The UPA’s big contribution to the economy was that it simply did not do anything to meddle or get in the way of the market forces — the economy was handed over to them by the National Democratic Alliance, or NDA, in not too bad a shape either.
Government spending: The fiscal deficit for FY2009 stood at 6 per cent and the current year’s deficit (Centre and states combined) is likely to be over 10 per cent — among the highest in the world. To tackle the fallout of the global slowdown India's stimulus packages will spend Rs 1,75,000 crore. Social sector spending, including new schemes like NREGA, have too many leakages. Bihar Chief Minister Nitish Kumar — who recently calculated the extent of leakage in Bihar — has suggested a radical solution. Deposit Rs 10,000 in every Bihari bank account and abolish all the hundreds of porous welfare schemes.
Disinvestment: Perhaps one of the biggest achievements of the NDA government was its drive to disinvest PSUs through the strategic sale route, through which it raised Rs 10,350 crore. In the power sector all files and administrative approvals for disinvestment of equity in enterprises such as NTPC, NHPC and PGCIL are in place. These alone can bring in at least Rs 8,000 crore.
Infrastructure challenges: Of the total 33,097 km of roads planned, only 10,858 km have been completed as of February 2009, according to a recent study done by Morgan Stanley. About 50 per cent of highway tenders are yet to be awarded. According to monthly data released by the National Highways Authority of India (NHAI), not a single project was awarded between August 2008 and February 2009. Most of India’s highways are two-lane, with poor service and low speeds. Of the total 66,590 km of national highways, only 13 per cent is four lane, 55 per cent is two lane and 32 per cent is single lane. The power sector is also in trouble: The Electricity Act of 2001 (enacted in 2003) is yet to be implemented in its true letter and spirit. Against the target of 78,000 MW, the actual commissioning of additional generating capacity in the first two years of the 11th Plan has been 12,700 MW.
Agriculture growth: The issues holding back agricultural growth are fairly well known. First is the problem of rural credit — or lack of it — which is a bane for poor farmers. More important is the question of rural infrastructure — proper roads, irrigation, access to markets in a quicker fashion, better support in terms of soil testing and fertilisers. Agricultural growth will help India's food security because food grain production has been falling behind requirements, and any boost in this area will automatically reduce the country’s dependence on imports of costly food grains, which then need to be sold at subsidised prices to the rural poor.
Procedural reforms: Setting up any kind of enterprise and seeking legal recourse remain tougher to do in India. Acquisition of land, and procedural matters, have been a huge hurdle in many new foreign investment projects. A government official recently met someone who wanted to open a new business near railway stations in India and that required a total of 19 clearances from 19 different agencies. "If the bureaucracy is trimmed as are procedures, investment will flow — both foreign and Indian," he says.
Businessworld
By M Rajendran with inputs from Raghu Mohan and Kandula Subramaniam
