Tuesday, May 26, 2009

Second chance at reform

Got this link from Gauravs blog to a piece in IE by Bibek Debroy, where he questions, if the UPA will enable reforms at all. The stock market seemed to think so, or atleast thats what the papers told us. But, I am not too optimistic. This piece, puts it far better than I ever could.

The popular hypothesis is the following. Under UPA-I, reforms got stuck because of the Left. With the Left out of the way, there will now be a liberalisation blitzkrieg — disinvestment, pensions, insurance, telecom, aviation, retail, labour market, APM (administered price mechanism), power sector, land acquisition.

But that hypothesis has two sub-hypotheses. First, reforms require legislative changes and the Left was obstructing those. Substantial liberalisation can be undertaken by the executive and neither the Left nor the Common Minimum Programme was a constraint there. If legislative changes are a pre-condition for liberalisation, there is a problem in 2009 too, with the Congress not possessing numbers in the Rajya Sabha. Logically, we will then revisit the issue in 2014 and explain why these reforms didn’t occur under UPA-II and why they might occur under UPA-III.

The second sub-hypothesis is that the Congress desires reforms. [Indian Express]

And then? Well, read the whole piece. It is a delightful read.

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