Three Steps To India'S Prosperity

The new India remains in bud, and the bud can still be crushed before it blooms. For it to flower, many things must happen. Politicians say a consensus exists across all parties on economic reform. This may be true in the most general sense, but it is far from evident on individual issues. An overall commitment to reform is no longer adequate. Specific measures are needed, and in each case there are many hurdles and delays.

The liberalisation of the power, telecoms, airlines and media sectors have all been abysmally mishandled. If they had not been, foreign investment would have come flooding into the country, providing a motor for economic growth and giving confidence to investors in many other sectors of the economy. The scandal of the Indian government is not so much the amounts of money ministers and officials may have pocketed, but the amount prevented from entering the economy by incompetence and venality.

Financial sector liberalisation is the essential underpinning of economic reform. Although this has been continuing steadily, it has been painfully slow. Only last week in the columns above, a distinguished former central banker was agonising about the need to create the perfect yield curve on government securities before developing a proper money market. Here, as in many other areas, officials should follow the advice of Nike shoes and just do it. The results of decisive reform rarely justify the fears of the cautious.

So first of all, the country needs ministers and top bureaucrats who will push through common-sense reforms in individual sectors, cutting through the natural intransigence of those with a vested interest in the status quo. It is not enough to have a finance minister and one or two others of a reformist bent. This will no longer provide sufficient assurance for investors: consider the damage done by C M Ibrahim as civil aviation minister and Sukh Ram as communications minister.

States too need sensible ministers