The Hindu Business Line : Reforms and privatisation: Going beyond the obvious

THE latest figures show that Indian economic growth has crossed eight per cent. But infrastructure remains poor and is unable to cope with the increasing needs of business and an increasingly affluent population. Even posh houses and apartment complexes were marooned for days together after the recent heavy rains in the major cities, exposing the complete lack of urban planning. If conditions are so bad in the extremely visible metros of Mumbai, Chennai and Bangalore, the plight of smaller places can well be imagined.

Two issues merit attention here: the utter incompetence or negligence of the bodies in charge of city management - the corporations and the development authorities, and the all-pervasive corruption in governments and civic bodies, enabling land grabbing and end-use without regard to access and drainage systems. It is a sign of the times that many new localities have better broadband connectivity than physical connectivity. (It is a different matter that the country's most "admired" business houses which are in telecom exhibit the most shoddy practices in road digging and cable laying, devastating or completely disfiguring earlier good environments).

Investment in infrastructure - more power, better roads and enough water - is, of course, the need of the hour. Governments claim, as usual, paucity of funds. It has also become fashionable in recent years to talk of fiscal prudence. Money cannot be spared even for essentials lest the deficit gets out of control. (Marching, as we are, towards developed nation status, isn't it high time we also spoke the language of their free market economists)? One recalls a former Finance Secretary in a post-Budget Q & A asking a questioner to choose between more taxes and more funds for primary education, as if the former determines the latter. (This worthy was later promoted as our Executive Director of the World Bank). Such is the mindset of some in the highest ranks of policy and decision-making.

The "formula" approach - reforms, privatisation, disinvestments, user charges - that seems to characterise much of present-day government thinking is, therefore, not surprising. It is as if these are the magic wands that will make all issues and problems disappear without trace if only `fools and vested interests' do not stand in the way.

The advocates of reforms and markets would be the first to cry hoarse if we adopted even a few of the policies of one of their darlings - Singapore. There they have stiff taxes on cars and road congestion charges to restrict car ownership and use so that their (pretty advanced) infrastructure is not overwhelmed by the life style of a highly affluent population. To give another example, property taxes are correlated with the market value of property.

Thus, world-class infrastructure requires world-level user charges. How many of us can afford to pay? Equally, how many of us are willing to pay?

Market economics is obviously much more than disinvestments and privatisation.

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