The Gold Standard | Niranjan and Ninan

Business Standard has a Op.Ed. piece by T. N. Ninan, based on his speech at the launch of a book on India’s economic reforms dedicated to India’s Prime Minister. I would love to get a copy of his full speech. He makes great points:

is there wiggle room for reform? I think there is. First, we must learn from homeopathy, and the importance of small doses. I am told that Gujarat raises its power tariff by two per cent every quarter; no one notices and no one protests. It seems to me that we can do that for petroleum pricing, and for pricing reform in general.

Second, we have to find a way to get beyond positions adopted out of fear of change or because of ideological bias. As the Chinese would say, feel the stones as you cross the river. For instance, introduce income transfers through pilot projects, then do state-level changes that demonstrate how money gets saved, and then commit to a national roll-out. It is hard to sustain ideology-driven opposition when the proof of the pudding is there in the eating.

Third, since politicians and civil society leaders do not like being told that poverty is declining, we must assure them that the poor will always be with us. How? By making poverty a relative and not an absolute definition;

Finally, reform has not yet got a political constituency even after 21 years because we talk of the fiscal deficit, of tariff walls, of public debt, of monetary policy and other arcane things that mean nothing to ordinary people. The market for change exists and grows only if it is linked to the market for votes. Instead of power sector reform, why not offer guaranteed electricity supply, at lower cost?

how about making jobs the centrepiece of the inclusion debate? [Link]

Niranjan’s piece on the decisive turns in Chinese macro-economic policies resonates well with Ninan’s speech/piece:

The data shows that the difference between growth rates in the two countries converge towards the end of every decade, but then something happens that allows China to accelerate relative to India all over again. It would be premature to speculate about a causal link, but it is worth mentioning that each moment at the bottom of the valley broadly coincided with political change and a fresh economic push in China.

At the end of the 1970s, Deng Xiaoping had consolidated his powers after defeating the Maoist Gang of Four; he began opening up the Chinese economy by dismantling collective farms, allowing more price flexibility for manufactured goods and inviting foreign investments into special economic zones.

Ten years later, after the massacre at Tiananmen Square, Deng nominated Jiang Zemin as the next head of the Communist Party, and then undertook a famous tour of the southern provinces in 1992 to provide a new push to economic reforms.

At the turn of the century, Jiang and Zhu Rongji took China into the World Trade Organization, reduced red tape, cut tariffs, privatized and dismantled parts of the old social welfare system. And now, as the next leadership prepares to take charge, there are moves to make the yuan an international currency, move up the value chain, and focus more on domestic consumer demand as a growth driver.

This Reuters news-story buttresses the point that Niranjan makes:

China is at a promising moment for speeding up interest rate and exchange rate reforms, the central bank’s statistics department said in a report published Tuesday, following the latest move to make the Chinese currency more flexible.

BS also features an editorial on the letter that Mr. Sharad Pawar (India’s Minister for Agriculture) had written to the Prime Minister on the anti-farmer policies of the government. He is spot on. This is a throwback to the Seventies. India has always talked the big talk on villages, villagers and farmers but invariably sold them short.

As T. N. Ninan wrote in another piece on April 7th, citing Lee Kwan Yew, the former Minister Mentor and Singapore PM, China walks while India talks. Exaggerated, no doubt but it is largely true.


DISCLAIMER: This is an archived post from the Indian National Interest blogroll. Views expressed are those of the blogger's and do not represent The Takshashila Institution’s view.