economic reforms sec a

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EconomicReforms

EconomicReforms

Submitted by :Group-5 ,Sec ±A ,WMG-17Amandeep SinghAmandeep Singh ± ± 82003 ,Gagan Sharma82003 ,Gagan Sharma ± ± 82012,Kamlesh82012,Kamlesh Jha Jha ±± 8201582015,, LuvLuv DhingraDhingra ± ± 82019 ,82019 , SameerSameer SoodSood ±± 82039,82039, MandeepMandeep SinghSingh - - 82022 ,82022 ,RaviRavi SethiSethi - - 8203482034



I ntroduction

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"Economic reform" refers to policies directed toachieve improvements in economic efficiency,either by eliminating or reducing distortions inindividual sectors of the economy or byreforming economy-wide policies such as taxpolicy and competition policy with an emphasison economic efficiency, rather than other goals

such as equity or employment growth.

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India s growth story

GDP growth of 7%.Manufacturing sector grew at 9.13% 2004-05) as against 5% in(2000-01)

Capital goods grew at 13.95% (2004-05)Consumer goods grew at 11.7% (2004-05)N early 2/3 of the population is illiterate, the average annual incomeis $306.India has great potential: large deposits of natural resources, large

rivers for hydroelectric and other forms of power, and the secondlargest population in the world!!Despite this potential, India remains one of the poorest countries inthe world.

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P re-liberalisation policiesIndian economic policy after independence was influenced by thecolonial experience and by those leaders' exposure to Fabiansocialism.Policy tended towards protectionism, with a strong emphasis onimport substitution, industrialization, state intervention in labor andfinancial markets, a large public sector, business regulation, andcentral planning.Five-Year Plans of India resembled central planning in the SovietUnion. Steel, mining, machine tools, water, telecommunications,insurance, and electrical plants, among other industries, were

effectively nationalized in the mid-1950s.Elaborate licenses, regulations and the accompanying red tape,commonly referred to as License Raj, were required to set upbusiness in India between 1947 and 1990.

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P re-liberalisation policies Impact

T he low annual growth rate of the economy of India before 1980(stagnated around 3.5% from 1950s to 1980s).Only four or five licences would be given for steel, power andcommunications. License owners built up huge powerful empires.A huge public sector emerged. State-owned enterprises made largelosses.Infrastructure investment was poor because of the public sector monopoly.License Raj established the "irresponsible, self-perpetruatingbureaucracy that still exists throughout much of the country" andcorruption flourished under this system.

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E conomic reforms in I ndia

T he economic liberalization in1991 is initiated bythen Indian prime minister P. V. N arasimha Raoand his finance minister Manmohan Singh.

T hey did away with investment, industrial andimport licensing and ended many publicmonopolies, allowing automatic approval of foreign direct investment in many sectors.

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Economic reforms during the post independenceperiod

T he post independence period of India was marked by economic policieswhich tried to make the country self sufficient. Under the economic reform,stress was given more to development of defense, infrastructure andagricultural sectors. Government companies were set up and investmentwas done more on the public sector. T his was made to make the base of the country stronger. T o strengthen the infrastructure, new roads, rail lines,bridges, dams and lots more were constructed.

During the Five Years Plans initiated in the 1950s, the economic reforms of India somewhat followed the democratic socialist principle with moreemphasis on the growth of the public and rural sector. Most of the policies

were meant towards the increase of exports compared to imports, centralplanning, business regulation and also intervention of the state in thefinance and labor markets. In the mid 50's huge scale nationalization wasdone to industries like mining, telecommunications, electricity and so on.

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Economic Reforms during 1960s and 1980s

During the mid 1960's effort was made to make India self sufficient and alsoincrease the production and export of the food grains. T o make the plan asuccess, huge scale agricultural development was undertaken. T hegovernment initiated the µGreen Revolution¶ movement and stressed onbetter agricultural yield through the use of fertilizers, improved seed and lotsmore. N ew irrigation projects were undertaken and the rural banks werealso set up to provide financial support to the farmers.

T he first step towards liberalization of the economy was taken up by RajibGandhi. After he became the Prime Minister, a number of restrictions onvarious sectors were eased, control on pricing was removed, and stress

was given on increased growth rate and so on.

