Trade Organisation (WTO) is welcome.
A time-frame for phasing out has to be provided. The commerce ministry prepared the proposal with a five-year time-frame for eliminating restrictions. Phasing them would be synchronised with the new exim policy to be announced on April 1. Since agricultural imports are taboo and the mindset of self-reliance in foodgrains cannot be give up, agricultural liberalisation has been postponed until towards the end of the five-year period. Since the government does not have the political will to reform administered prices of urea and petroleum products, these too have been pushed back. Textiles are a powerful lobby so these will also be liberalised at the end of five years.
That leaves consumer goods. The Left is already up in arms about liberalisation of this sector on the grounds that it would lead to a consumerist culture and widen the trade deficit. Even if there is no merit in these arguments, the political clout of the Left is out of all proportion to its importance. Therefore, consumer goods cannot be moved directly to the OGL (Open General Licence) category but will first be moved to the special import licence list and then to OGL. However, it is debatable whether this time-frame will be acceptable to the IMF or the WTO. The proposal means phasing out QRs over the period 1997 to 2001, with nothing very much happening in the next three years. But 2001 is too far and the present government will not be around then.
Despite these reservations, there are three reasons why the proposed liberalisation is welcome. First, the government has accepted the proposition that consumer goods must be liberalised, even though this is for the wrong reason that nothing else can be liberalised immediately. Second, the irrelevant arguments of the Planning Commission and the agriculture minister have been seen for what they are. Third, the government has issued a warning to domestic producers of consumer goods that they must be competitive to survive. All that the cabinet has done is to make promises, but in this era of confused and muddled programmes, even promises are hard to come by.
