The Hindu Business Line : UPA: Keeping the reforms flag flying

The Government has done a satisfactory job, more or less continuing the broad economic reforms that were set in motion by Dr Manmohan Singh himself in 1991. The UPA Government can take pride that the fundamentals have never been as comfortable as they are now, as indicated by the way the recent stock market collapse was halted and operations returned to normality.

THE PRIME Minister, Dr Manmohan Singh, with the Congress President, Ms Sonia Gandhi, releasing a report on the achievements of two years of UPA Government. — Kamal Narang

Every Government worth its name has to function within a framework of given conditions, some of which may be endogenous to its structure while others may have their origins outside it — maybe even outside the country. This, one feels, is the framework within which the Manmohan Singh Government (which has just begun its third year in office) should be judged, its domestic policies hemmed in by the requirements of the United Progressive Alliance coalition which it represents and its external policies being greatly influenced by, first, the evolving international scenario which is independent of the course of national development and, secondly, the traditions which the NDA regime led by Mr Atal Bihari Vajpayee set out in the five years prior to 2004.

Briefly, one is of the view that the Congress-led Government has done a satisfactory job, more or less continuing the broad economic reforms that were set in motion by Dr Manmohan Singh himself in 1991 (when he was Finance Minister in the P. V. Narasimha Rao government) and which were ably pushed forward by Mr Vajpayee's regime. Admittedly, not everyone will agree with all the details of the reform-action taken over the past 15 years by the United Front Governments and the NDA regimes, but the fact remains that the basic thrust has remained unimpaired under the UPA dispensation, which has led to the Indian economy being taken far more seriously than ever before by the international comity of nations.

Major transformation

For a nation that was considered a lost case by the world's economic pundits not even two decades ago, the transformation must be seen as a major achievement, for which the national economic policy over the past 15 years has been mainly responsible.

The UPA Government's achievement in this specific sphere has been to add fizz to that transformation and to get the `Indian image' to a position today which is even better than what it was in 2004 when the present regime took over.

Among the best bits of evidence that one can cite for this development is the position India enjoys today in the World Trade Organisation, an achievement for which the late Murasoli Maran and Mr Arun Jaitley can be said to have been as responsible as Mr Kamal Nath of the UPA Government. Indeed, it would have been quite easy for the present regime to have lost the initiative in the WTO sphere built up by the previous governments. Not only has this not happened, the UPA Government has catapulted India's stock in Geneva even higher — to a point where the country now shares the onerous responsibility (with a handful of other developing economies such as Brazil and China) of being the arbiter of nothing less than the WTO's future itself.

Economic acumen

It is important that this progression in India's `WTO image' has come at a time when there is growing respect for the nation's economic acumen (mainly reflected in expertise related to IT and IT-enabled services), which has had an exponentially favourable impact on the way India, in its totality, is today viewed by the world at large.

True, there are a number of competitors on the world-stage who are fast catching up with the standards India has set in the IT sphere, but the fact remains that the UPA Government has not taken any step which can be described as grossly retrogade in exploiting the benefits generated by the new reputation.

Clearly, this constitutes an important feather in the Government's cap although, one imagines, the time is coming soon when the regime will have to work really hard to keep the feather in place.

During the past few years, the IT surge has coincided with an opening up of the domestic economy to foreign economic influences, chiefly though the FDI route, a process which in turn has been aided by the internal reform measures taken by the Government of the day to make operations by foreign owners of capital and technology easier and more convenient. Although the volume of FDI in India is still abysmally small compared to what is available worldwide and what the domestic economy can absorb, the Manmohan Singh Government should be given full marks for strengthening the reputation of the economy as being a good destination for overseas resources, and perhaps even for increasing the potential.

FDI `feather'

This is another feather in the UPA cap which — though under constant threat from a variety of sources, chiefly domestic — has done the republic a world of good by way of adding to the corpus of efficient economic activity.

Admittedly, the income distribution aspect has on occasion turned out to be an aberration in select regions, but the point has been effectively made that, considering the total volume of investment in the economy, it should not be blown out of proportion, particularly when the beneficial effects of FDI — both direct and trickle-down — are universally acknowledged to be considerable.

In a manner of speaking, the specific achievement of Dr Manmohan Singh has been to stick to his FDI guns despite the severe pressure put on him by important political constituents to let go of them.

As for the domestic economy, the UPA Government can take pride in the fact that the fundamentals have never been as comfortable as they are now, as indicated by, among other things, the way in which the recent stock market collapse was halted and operations returned to normality. Clearly, the stock market crisis and its abatement — coinciding as they did with the second anniversary of the UPA Government — was perhaps the Prime Minister's best unstated riposte to all those who have been baying for his blood on the ground of poor economic performance.

On foreign policy, there is admittedly the dark shadow of the India-US nuclear deal which, however, has been variously interpreted as the republic's coming of age as a de facto nuclear power.

A lot of stiff bargaining is still in the pipeline, and it will be a test of the UPA's mettle to navigate through it successfully keeping the national interest in mind.

The one area where the UPA regime has failed miserably is that of reservations, specifically by allowing Mandal-II to happen precipitately when it should have used all its resources to draw out the issue into a lengthy process — perhaps lasting a decade, as was the case with Mr V. P. Singh's Mandal-I.

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