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Mainstream, VOL L No 48, November 17, 2012

Agenda for Reforms?

Wednesday 21 November 2012, by Devaki Jain


“What’s in a name?” asks Juliet in Shakes-peare’s Romeo and Juliet. “That which we call a rose, By any other name would smell as sweet,” she says. (Romeo and Juliet (II, ii, 1-2)

But Juliet could not have imagined how the term/name “reform” has not only become a catch all for the kind of pick and pay interventions by the state in the last two decades, but is misleading the doers and the receivers—policy-makers and citizens..

What is reform? Reform as different from revolution? Reform is generally distinguished from revolution, says the dictionary. The latter means basic or radical change; whereas reform may be no more than fine-tuning or, at most, redressing serious wrongs without altering the fundamentals of the system. Reform seeks to improve the system as it stands, never to overthrow it wholesale—to put an end to (an evil) by enforcing or introducing a better method or course of action. 

But in India, reform has not only become a catch-all term, ranging from raising oil prices to lowering interest rates to enabling FDI in multibrand retail to asking the PSUs to share their profits with inland revenue.

Reform as freeing natural resources from regulation—freeing them from regulatory mecha-nisms which attempt to conserve environment as well as protect the holders of the resource? Reform as building hydro projects which endanger the eco-system? Reform as removing subsidies but also removing import duties on luxury brand cars and whisky?? As it stands now, it does not seem to be just about deregula-tion either, as there is such a jungle of regulations, usually an encumbrance and an extension to existing bureaucracies.

By using this totally amorphous term, we are not only misleading ourselves but creating dissatisfaction allround, but also creating a maze from which we are not able to see our way out. Removing the licence raj, where the bureaucracy had the power to control and regulate the private sector, was seen as the first step to liberalising the economy, particularly industry and finance. Having inherited the philosophy of a welfare state as well as a state which is the engine of policy, it has been difficult to reverse the system entirely. Hence it was rep-laced by regulators, for example, TRAI or SEBI and also by additions of oversight committees. Private public partnerships are another strange concoction, also a legacy of fear of the private and the need for public services.

Can all this jungle of intervention and de-control be called reform, which is defined as a way of improving the system?

Hence when experts are asked to write about recent policy measures, and they say we need more reform or that reforms are back on track, or we are not getting there, they are camoufla-ging the particular pin-prick or knife that is being thrust into areas such as natural resources management or the indigenous vending systems, or privatising public services. They are also adding to the cafeteria, the pick and pay scene of regulation and decontrol that is not only encumbering the economy but giving space, chinks in the armoury which have become the havens for corruption, for making money.

How did the political leaders of Himachal raise their wealth over one era of elected positions from lakhs to crores? Because of the reform maze …

Call the rose by its name and only its name, it cannot be, as Juliet thinks, the same whatever the name. What we have is not reform, that is, redressing serious wrongs: it is structural mal-adjustment, a shocking misuse of governance systems. We need to address the whole multi-brand store, not just pick and pay.

The author, a noted development economist, is a former Member of the South Commission.

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