Thought for the day
"We can't solve problems by using the same kind of thinking
we used when we created them."
-
Albert Einstein (German 1879-1955)
Word for the day
Effulgent (adj)
Shining forth brilliantly; radiant.
(Source: Dictionary.com)
Teaser for the day
Does Congress support for Insurance Bill marks any material
change in strategy?
Execution is the key
The governments in past 25years have mostly adopted similar
socio-economic policies consistently irrespective of their form (single party
or multi party) or constitution (minority or majority).
For example consider the following:
1. The process of
meaningful tax reforms was started by the then finance minister V. P. Singh
(Congress 1984-89) by rationalizing the tax slabs, lowering maximum marginal
tax rates substantially, rationalizing wealth tax and introducing CENVAT. The
recommendations of Raja J. Chelliah Committee (1991-93) on tax reforms
constituted by the government (Congress 1991-96) have since formed the basis of
tax reforms in India. All successive governments have implemented these
recommendations. No government has sought to reverse or alter the process
started by Congress government (1984-89). These recommendations formed the core
of the now discarded Direct Tax Code. The origin of the tax proposal like lower
tax rate with lesser exemptions and no wealth tax proposed in could also be traced
to that.
Committees
formed under the chairmanship of other members of Raja Chelliah committee like
Govinda Rao, Partha Shome and Vijay kelkar etc. subsequently updated the
recommendations to provide further impetus to the entire process of tax reforms
in the country.
It was the
Finance Minister of H. D. Devegoda led United Front government who presented
the most talked about "dream budget".
2. The
recommendations of Narsimham Committee (1991-92) appointed by Dr. Manmohan Singh,
the then finance minister in the Congress government, have largely formed the
basis of financial and banking sector reforms in the country. Most successive
governments have implemented the recommendations consistently. In fact, P.
Chidambram, the then finance minister in United Front government (1998) had
re-appointed the Narsimham Committee to make recommendations about the second
generation banking sector reforms. The report was submitted in 1999 to the NDA
government which accepted the recommendations. However, almost all governments
have failed in building wider consensus on these recommendations and have
failed to implement many of them. But acceptance and rejection has been very
consistence irrespective of the form and constitution of government.
3. The BJP led NDA
government enacted the Fiscal Responsibility and Budget Management Act (FRBMA)
in 2003. The arch rival Congress led UPA-I government implemented the same in
2004 in letter and spirit. This still forms the very basic of fiscal discipline
both at central and state levels, though implementation was suspended in 2009
in the wake of global crisis and need for stimulus. In FY13 stimulus withdrawal
commenced. The incumbent Finance Minister has committed to achieve the targets
in next three years.
4. The minority
government of Chandrashekhar introduced disinvestment policy first time in
1991. Every successive government since then has not only accepted the policy
in principle but also tried to actively integrate
into the
evolving economic model. Almost all of them have consistently failed in
implementing the policy in right spirit.
5. The then Finance
Minister Pranab Mukherjee sought to implement GAAR or general anti tax
avoidance rules. However, he had to defer the implementation due to concerns
expressed by foreign investors and businesses. Both the successive finance
ministers have kicked the can a little further.
6. Single national
market (GST) is also an idea whose time has come. The incumbent government is
poised to implement the legislation framed by the previous government.
7. Programs such as
cleaning the holy rivers of Ganga & Yamuna and provision of toilets in
every home have been accorded priority by all successive governments. Millions
have been spent on these programs with no evident results. The incumbent
government has adopted the program on mission basis. The execution could make a
difference.
From the above cited example, it is evident clear that the
direction of policy has been mostly same on most accounts during the past three
decades. The difference lies in the execution.
Indubitably, the execution was seen much better during Vajpayee
led NDA government whereas it lagged during the subsequent UPA Government.
The incumbent government has taken a number of steps to improve
the execution of key policies and programs. The outcome will decide whether the
things are being done differently!
It is however important to note that the P. V. Narsimha Rao led
Congress government and Atal Bihari Vajpayee led NDA government made many historic
departure from the past and took many new policy initiatives.
The end of Nehru era's license, quota & permit raj,
abolition of capital controls and introduction of LERMS, entry of private
players in civil aviation, opening of financial sector, etc. were some major
path breaking reforms introduced by Narsimha Rao government.
Divestment of major government monopolies like power, roads,
wireless communication, ports, airports, insurance & hydrocarbons, focus on
rural connectivity, deregulation of fuel pricing, and liberal FDI regime were
the key new policy initiatives during the Vajpayee led NDA regime.
The 10years of UPA regime did not witness any major policy
departure. The execution of existing policy norm was poor.
In past 10months of PM Modi led NDA we have not seen any major
policy departure, except dismantling of 6 decade old Planning Commission.
However, the dominance of market economists in the consultative bodies of the
government suggests that we will see a new policy paradigm in next four years.
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