1INDIA’S ECONOMIC REFORMSPrabhu Chawla, Editor, India TodayA POLITICALASSESSMENT2Of Good Economic & Good Politics•In India good economics is not always considered to be good politics•Convincing politicians of good economics is a long drawn process•Because India is a fertile land for parties•Parties are usually ruled by dynasties•Profusion of parties often leads to profusion of elections•And that leads to coalitions3Party of Parties!!!•765 registered political parties—6 national, 57 state & 702 ―other‖ •Parties based on language, caste, region—and philosophies •State and ―other‖ political parties have grown in relevance in recent years•They often become ―King Makers‖4Dynasty In Democracy*The Gandhis in Delhi•The Abdullahs in J&K•The Yadavs in UP and Bihar•The Badals in Punjab•The Chautalas in Haryana•The Karunanidhi clan in Tamil Nadu •The Karunakarans in Kerala…Genealogy has made ideology redundant5The Great Indian Poll Parade•Every year has been an election year since 1987•107 elections in the past 16 years•Parties were in election mode for 29 months•We are talking of about 3 years of officially mandated holiday from governance6The Poll Parade•In four out of five elections, incumbent governments are thrown out •Over 50% of elected representatives are voted out in every election•Indian democracy is voluminous and volatile•Call it the celebration of democracy or the curse of democracy7Rostow Revisited•Even when governments last a full term of 5 years, each year represents a distinct phase of governance: •1ST year is the Year of Conception•2nd year is the Year of Delivery•3rd year is the year of Consolidation•4th year is the year of Freebies•5th year is the year of Inaction8Coalitions Can Deliver•For 10 years, there hasn’t been any single-party rule in Delhi•Even Congress has reconciled to coalitions•Parties from extreme ends of political ideology are often in one government•Left is becoming Right, and Right is (sometimes) becoming Left •Big Mac co-exists with Big Marx9Coalition Dynamics•Coalitions have changed the meaning of opposition •The strongest enemies are now within the government—in NDA and in UPA•The orphaned spectre of Marx has found a home in the Indian marketplace•Coalitions have forced people in the government to confuse convenience with conviction 10Diversity Delivers•Across regions, states and parties, the governance agenda is becoming identical•The wave of reforms that started under compulsion in Delhi in 1991, has spread across states•We are moving from compulsion-driven reforms to strategy-driven reforms•Don’t confuse political stability with policy stability, but policy sluggishness is a different matter11Diversity Drives Development•India’s best economic performance has been in the politically most uncertain decade:Years Avg Annual growth in Per capita income 1960/61 –69/701.4%1970/71 –79/800.7%1980/81 –89/903.2% 1990/91 –99/003.5% 2000/01 –03/044.0% 12Diversity & Democracy Deliver2003 Real GDP (1992=100)100150200250300ChinaIndiaMalaysiaKoreaPhilippinesIndonesiaThailandMexico•India is the fastest growing democracy in the world •Never in human history has a democracy with even 200mn people sustained annual real GDP growth of 5.9% over a 24-year period13Reform: Progress & ProspectsProgress so farProspectsInfrastructure4/10Progress to be slowFiscal Correction5/10 Expect halting progressExternal Economy7/10Will continue to shinePrivatization4/10Selective disinvestmentLabour Reforms3/10Unlikely under UPA Bureaucracy 3/10No significant changes14Challenges Ahead•Mutually beneficial Centre-State partnership•Dismantling of unproductive and regressive bureaucracy•A Nationally Acceptable Common Minimum Programme (NACMP)•The NACMP of all political parties—not just of parties in the government15Defining Trends•Indian Economy is GLOBALISING•Indian Politics is REGIONALISING•Indian Society is LOCALISINGThese are mutually reinforcing and positive trends…16Three Positive Trends•The three trends are positive because each one of them is re-enforcing Efficiency•Globalisation has made Indian economy efficient•Regionalisation has made federation of India effective and efficient•And predominance of local issues will make our utilities efficient17THANK YOU