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Economic Reforms during 1990s to the present times

Due to the fall of the Soviet Union and the problems in balance of paymentaccounts, the country faced economic crisis and the IMF asked for thebailout loan. T o get out of the situation, the then Finance Minister,Manmohan Singh initiated the economic liberation reform in the year 1991.T his is considered to be one of the milestones in India economic reform as itchanged the market and financial scenario of the country. Under theliberalization program, foreign direct investment was encouraged, publicmonopolies were stopped, and service and tertiary sectors were developed.Since the initiation of the liberalization plan in the 1990s, the economicreforms have put emphasis on the open market economic policies. Foreigninvestments have come in various sectors and there has been a goodgrowth in the standard of living, per capital income and Gross DomesticProduct.Due to the global meltdown, the economy of India suffered as well.However, unlike other countries, India sustained the shock as an importantpart of its financial and banking sector is still under government regulation.N evertheless, to cope with the present situation, the Indian government hastaken a number of decisions like strengthening the banking and tertiarysectors, increasing the quantity of exports and lots more. Group-59



E conomic reforms in I ndia

Rajiv Gandhi government (1984-1989)

Narasimha Rao government (1991-1996)

Post liberalization reforms

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Rajiv Gandhi government (1984-1989)

In the 80s, the government led by Rajiv Gandhi started lightreforms.T he government slightly reduced License Raj and also promotedthe growth of the telecommunications and software industries.

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N arasimha Rao government (1991-1996)

T he reforms progressed furthest in the areas of opening up toforeign investment, reforming capital markets, deregulatingdomestic business, and reforming the trade regime.Liberalization has done away with the License Raj (investment,industrial and import licensing) and ended many publicmonopolies, allowing automatic approval of foreign directinvestment in many sectors.Rao's government's goals were reducing the fiscal deficit,privatization of the public sector, and increasing investment ininfrastructure.

T rade reforms and changes in the regulation of foreign directinvestment were introduced to open India to foreign trade whilestabilizing external loans.In the industrial sector, industrial licensing was cut, leaving only18 industries subject to licensing. Industrial regulation was

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Abolishing in 1992 the Controller of Capital Issues which decided the pricesand number of shares that firms could issue.Starting in 1994 of the N ational Stock Exchange as a computer-basedtrading system which served as an instrument to leverage reforms of India'sother stock exchanges. T he N SE emerged as India's largest exchange by1996.Reducing tariffs from an average of 85 percent to 25 percent, and rollingback quantitative controls. ( T he rupee was made convertible on tradeaccount.)Encouraging foreign direct investment by increasing the maximum limit onshare of foreign capital in joint ventures from 40 to 51 percent with 100

percent foreign equity permitted in priority sectors.Marginal tax rates were reduced.Privatization of large, inefficient and loss-inducing government corporationswas initiated.

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Later reformsAtal Bihari Vajpayee's administration surprised many by continuing reforms,when it was at the helm of affairs of India for five years.T he Vajpayee administration continued with privatization, reduction of taxes,a sound fiscal policy aimed at reducing deficits and debts and increasedinitiatives for public works.T

he UF government attempted a progressive budget that encouragedreforms, but the 1997 Asian financial crisis and political instability createdeconomic stagnation.Strategies like forming Special Economic Zones - tax amenities, goodcommunications infrastructure, low regulation ² to encourage industrieshas paid off in many parts of the country.

T he Golden Quadrilateral project aimed to link India's corners with anetwork of modern highways.Right to Information Act (2005)Indo-US civilian nuclear agreement (2008)Right to Education Bill (2008)

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What has been done?Overall acceleration of economic growth along with rapid elimination of poverty has to be the primary objectiveinjection of competition in the economy in order to induce greater efficiencyand productivity gains; and dedicated efforts are needed to build capacitythrough human resource development.

Between 1850 and 1900, there was hardly any discernible economic growthin Indian sub-continent. Per capita income was stagnant, perhaps decliningover that whole long period.After independence, annual per capita was in the range of 1 to 1.5 per centuntil around 1980. After 1980 it increased to about 3-4 per cent.Economic crisis at the end of the 1980s: T he balance of payments came

under severe pressure, fiscal deficits increased significantly over the 1980s.

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Macroeconomic Reforms and Fiscal Stabilization

F iscal System

Monetary Policy

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Fiscal System

F iscal SystemT he tax system for direct and indirect taxes was very complex.High maximum marginal personal income tax rates, with number of rates for different income ranges.Corporate tax rate was very high. Accordingly, the tax code had to beriddled with a number of special provisions for exemption of different kindsof income, and the corporate tax code was full of exceptions and incentives.High tax avoidance and evasion due to high rates and complexity, Both thepersonal income tax and corporate tax rates were brought down to 30 per cent, along with considerable simplification.

