New government's economic drive moves, but in fits and starts

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Anuradha Shukla and Sanjay Singh | 28 Aug, 2009
The first 100 days of the second edition of United Progressive Alliance (UPA) government have had their share of hits and misses in steering the Indian economy, with some ministries able to drive their agenda forward and others yet to draw clear roadmaps, analysts maintain.

If the presentation of the national budget within 45 days of assuming charge and a new draft direct tax code to recast the Income Tax Act were the high points of these 100 days, the misses included the lack of clear direction on how to reform the energy sector or how the ambitious skills development programme would evolve.

"The concept behind the 100-day agenda was to set the momentum and targets for ministries," said Planning Commission Deputy Chairman Montek Singh Ahluwalia, among the key members of Prime Minister Manmohan Singh's policy-making team.

"I feel this has been done very well," Ahluwalia told.

The experience of ministers clearly mattered in pushing forward the government's agenda that was clearly defined in the election manifesto of the Congress party and also spelt out in President Pratibha Patil's address to a joint session of parliament after the new government was inaugurated May 22.

Interviews with industrialists, corporate analysts and think tanks reveal that Finance Minister Pranab Mukherjee was the clear winner among all his colleagues who handle economic portfolios, even as those in charge of ministries like roads and highways, or commerce, also played their roles better than others.

"If you ask me ministry-wise, I feel home and finance ministries have been the best performers in terms of quick action and implementation," said industrialist Rajeev Chandrasekhar, who is also a member of the upper house of parliament.

"The road and transport ministry has also shown focus," Chandrasekhar added.

Amit Mitra, secretary general of the Federation of Indian Chambers of Commerce and Industry (FICCI), specifically mentioned the direct tax code, the budget, the Right to Education Act and the railway budget as areas where the government has shown it means serious business.

"But more than that there is an atmosphere of change in the ministries. They are setting definite targets and most of them are sticking to time lines - this is very positive," Mitra said.

K.V. Kamath, chairman of ICICI Bank, the largest in the private sector, said 100 days were too short a time to assess the performance of a government but added that there were some noteworthy developments as well.

"I feel the initiative on unique identity was one very good move. The finance ministry also took many measures to keep the economy on the track," Kamath said. "Health and education are areas that need more attention and focus."

On the flip side, experts found little movement in areas like telecom where the policy on spectrum for third generation telephone services was decided only Friday. Even in the power sector, they felt strategy needed fine-tuning to get more capital.

"Energy should be the next priority. There are major power shortages. We must think of alternative sources like solar power and all," said technocrat Sam Pitroda, who fashioned India's telecom revolution in the 1980s and 1990s.

The new government also resumed charge during some difficult times when economic growth declined from over 9 percent in 2007-08 to just 6.7 percent, even as the failure of monsoon led to drought being declared in 252 out of 626 districts and put pressure on the country's food security.

But the response, some experts maintain, has not been up to the mark, even though the government responded fast and said it would resort to import of food as and when required.

"I feel sectors like agriculture have been largely ignored," said Dalip Kumar, economist with the Delhi-based think tank National Council for Applied Economic Research.

"Not much has been done for better yields. Nothing has been learned from the past."

But Chandrasekhar, who was also president of FICCI, maintains that it was because of the government's focused policies that India was able to maintain a growth of over 6.5 percent and that the performance on that count was commendable.

"Through the budget the government put a process by which the revival of the economy was possible after the downturn. It was because of the timely and quick policy actions that economy is showing signs of revival," he said.

Looking forward, experts also said that a lot more was also required to ensure that all pending reforms were put on the fast track, especially after the clear electoral verdict for the UPA government.

"Many more things that we were expecting has not happened like pension reforms, banking reforms, insurance reforms. But then there is time for that. I hope it will happen in the winter session of parliament," said FICCI's Mitra.

Well-known economic and corporate analyst Gurcharan Das said the time had also come for the government to shift the focus of reforms to areas equally important for the country and its citizens.

"We have done a good job so far as economic reform is concerned. Now I feel it is time for a great deal of administrative reform, policy reform, judicial reform. We have to work on a more efficient delivery system," Das said.

"Unless our system is transparent, no reform or development can reach the bottom of the pyramid."