The Hindu Business Line : <I>Pace of reforms </I>

Deciding on the pace of economic reforms is no easy matter. Russia, immediately after the demise of the Soviet Union, was given the "shock treatment' by misguided American economists, subjecting its previously state-owned enterprises (SOEs) to instant privatisation and its banks to Western-imported policies and practices. The result was instant economic chaos from which that country is yet to fully recover.

Learning from Russia's experience, China kept foreign investors under leash and has been able to thwart all attempts to pressure it to revalue its currency to suit the convenience of any other country. However, according to the latest news, there too bold changes are in the offing. For the first time, China has decided to permit foreign companies to have ownership stakes in its SOEs in the hope of accelerating the pace of growth with the help of new management techniques, attractive incentive schemes, and state-of-the-art technologies.

It is also inducting outside directors from within and outside the country on the boards of some of its SOEs. Whether the new move will pay off or not, only time can tell, but there is no doubt that the Chinese Government will keep a watchful eye on the experiment so as not to let it go out of control.

India being a vibrant democracy, not all sections of opinion are agreed on the exact pace of any kind of reform at any given time. Whatever the Government does, and at whatever pace, there are always howls from one direction or another either that it is too fast, leaving the poor and vulnerable in the lurch, or that it is too slow, at the cost of losing the confidence of economic stakeholders such as domestic business persons, foreign investors and financing and banking institutions. The Government's dilemma is made all the more acute by coalition politics.

Nevertheless, India so far been able to harmonise the differing viewpoints and move at a pace and in a direction that is in its own best interest.

B. S. RAGHAVAN