In the case of indirect taxes, there were high levels of both domestic exciseduties and customs tariffs, with a myriad of rates for different commodities.T his necessitated a whole range of specific provisions and exemptions for different kinds of producers and end users, leading to great administrativecomplexity.

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Fiscal System Continued«..Customs duties brought down from average of 110 per cent in 1991 (withhighs over 400 percent) to a non agricultural peak of 12.5 per cent in 2006.Excise, which is levied at the manufacturing stage, is now essentially leviedas a VA T (Value Added T ax) so that cascading is avoided.Introduction of service tax in order to tax the whole economy more fairly andto reduce the excessive burden on one sector.T ransformation of state level sales taxes to the Value Added T ax (VA T ),which introduced a large measure of rationality and uniformity in the statetax system.

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Monetary P olicyMonetary policy during 1970s and 1980s, become almost non-existent: witha system of credit allocation, administered and different interest rates for different purposes; automatic monetization of fiscal deficits; and financialrepression through pre-emption of banks¶ resources.

Measures taken included:Elimination of automatic monetization, reduction of statutory pre-emption of the lendable resource of banks, and interest ratederegulation .

Result:Consequent movement from direct to indirect instruments of monetarypolicy. T hese changes significantly reduced of inflation.

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Micro Economic ReformsMajor economic reforms took place in areas like Industrialderegulation, infrastructure reforms, financial sector strengthening,capital market, deepening and agriculture.

Industrial PolicyInfrastructureF inancial Sector

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Industrial P olicyMassive deregulation of the industrial sector constituted the first major package of reforms in July 1991. T he obsolete system of capacity licensingof industries was discontinued; the existing legislative restrictions on theexpansion of large companies were removed; phased manufacturingprogrammes were terminated; and the reservation of many basic industriesfor investment only by the public sector was removed.

Restrictions that existed on the import of foreign technology werewithdrawn, and a new regime welcoming foreign direct investment, hithertodiscouraged with limits on foreign ownership, was introduced.

With this massive reform introduced in one stroke in 1991, the stage wasset for a policy framework that encouraged new entry, introduced newcompetition, both domestic and foreign, which thereby induced theattainment of much greater efficiency in industry over a period of time.

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InfrastructureWith deregulation, introduction of the private sector and formation of theT elecom Regulatory Authority of India ( T RAI),

T he major reforms in roadways were: imposition of a fuel acess to financehighway construction; the commissioning of the N ational Highway

Development Project and PMGSY (Prime Minister's Gram Sadak Yojana or the Rural Roads Programme).

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Financial SectorIntroduction of competition enhancing measures.

Introduction of operational autonomy and partial disinvestment of publicownership in public sector banks, entry of new private and foreign banksand permission for FDI and portfolio investment in banking are some the

major reform measures in this area.

Listing of almost all public sector banks is another major reform in thisregard.

Introduction of partial private sector ownership in public sector banks andtheir consequent listing has been extremely important for market orientationof these banks and transparency in their accounts and operations.

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Current Economic ScenarioPer capita income more than 6.4% per year, against 1.5% per year up to1980

Indian Growth Experience (Sector Wise)

A griculture:

1951-52 to 1960-61: 3.1%2002-03 to 2005-06: 1.9%

Industry:1951-52 to 1960-61: 6.1%

2002-03 to 2005-06: 8.3%

Services:1951-52 to 1960-61: 4.6%2002-03 to 2005-06: 8.7%

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Current Economic Scenario Cont..GDP:

1951-52 to 1960-61: 3.9%2002-03 to 2005-06: 7.0%

Per Capita National Income:

1951-52 to 1960-61: 1.9%2002-03 to 2005-06: 5.6%

P ercentage of P eople below P overty LineRural:

1987 to 88 ± 39.12007 (Projection) ± 21.1

U rban:1987 to 88 ± 38.22007 (Projection) ± 15.1

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GDP Per Capita (1990 International Dollars): 1700-1998 and 2003

Source for: 1700-1998: Maddison, Angus. 2002. Growth andInteraction in the World Economy: T he West and the Rest over the Past Millennium, OECD Observer.

Source for 2003: World Bank, 2005, Table 1.1.

