Who wants reforms?

BS OPINION

If you're looking for a sign as to just how far the BJP has strayed from its original agenda "" and we're not talking Ayodhya here "" a good place to begin would be to see the party's track record on internal liberalisation.

Readers will recall that the BJP's original slogan was that it didn't want external sector liberalisation, it wanted internal reforms first, it wanted India to be open to Indian goods from different parts of the country instead of just being open to goods from across the globe.

But, as this newspaper has reported, the panel on internal reforms set up under the stewardship of the Prime Minister himself, has not even met once in the last nine months, though it was to meet at least once every quarter.

Other panels that have met the same fate, including one chaired by the deputy prime minister, are those on governance and on simplifying investment rules.

Since the committees haven't even met, let alone had any meaningful discussions or made recommendations, it would be a good idea to simply scrap the panels, to firmly tell the world that these reforms are not part of the government's agenda.

In any case, the government already has unfinished reforms on its agenda, so why would it want to burden itself with more recommendations?

Despite many false starts, for instance, the government has still not been able to implement the decision announced by Yashwant Sinha over two years ago "" to change two laws that would make it easier for firms to close units.

Similarly, India's import duties have not been lowered in the past few years, though India has one of the world's highest levels of import duties.

The Delhi Rent Control Act has not been gazetted despite the President signing his assent years ago, the value added tax has not been implemented despite agreement on the date of its introduction... The list is a long one.

The reason for the lack of enthusiasm for reforms, and that's why the panels have not even met, is obvious "" there is no political constituency for reforms.

Reforms in India, it is well established by now, are driven by either crises or vested interests. The 1991 reforms were driven by a foreign exchange crisis; others such as the telecom reforms of 1999 (when firms migrated from high fixed licence fee commitments to a lower revenue-sharing licence fee regime) were driven by the needs of the private sector telecom players "" indeed, even the latest move towards a unified licence is being driven by the needs of one part of the industry.

Other reforms that have not taken place, despite being legislated/mandated, are precisely those where the pro-reform constituency is weak "" despite agreeing to free oil prices, the petroleum minister still decides on the matter, and he's in no hurry since the only people getting hurt are the public sector oil firms.

Prices of natural gas to be supplied by ONGC, similarly, were to be dictated by global prices, yet this gas continues to be subsidised by ONGC, by over Rs 8,000 crore a year.

In the absence of a powerful reforms lobby, the only thing which will get reforms moving is either another crisis, or the euphoria of an election victory.