An Agenda for Growth
India's Congress-led United Progressive Alliance, having taken 263 of the 545 seats in the Lok Sabha (lower house of Parliament) – has interpreted the strong electoral victory as affirmation from the voters to unveil an ambitious reform agenda.
Loaded in favor of the social sector and "inclusive" economic reforms, the government's broad policy contours were highlighted by President Pratibha Patil in her inaugural speech last week. These include a first "100-days Action Plan" which will focus exclusively on social and welfare schemes, judicial reforms and a plethora of measures to fortify the state machinery "for effective delivery of all governmental schemes."
The alliance's other reforms aim to accelerate growth in agriculture manufacturing and services, consolidate existing programs for employment, education, health, rural infrastructure, urban renewal and introduce new programs for food security and skills development.
In major part, the reforms can be regarded as a continuation of those that Manmohan Singh, then the finance minister, put into effect in 1991 to end the so-called License Raj, opening the economy and changing the socialist economic system that had hampered India from independence and transforming it to a market economy. Singh removed many of the obstacles to foreign direct investment and began the privatization of the public sector. The reforms were credited with driving up gross domestic product from an annual 3 percent to 8-9 percent.
With the strong – and somewhat unexpected – electoral victory behind him, Singh, now prime minister, is set to consolidate the reforms with a vigorous agenda that includes accelerating the stalled sale of public sector enterprises. The idea is that people should be direct shareholders in these public sector units which will facilitate an increase in private holdings of these public sector units.
"Governance" reform, as emphasized by Singh, is also being given top billing apart from the creation and modernization of infrastructure and capacity creation in key sectors. Prudent fiscal management, energy security and environment protection and "constructive and creative engagement with the world" are some of the other thrust areas.
While the alliance's action plan is ostensibly exhaustive, however, the government is playing it extremely safe by continuing its overtly populist, welfare-oriented measures designed to appeal to voters in upcoming assembly elections.
However, there is also a new emphasis on accountability, seeking to clear out India's endemic governmental corruption – a dose of which occurred this month with the arrest of the chairman of the national military procurement agency. The government has promised to unleash monitoring measures for investment-intensive ministries and programs. This would include the creation of an Independent Evaluation Office to evaluate the impact of flagship programs.
The government for the first time will also present five annual reports to the people on education, health, employment, environment and infrastructure to trigger public debate. Meanwhile, district-level ombudsmen will be created for social audit of the National Rural Employment Guarantees Scheme, the alliance's flagship 10-billion dollar social sector scheme. There will also be constant tracking of where public money is going through a new public data policy.
The reform agenda has other pluses and minuses. The enactment of a new law — the National Food Security Act — entitling every family below poverty line in rural as well as urban areas to 25 kg of rice or wheat a month at Rs 3/kg is welcome. More so an assurance that this legislation would be used to bring about broader systemic reform in the much-reviled public distribution system which will go a long way in assuaging the concerns of millions of people.
However, investments in higher education to make "500 million skilled people by 2022" to reap the benefits of demographic dividend cannot be executed merely by making massive investments in education as the government intends doing. The non-formal education sector will need to be brought in, along with private institutions to fulfill the task.
Be that as it may, holistically, the alliance's reforms are in sync with its projection of a party that is anchored in the larger vision of India as a nation while simultaneously being sensitive to regional and local sentiments. In this regard its sweeping set of reforms to revamp the country's creaking internal security and Intelligence were largely anticipated considering the Mumbai terror attack last year – which killed 160 people and destroyed property worth millions – which could have cost the party this election.
In fact President Pratibha Patil, in her Parliamentary speech, emphasized that internal security will be one of the top priorities for the new government and an urgent plan to address national security challenges will be executed in a time-bound manner.
"A policy of zero-tolerance towards terrorism, from whichever source it originates, will be pursued," Patil said in a subtle hint to Pakistan, adding that a National Investigation Agency will now be empowered to tackle terror-related offences. With political strife in immediate neighborhood – including Pakistan, Sri Lanka and Nepal – an enhanced security on India's borders is designed to help it address South Asia's rapidly altering geo-political equation.
Pretty much like new internal security measures, the alliance's political carrots to Indian women – who constitute half the country's demographic -- are also being seen as a savvy political move. They will give a substantially larger representation to Indian women in the Parliament. When viewed along with the government's commitment to push for the Women's Reservation Bill, they will collectively ensure the largest-ever political space to Indian women compared to any other country in the world at any time.
Among the other women-centric welfare measures include 100 percent literacy for women (as against the current figure of 54 percent) in the next five years through the National Literacy Mission, fixing the women's quota in central government jobs and setting up of the National Mission on Empowerment of Women for the implementation of women welfare programs.
However, ambitious as the UPA's promises undoubtedly are, they won't be easy to fulfill. But the task has certainly been made less daunting this time due to a convincing UPA win. The prime minister will thus not need mercurial coalition partners or Communists to keep his government afloat.
The rules of the game have clearly changed. And Singh can now afford not to capitulate to parochial and venal elements. He can forge ahead with liberal policy reforms at home and simultaneously enjoy greater room for maneuver in his foreign policy where trade, climate change and China's worrisome ascendancy and territorial ambitions in south Asia are vital concerns.