1700 1820 1870 1913 1950 1973 1998 2003

China 600 600 530 552 439 839 3117 4980

India 550 533 533 673 619 853 1746 2880

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F oreign Capital Inflows and Reserves (U S$ Million)

1990-1991

1997-1998

2003-2004

2004-2005

Cumulative

FD I 97 3525 4673 5535 44,511 2

Portfolio 6 1828 11,377 8909 55,467 2

TOTAL 103 5353 16050 14444 99,978 2

Reserves 1000* 29367 112959 141514 2 143,7743

External Debt(Total)

83801 93531 98488 104551 122,1474

Short Term 8544 5046 2745 4569 7,275 4

Debt Service (%) 35.3 17.8 14.1

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Real GDP Growth

Period1950-1980

1980-1990

1991-1992

1992-1997

1997-2002

2002-03 2004-05 2005-06*

Average AnnualGrowth Rate (%)

Real GDP 3.50 5.9 1.3 7.1 5.5 4.0 6.9 7.0-7.5

Population 2.2 2.1 2.0 1.9 1.7 1.7 1.6 1.6

Read GDPper capita

1.3 3.8 -0.7 5.2 3.8 2.3 5.3 5.9

Sources: MOF (2005a), Annex Table 1.6, * RBI, (2005c) 2 8 Group-5



PERCENT A GE OF POP ULA TION LIVI NG IN PO V ERTY

RURAL URBAN N AT ION AL

August 1951 ± N ovember 1952 47.4 35.5 45.3

September 1961 ± July 1962 47.2 43.6 46.5

July 1973 ± June 1974 56.4 49.0 54.9

July 1977 ± June 1978 53.1 45.2 51.3

1983 45.7 40.8 44.5

July 1987 ± June 1988 39.1 38.2 38.9

July 1993 ± June 1994 37.3 32.4 36.0

July 1999 ± June 2000 27.1 23.6 26.1

Target for 2007(Tenth Five-Year Plan)

21.1 15.1 19.3

Sources: World Bank (2000), Annex Table 1.1 and MOF (2005a), pp.225-2272 9 Group-5



F iscal Deficit (% of GDP)

Centre States Consolidated

1990-91 6.6 3.3 9.4

1996-97 4.1 2.7 6.4

2002-03 5.9 4.7 10.1

2003-04 4.8 4.4 8.4

2004-05(R evised)

4.5 3.8 8.3

2005-06 (Bu dget)

4.3 3.7 7.7

Source: Rao (2005), Table A4, RBI (2005a), Table 11 30 Group-5



Savings and Investment Rates

1990-1991 1995-1996 2001-2002 2003-2004

Gross Domestic Savings 23.1 25.1 23.5 28.1

Public 1.1 2.4 -2.8 -0.3

Household: 19.3 18.2 22.8 24.3

Financial 8.3 8.9 11.2 11.4

Physical 11.0 9.3 11.6 12.9

Corporate 2.7 4.5 3.5 4.1

T OT AL PRIVA T E 22.0 22.7 26.3 28.4

N et Capital Inflow 3.2 1.7 -0.4 -1.8

Gross Domestic Investment (Adjusted for errors and omissions)

26.3(0.1)

26.8(0.2)

23.1(-1.0)

26.3(3.3)

Public 10.4 7.7 6.0 5.6

Household 11.2 9.3 12.6 12.9

Corporate 4.6 9.6 5.1 4.5

T OT AL PRIVA T E 15.8 18.9 18.1 17.4

Sources: Central Statistical Organization (CSO), N ational Accounts Statistics, 2004 and earlier issues

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External Sector

*ChinaSource: In ter na tional Tr a de St a tistics , Tables I.5, I.7 and II.2 , Geneva, World T rade Organization,

2005.

1948 1983 1993 2004

Share in World MerchandiseExports2.2(0.9)*

0.5(1.2)*

0.6(2.5)*

0.8(6.5)*

Rank30(3)*

Share in World Commercial

Services Export

1.9

(2.9)*

Rank16(9)*

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Where do we go?As per the data published by CSO, we need to achieve a steady GDPgrowth of more than 8.5% per annum per year, and thereby see at least adoubling every decade.

T he main organizing principle of most reforms carried out so far has beenthat of freeing the private sector from the myriad government controls thathad existed for a long time. Whereas this process itself still has somedistance to go, the consequence of this widespread deregulation andintroduction of competition in most segments of the economic sphere hasbeen the very visible unleashing of entrepreneurial energies at all levels andin most parts of the country.

Have we reached the limit of private sector led acceleration in investmentand output growth? Will this now be increasingly constrained by the lack of public investment, both physical and social? T here is a major lack of adequate delivery of public services in both quality and quantity, whichneeds to improve extensively.

