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WITH the ‘original’ team of reformers – Manmohan Singh, P. Chidambaram and now Montek Singh Ahluwalia – back in power, the pink press is expectant about a resumption of the stalled reforms process. True, 2004 is not 1991. At that stage there appeared little choice but to heed the World Bank-IMF advice – India was dangerously close to defaulting on its loan repayments and the country’s forex reserves were at an all time low. And so, India was put onto a new development path.

The situation today is different. Better, most would say, with most macro-economic indicators in healthy shape, and the industry, once a shrill advocate of protection now more competitive and ready to face global challenges. The downside is that much of the decade long growth has failed to translate into employment and inter-personal inequality and regional disparities have grown.

Troubling for those desiring speedier and deeper reforms – labour market reforms, disinvestment, reduction of subsidies and privatization of public services – is the electoral mandate and the new governance arrangements. There is not only the ‘expected’ fear of the left and its ‘unaltered’ mindset or the patronage orientation of many of the Congress allies (reflected in the wrangle over the Railways portfolio) but also the apprehension created by talk of ‘two centres of power.’

The fear is that the Congress, looking to retain Maharashtra and win back the Hindi heartland, may prefer old-style populism and curb the reformers in government. The rapidity with which the AIADMK rolled back its reformist policies and announced new sops post its electorate debacle is indicative of future trends. As are the first pronouncements of the YSR regime in Andhra. It does appear that a decade and half of analysis of the ‘liberalisation, globalisation, privatisation’ package – both in the country and elsewhere, has still to sink in.

An early book, The Intelligent Person’s Guide to Liberalization by Amit Bhaduri and Deepak Nayyar (1996), while unambiguously advocating structural changes in the economy, both internal by enhancing the space for private capital and external, by encouraging global competition, warned that not attending to sequencing and pace of different policies as also neglecting the political task of creating a constituency for restructuring would create dislocations and a impasse.

It is in hindsight fortunate that our ruling elite (both the Congress and NDA) engaged in cautious reform. Not, for instance, opening up the capital market the way many East and South-East Asian countries had done, saved us from the 1997 currency meltdown crisis. So did the continuing protection to the farm sector and retail trade. It is symptomatic that not yielding to WTO pressure on agriculture subsidies was appreciated across the party spectrum.

A recent book by Jagdish Bhagwati, In Defence of Globalisation (Oxford, 2004) makes for instructive reading. Not only because the author is one of the early proponents (along with Manmohan Singh) of the need to move away from a closed economy/import substitution model followed by India in the earlier decades, but more for his fine-grained analysis of anti-globalization movements that have so captured the imagination of social activists worldwide.

It is, however, feasible to do an altered reading of his discussion of the ill-effects of global integration, in particular the implications for poverty, inequality, disparity, environment and gender. Even if assertions by social activists that portray globalisation and multinational corporations as responsible for all our ills may not stand academic scrutiny, it is difficult to deny the ‘real’ basis of fear that any shift to a new policy regimen generates, particularly among those who are asked to ‘adjust’ in the hope of future benefit. Failure to attend to legitimate concerns, in a democratic polity, engenders political cost, including a loss of power.

Fortunately, Bhagwati is no votary of global finance capital. He does not shy away from the inevitable downsides which accompany restructuring, foregrounds the achievement of social agendas (not just primary education and health, but also water for consumption and irrigation), discusses governance models, in particular decentralization and panchayati raj and recommends optimal, not maximal, speed. Equally, he postulates a crucial role for the state and state enterprises (particularly in managing public utilities) and cautions against ideological sell-offs.

Can we hope that the Common Minimum Programme, more a manifesto of high-sounding intention than programmatic detail, takes such new research on board? Even the hey-day of Mahalanobis and Nehru was never autarkic. Falling prey to fear may result in India, once again, failing to grab the opportunities thrown up by an integrating world. It is time we look ahead.

Harsh Sethi