country as personal baggage? Expatriate workers coming home from the Gulf countries brought with them TV sets, foam mattresses, 2-in-1s, clothes (even synthetic saris) and gold, Pyrex dishes and sundry small gadgets of a quality and price that you could only dream of in India. Those coming in from elsewhere brought in liquor, cigarettes, dark glasses, pens (all the way from Cross to Mont Blanc), cigarette lighters, perfumes, branded jeans, even toiletries and the occasional copy of a proscribed magazine "" I once met the export manager of an auto company who was popular with his colleagues because he travelled abroad frequently and had managed to put together a large collection of Playboys. Smugglers in turn focused on synthetic textiles, watches, gold, pens, cigarette lighters, and electronic items of various kinds. What those lists told us was how much India was an economic prison. |
| If those look like quaint lists today, it is because the life of the Indian consumer has changed. TV sets are no longer over-priced, indeed they are cheaper here than elsewhere, as are textiles, gold ornaments, and the rest. Smuggled goods are no longer ubiquitous on Mumbai pavements, and the airport customs officials who used to harass the poor Gulf returnee and let him pass for the price of a Johnnie Walker, now look bored and have no interest at all in those walking past them. Judging by the duty-free index, the domestic Indian consumer has been given his freedom. Those shopping abroad look increasingly for the premium labels that are still not available in India because of the restrictions on retailing. |
| As for the things that cannot be imported, consumers now are mostly killed with choice "" motorbikes and cars, banks and the availability of retail finance, mobile phone services, a variety of housing providers and many airlines (think of the old government housing monopolies in all the big cities, and you will recognise the difference). The areas where things have not changed much (if at all) are those where government supply still predominates "" power supply, schools and hospitals. But since the focus here is on the reforms that have worked, let it be said that the Indian consumer is now living in pretty much the same contemporary world occupied by consumers in many other countries "" with the benefit, let it be added, of a tax regime that has also been transformed. |
| So the Prime Minister has a point. It should be added that some changes are still in the works "" like the new airports that are beginning to be opened for service, new highways, and the metro services in some of the big cities (though it should be added that all these come at a price, as people are discovering). Having acknowledged all this, the question today is, what will Mr Chidambaram do in his last Budget to help complete the transformation, especially in the areas that have seen little change? |
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