Vision 2011

It’s time to step on the economic accelerator

   At year-end, India can pat its back on rebounding from the post-2008 slowdown. An enviable 9% growth rate looks doable soon. But if crisis management up to 2010 impresses, UPA-II needed to use its enhanced political mandate of 2009 to resolutely walk the reforms road, more so since the Left is no longer around to play spoiler. But aside from okaying disinvestment in timid bursts, it’s still to execute a big-ticket reforms menu. Without this, clocking and sustaining double-digit growth and fulfilling social sector pledges won’t happen. A midpoint in UPA’s second stint, 2011 is a good time to press the accelerator.
   High food prices will persist into the new year, a reminder of the farm sector’s structural anomalies. Liberalising multibrand retail will bring assured benefits to agriculture by creating infrastructure and jobs. Raising farm productivity – and agriculture’s GDP input – is urgent. For that, farmers need fair price discovery through access to diversified markets. The Planning Commission is said to want farming’s technological upgrade together with the trimming of food and fertiliser subsidies soon. Neither is possible without reform, which should go along with PDS revamp. Let’s experiment more boldly with alternative delivery mechanisms – backed by the UID and financial inclusion projects – to give food security to both farm and non-farm poor.
   We need a common market, unhindered by too many inter-state barriers, market intermediaries or taxes. In this context 2011 needs to see the debut of GST, an indirect tax reform that, along with a new, streamlined direct tax code, can transform the economy. With Centre-state fiscal burdens pared via boosted tax compliance, bigger spends can go to social and physical infrastructure: schools and hospitals, roads, ports and power projects. Both are areas the plan panel rightly marks out for the 12th Plan’s special focus. Raising funds via reforms – including through spurred disinvestment – is top priority, because yawning fiscal deficits dent investor feelgood. In fact, FDI’s recent worrying dip should prompt us to open up, besides retail, other closeted sectors like insurance, defence and education.
   In 2011, let’s treat speeded-up industrialisation as non-negotiable. For too long, we’ve tripped ourselves by sticking with antiquated labour laws that hamper business viability, impede organised labour’s expansion and skills upgrade, and doom casual workers to low wages and insecurity. Farm livelihoods can’t sustain all our youthful, productive hands. And schemes like NREG can’t substitute for factory jobs of the kind helping China fight poverty so successfully. Nor should industry’s advance and the building of infrastructure keep being blockaded by land-related agitations. Let 2011 produce a definitive and revamped blueprint for transparent, market-driven property transactions. That’ll make buyer and seller both stakeholders in inclusive growth.