The new President and economic reforms

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October 11th, 2012 Tarun Chaturvedi

Last week, a colleague of mine who teaches in a university in Belgium, was asked to prepare a paper on the recent reforms unleashed by the Indian government. The poor guy has no knowledge of India and so reluctantly accepted the assignment. This is what he sent me for checking:

With the new President taking charge at Raisina Hills, the reform juggernaut has started rolling and that too rolling pretty fast. First came the announcement to permit FDI in multi-brand retail and the steep increase in diesel price accompanied with the cap on LPG cylinders. Not only that, from 1st of October, the rail fares are also being hiked because of the additional levy of service tax. These have been tough and unpopular decisions and in the process the government has lost an ally got itself converted into a minority government but has stood its ground firmly. Surprisingly, no roll back has been hinted and now it seems the decisions have sunk in and settled.

Again, in the last few days, the government has okayed FDI in aviation and insurance and these measures have come as a much needed breather to some of the bleeding industries and in turn has acted as major relief to the banks who had lent to these industries. The government has gone ahead and announced a restructuring of the State Electricity Boards which was a much awaited exercise.

Now we read that the government is planning a new method of implementing the subsidy schemes by which the targeting is much better and the existing leakages in the subsidy schemes are plugged. In short, the subject for whom the subsidy has been planned gets it straight in his bank account from the government. Another brilliant move which when implemented will help the targeted class to enjoy the subsidy benefits much better.

Unfazed by the growing opposition to some of the reform measures, the Indian Prime Minister Manmohan Singh has reiterated that the above reforms initiated by the central government were an ongoing process for the good of the country and hence would continue. The fact that the Prime Minister has regained his ability to speak and that too in such a strong voice has itself come as a major relief to a large part of the Indian population.

And let us not forget that the Indian stock markets have closed at a 5 month high and so has the India rupee. And imagine all this has happened within a month or two of the new president settling down at Raisina Hills. Since he is going to occupy the seat for five years, India is surely going to see a lot of liberalisation.

My god, I never knew about these qualities of the new president. I really don’t know how to reply. I feel the best would be to dissuade him from requesting for a new topic which deals with India.

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