Saturday, June 6, 2009

A dream economic team after a decade

It is almost exactly after a decade there is new hope from a ruling Govt with some fresh ideas to take India forward. It was in Oct 1999, when the then Vajpayee government created a core economic team which people were not aware of it. Yashwant Sinha, Arun Shourie and many others were a part of such a team which made the stock markets and industrial circles very skeptical. With faces never seen in power and administration were incharge of key portfolios. But very soon India saw some breakthroughs and a new life was given to the economy.

Within 100 days i.e before Dec 1999, the government came up with a massive program of bills and reforms policies which brought revolutionary changes in the country. Examples include scrapping of Urban Land Ceiling Act which had stalled new businesses from setting up their stores on new lands. The other example include denationalization of insurance sector thereby bringing foreign players and revamping existing LIC (which was perhaps the only insurance company till then in the country), reforming and constituting a FIPB (Foreign Exchange Promotion Board) which became the regulator for overseas investments and inflow of foreign currency. Within the first 100 days, new Companies Act 2000 replaced 1956 Companies Act which brought in new legislations on how companies can do businesses in India including limited liability partnerships . The draconian FERA (Foreign Exchange Regulatory Act) which prohibited people from having foreign currency in excess and led to raids every now and then and filed criminal cases against individuals instead of civil ones was replaced by the new FEMA (Foreign Exchange Management Act) which brought in new life to the country.

These were all path breaking initiatives by this economic team which received appreciation even from Congress economist Jairam Ramesh whose economic knowledge even I admire.

India started on having a flexible exchange rate system. The tarfiif on imports came down to 25% from 100% till 1999 and all industrial licensing quota was abolished. Public sector control were brought down to 3 sectors from 18 and changed the way how private investments can bring in new competition and efficiency.

Such an impact the Govt provided to the economy within 100 days.

Manmohan Singh in his second innings has raised such hopes by having some real experienced and talented people in certain key portfolis. The team led by Pranab Mukherjee, Anand Sharma, Murli Deora, Praful Patel and others give great hope to the long pending reforms. I hope that in the next 100 days, we see some drastic steps. The new team is far more known to the public than that of 1999 and therefore expectations have doubled.

There is great hope after 10 years in 2009. Esp in infrastructure growth with KamalNath taking in charge and removing the corrupt, inefficient T. R. Baalu, Manmohan has done a great favor to the country.

Let's hope that this second innings delivers to the economy which very badly needs smart and tough decisions

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