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Montek roots for agriculture reform

May 26, 2004 12:54 IST

Montek Singh Ahluwalia, former finance secretary and currently director of the Independent Evaluation Office at the International Monetary Fund, is bashful about speaking to the press amid speculation that he is awaiting an invite from his former boss -- Prime Minister Manmohan Singh -- to return to India and head the bureaucracy at the finance ministry.

According to sources close to Ahluwalia, although he is the first director of this new office at the IMF, which was virtually created for him, he is not especially happy there despite the high-sounding mandate of the position and the perks that go with it.

He has apparently been complaining that there is really nothing to do and that he yearns to return to Delhi.

In the 1990s along with Dr Manmohan Singh he was the architect of India's economic reforms during the P V Narasimha Rao government.

Thus, at a symposium on the Politics of India's Next Generation Economic Reforms organised last week by the South Asian studies department at Johns Hopkins University's School of Advanced International Studies, Ahluwalia started off with the caveat that he has absolutely no inside track to the new government's thinking on the country's economic reforms.

"I am painfully aware that I am asked to speak on the mistaken notion that I have some inside information," he said, and added: "One of the good things about speaking at this time when we have had a major political change in India is that I don't think anyone has inside information."

But this did not stop him from offering his own prescription to the new government for better economic growth, faster reform process and a more equitable distribution of the benefits among all.

"The principal target before the new government will be to jack up the growth rate which has decelerated to something close to 8 percent." He said he had no doubt it could be done.

He noted that things have to be done "in the process of industrial reform, reform of foreign direct investment, the opening up of the economy, continuation of what has been happening and that could lead to very dramatic changes within the next two- or three-year period."

"There is a need to extend reform to the agriculture sector. There is no way 8 percent GDP growth can be achieved without agriculture going up," he said.

With regard to infrastructure, Ahluwalia said: "It's absolutely clear to everybody that it speaks very highly of Indian entrepreneurs that they are able to do what they have been able to do with the quality of infrastructure we have given them."

He recalled that in the past five years, with the exception of telecommunications, no visible progress had been made in other infrastructure areas that had been identified.

"Whether the politics of the new generation of reforms will make that more or less difficult is an interesting question to address. There will be two key elements, which will determine whether India can take off in that area; the first of those is the fiscal side."

The public sector will depend critically on the resources position, and this is going to be the biggest

challenge facing the new government, he said. "Private participation alone will never be able to meet India's infrastructure needs," he added.

Ahluwalia predicted that "there would be tension between the political process wanting to transfer resources to weak states and the economic compulsion that if globalisation is a must, the best thing the government can do for weak states is to improve the infrastructure of these states."

"How politics is going to make that possible is a wonderful challenge," he added.

He said the election results clearly show that India is not satisfied with the contention that the country is doing better than it has done before. "Television advertising and the rampant consumerism seen on the screens were probably a catalyst in the angst of the rural voter that if that's the lifestyle of an average Indian, how come I am not getting a part of the pie," he said.

He said the industrial side of reforms had been given a lot of attention, but at the expense of agriculture. "I don't recall a single question or specific query on agricultural reform. There has to be a specific agenda on agricultural reform."

Another speak was John Echeverri-Gent, director of the Center for South Asian Studies and associate professor of politics at the University of Virginia whose books include The State and the Poor: Public Policy and Political Development in India and the United States, and is currently completing his newest publication, Politics of Markets: The Political Economy of Reforming India's Stock Markets.

"There is no doubt the economic reforms are going to continue but the issue is at what pace will they continue," Echeverri-Gent said, and added that he was very concerned that former Andhra Pradesh chief minister Chandrababu Naidu's successor, Dr Y S Rajashekhar Reddy, "in one of his first announcements said he is going to provide free electricity."

"If the lesson the state level reformers take is that economic reform is not politically popular and that we need to revert to populism, that is a very concerning state of affairs," he said.

"If all of India's reformers decide that they need to modify the reform process to make benefits more equitable, then I feel the future of India's reforms is very bright."

But another panelist, Rob Jenkins, professor of political science at Birkbeck College, University of London, whose research has been on Indian politics and political economy, argued that there is no evidence that the election outcome was due to voter outrage over a lack of equitable distribution of the economic reforms.

Devesh Kapur, an associate professor of government at Harvard University, said: "Agriculture is a state subject and there have been limitations on what the national policy can be. And as you talk about poverty alleviation, no one seems to talk about Bihar and about a government that has made a mess of things," he asserted.

Kapur said the "states remain a moribund entity and the reforms have far bypassed them. The states have not delivered."

E Sridharan, academic director of the University of Pennsylvania's Institute for the Advance Study of India in New Delhi, contended that the "election results are really a summation of what happens in states and coalition politics and not a national summation."

Aziz Haniffa in Washington, DC