Welcome tips on reforms
Since the reforms started in the '90s, the Indian economy is said to have successfully breached Raj Krishna's Hindu rate of growth. Shops brimming over with foreign brands, all of which looked so easily accessible thanks to a booming stock market, falling taxes and credit cards generated a good deal of complacence. But for the last two-three years the gardener has gone missing. Bringing the economy back on the ground with a thud.
It is this void—in economic language, the lag between the reforms in the domestic economy and the external sector—that Agenda for Change seeks to address, to put the continuity of reforms in perspective. Most of the basic items on the reform agenda in 1993—indirect taxes, small-scale sector, subsidies and the PDS, privatisation of infrastructure and user charges, primary education and health care, labour market, agriculture, administrative law—are still there, due to a lack of consensus on how the reforms should progress. In each of these areas, the writers have raised the issues central to reforms, and listed an agenda for change. Adhering to this agenda, it is hoped, will bring the economy closer to double-digit growth.
Most economists may not find the Agenda for Change series, a brainchild of Manmo-han Singh, very novel. Still, the credit for the most electric and thought-provoking essay in the book goes to Parth J. Shah. I'll summarise his agenda for change in education: liberalise education, abolish licence-permit raj; increase choice and competition by removing barriers to entry (i.e. have more schools); make schools student-centred, bring consumer sovereignty to education; link school revenues with performance; pay anyone who educates a child up to third standard when the child passes a standardised examination. Shah makes the point that the basic reason for poor standards of education in India is not because people "lack understanding of the importance of education; they simply can't be fooled into spending their time and money for a mediocre education."
Shah cites the example of Kerala and West Bengal, traditionally Leftist states, to break a few myths: despite free primary education, in 1994, poor households with less than Rs 3,000 annual income spent 10-36 per cent of their meagre money on education; that huge spending does not a good student make, more relevant is how that money is spent. And if the government is inefficient in producing food, can it be trusted to be efficient in producing educated minds?
The next best set of suggestions come from Ashok Gulati in agriculture, where the backlog of reforms is huge. And so is the agenda for change. Little has been done in this area and in the labour market, where T.C.A. Anant makes the very valid point that when the state, as in public sector, accounts for 70 per cent of all organised labour, how can it be an impartial arbiter in industrial disputes? Further, the dispute resolution system is biased in favour of adjudication over collective bargaining because most of the relevant Acts owe their origin to the Defence of India Rules and its wartime exigencies of maintaining production and the state-above-all concerns. Worse, the outdated provisions of the Trade Unions Act 1926 actually prolong disputes. Still, Anant's essay leaves one disappointed for having skimmed just the top of the iceberg.
Finally, two questions. The book is written for general readers and the non-economist, then why does the language remain so jargonised? Also, does the agenda have to be so haphazard? Why else does the book start with securities markets and end with environment protection? There could perhaps be an order in the next volume, which hopefully will be soon.