The need for quick decisions on land reforms & security and environment concerns are a major reason for projects like roads, power and coal being held up
The need for quick decisions on land reforms & security and environment concerns are a major reason for projects like roads, power and coal being held up
The pep-talks given by Prime Minister Manmohan Singh and finance minister P. Chidambaram to the new-look Cabinet were laced with a sense of urgency considering the short window before the country enters election phase.
However, elections are the least of the concerns, considering that two years of policy paralysis has resulted in shortages of crucial raw materials like coal, steel, iron ore and other minerals. Unless these are tackled, it is difficult to see how targets for power, steel and a host of other projects are going to be met.
The Prime Minister warned of the twin deficits — current account deficit (CAD) and fiscal deficit. The figures are so humungous that mere tinkering with, say, prices of diesel, will not come even close to tackling the problem. Mr Chidambaram has with much enthusiasm announced a road map for achieving this. But these are all still on paper and even the Reserve Bank of India says it would like to see their implementation to be able cut interest rates in order to spur growth.
If the RBI is not convinced, how can one expect foreign investors to be convinced? The fiscal deficit is a major factor, as the Prime Minister admitted, deterring foreign investors from putting their money into India. The FM has underlined the importance of foreign institutional investment and foreign direct investment to finance India’s infrastructure demands.
One hopes that the meeting the PM had with the ministers of his Cabinet is not the first and last. It should be at least a fortnightly, if not a weekly, meeting where targets are given to ministers for their respective departments and a review undertaken of the progress. This way issues and impediments can be thrashed out so that inordinate delays can be avoided.
Both the PM and the FM have pointed out the need for quick decisions on land reforms and security and environment concerns, and these are among the major reasons for projects like roads, power and coal being held up. The RBI, in its Macroeconomic and Monetary Development report released this week, said that if industrial growth is to be revived there is a need to take expeditious decisions to accelerate investments, especially by easing policy constraints and removing major supply bottlenecks. Quick decision-taking would be enabled at a fortnightly meeting of all Cabinet ministers. There are hundreds of projects awaiting decisions, and with all the ministers in one room this should not be very difficult. The Prime Minister would have to show some leadership on this issue and fix responsibility for decisions being taken within a reasonable time frame.
