More than 80 per cent of our respondents believe that the reformsprogramme has achieved less than 60 per cent of what it setout to do. Averaging allscores, we get the figure 46.3 per cent. That corporate India feels that liberalisationhas delivered less than 50 per cent of what it promised is clearly worrying.
"The controls have gone but the controllers are stillthere," says Vijay Kalantri, president, All IndiaAssociation of Industries. "Theregulations are gone but the regulators are still there." Says Harsh Goenka,chairman, RPG Enterprises: "In privatising PSUs and reforms in the labour policy,nothing much has changed. The former is cosmetic, and the latter is politicallysensitive." That reforms have not percolated from the Centre to the states is acommon complaint. The other issue is corruption. Says Udayan Bose, chairman, LazardCreditcapital: "The system needs to be more transparent and less corrupt to reallygrow."
But the overriding criticism is that due to lack of political will, thereforms have taken a backseat in the last one-and-a-half years. "The pace of reformssuddenly dethrottled after the state assembly elections," says Gupta of the Lloydsgroup. "It’s a shame. It’s also not fair to the country." Of course,no one denies that liberalising the economy in a democracy like India is an extremelytough act. India is not China, Chile or Malaysia. "Governments operate underpolitical and social pressures frommany different sources, and it would, thus, befoolhardy to expect those governments to march solely to the economist’s drumbeat informulating policy when it must yield to other forces and pressures," says economistHarberger. Indeed, there may not be too many examples in history of a democraticgovernment pushing through reforms at the pace at which India has done in the last fiveyears. Or rather the first three-and-a-half years.
But the inaction of the last 18 months—and in some cases, even aslight retreat—may cost the country dearly. For, if there is one universal principleof economic reforms, it is that there can be no half-measures. Beingstranded half-waythrough a reforms process can cause tremendous social and economic dislocation. Indeed,the liberalisation started under Rajiv Gandhi was rolled back half-way through, settingoff the many-pronged crisis which the present government inherited. Says Rajagopal ofCoopers & Lybrand: "If liberalisation was a knee-jerk reaction to the balance ofpayment crisis we faced five years ago, then we’re back where we were: a full circlewith the rupeedepreciating and a lingering BOP problem." At the end of the first fiveyears of liberalisation, there is a lingering feeling that much has been achieved, butmuch potential has also been frittered away.
There is surely a hint of the disappointed lover in the less-than 50per cent rating that corporate India gives the reforms process on target achievement. For,to corporate India and to millions of Indians, tired of pseudo-socialistic stagnation,liberalisation was adream coming true. At its very basic, it was a great empowering force.Thus, expectations may have been too high, a growing sense of disappointment the naturaloutcome.
Whatever the case may be, India’s politicians may do well tolisten to Jeffrey Sachs, whizkid economist and consultant to a dozen liberalisinggovernments across the planet. Says Sachs: "The most unfortunate mistake ofgovernments engaged in economic reform is the belief that economic reforms are a painfulnecessity that are likely to be costly at the polls. This is a simplistic view of a morecomplicated reality. As a general principle, the electorate can sense the differencebetween a dynamic honest government attempting reforms, and time servers.