Dr Singh and Mr Chidambaram will have to fix not only timelines to get projects going but also set benchmarks for accountability and responsibility
A lot of expectations are riding on promises by Prime Minister Manmohan Singh and finance minister P. Chidambaram that some reforms will be taken up in the near future. This is one of the reasons why there have been positive inflows in equity and debt by foreign institutional investors in August.
Between the end of the Monsoon Session in early September and till the time Assembly elections in Gujarat are announced, the government has a five-week window to undertake key reform measures and whatever it plans to do to revive the economy. It is imperative it should use this window and not seek excuses to postpone reforms and other measures that are not contentious. Any further delay or flip-flop will only hurt the economy, which is already in distress.
The government should immediately call the committee on Goods and Services Tax and set a deadline for completing negotiations with the states that have been going on for years. The few issues that remain can easily be resolved. The committee has repeatedly indicated it is the government that is not showing any initiative on completing the process of finalising the GST format. Similarly, FDI in aviation is reportedly being held up by a strong lobby that does not want competition. Why should a sovereign government allow itself to be held hostage by a private airline, particularly as FDI will revive the airline sector in next to no time. The civil aviation minister must be held accountable for an answer to this. There may be some political opposition, but the government should be able to tackle this and move forward. Then there are some big-ticket disinvestment schemes: if pushed through at the right price, this too would also revive sentiment in the markets.
There are several other measures, like identifying major infrastructure projects that have been held up on some trivial or easily resolvable grounds, that can be restarted or completed without further delay. This will send out a strong signal that the government is serious about getting decisions moving. Both the Prime Minister and Mr Chidambaram will have to call all those involved — from ministers and top bureaucrats to project heads — and fix not only timelines to get projects going but also set benchmarks for accountability and responsibility. Contentious matters like FDI in multi-brand retail can be kept on hold till greater consensus can be evolved. India Inc, meanwhile, is sitting on a mountain of Rs 9 lakh crore in cash; if properly incentivised, some of this could be channelled into building of cold storages and other infrastructure for retail chains.
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