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India vs. ChinaIn the past two decades China has grown at 10%+.India at less than 6%China has outperformed India in all the three sectors of the economyIn 1980 India¶s GDP ($155 bn) was higher than China($141 bn)In 2001 China¶s GDP ($1117 bn) was more than twicethat of India ($492 bn)

In 1980 China¶s per capita income ($167) was lower than that of India ($228)In 2001 China ($878) was well ahead of India ($477)

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State Per CapitaGDP (Rs.)

AP 11293.4 Assam 6605.5Gujarat 15040.8Haryana 15711.7HP 12563.3Karnataka 13067.9Kerala 12074.6MP 8194.4Maharashtra 16110.7Orissa 6531.2

Punjab 16923.5Rajasthan 9196.8Tamil N adu 14592.9West Bengal 10694.9B ihar 3649.8U P 6573.6A ll India 11625.2



State Cumulative Per Capita(Rs.)

AP .9 A ssam 65 87 .3Gujarat 1 2 04 7 .7

Haryana 9 52 0.1

HP

162

51.9

Karnataka 8 19 5.9

Kerala 7 377 .6MP 57 66.5Maharashtra 7 61 9 .8

Orissa 5431.5P

unjab9

467

.9

Rajasthan 60 8 3.1Tamil N adu 7 561.4West Bengal 60 9 5.4Bihar 3 2 06.0UP 378 6.3 A ll India 6 7 48 .5



Indicator 2000-01 2001-02 2002-03Exports 37.5 44.9 44.9 Imports 55.4 59.3 57.6

Trade Balance -17.9 -14.4 -12.7 Invisibles 13.1 10.8 13.5

Current a/c bal -4.7 -2.6 0.8



97-98 98-99 99-00 00-01

Req. MU s 424,505 446,584 480,430 507,216

AvailableMU s

390,330 420,235 450,595 467,400

Shortfall 8.1% 5.9% 6.2% 8%

Subsidy Rs.30345 crs Rs.33814crs Rs.36319 crs Rs.36713crs

Loss Rs.18081 crs Rs.24920crs

Rs.24237 crs Rs.27306crs

ROR -27.5% -41.2% -37.9% -38.2%38 Group-5



Year % of TotalPopulation

1951 17.31961 18.01981 23.31991 25.72001 33.4

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Where do we go? (Cont«)

Area which require immediate attention for development:

Agricultural development,Urban development,Human Resource Development,

Management of Public Services

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Agricultural Development

With about 60 per cent of the population still largely dependent onagriculture, the deceleration has clearly had a significant impact on slower reduction in poverty levels

For aggregate annual GDP growth to exceed 8.5 per cent on a sustainablebasis, it will be difficult if agricultural growth itself does not exceed 4 per cent annual growth.

Supply Side Growth: After prolonged drought of mid 1960s; governmentlaunched a crash emergency program to accelerate the production of basicfood grains cereals, accompanied by discovery of high yield rice and wheat

varieties. However, in recent years, production growth in cereals hasstagnated significantly, with the productivity gains difficult to achieve.

Demand Side Growth: Increasing incomes leading to progressive shift indiets of urban areas and rural areas from cereals to non-cereals.

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Agricultural Development Cont..T herefore, it is necessary to understand that even though there aretechnological limitations to continued production of cereals from supply side,there are also limitations to growth of cereals from demand side.

N eed for a second green revolution: T here is great potential for accelerationin growth of non-cereal foods. T hese areas constitute dairying, horticulture,aquaculture and pisciculture, poultry, meat, and even wineries. T his can bedone by designing national programmes applicable country wide withrelatively easy regional variations

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U rbanization and U rban Development

T he public sector has to be empowered to make appropriate knowledgebased policy that is city and people friendly; and also to build capacity tomanage cities in a progressive framework.

Overall industrial policy and industrial location policy both have to be rid of their anti-labour using bias; and industrial location policy has to provide for the conscious development of urban industrial parks.

Many Asian cities, for example, including a high income city state likeSingapore, have a profusion of flatted multi-storied factories that house ahost of non-polluting labour using manufacturing facilities.

T here has to be recognition of the virtue of industrial clusters and facilitationof associated facilities such as industrial training institutions, educationaland health facilities. Many such activities can be supplied by the privatesector but it is enlightened public management that can bring them about.

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Strengthening of city management is a key requirement for the healthygrowth of Indian cities. T his needs a massive programme for financialstrengthening of local bodies including revamping of their local tax systemsso that they become buoyant. Ways and means will also have to be foundfor credit enhancement of urban local bodies so that they become creditworthy and can then raise the resources necessary for urban infrastructure

investment.

Overall, cities are huge public management systems that have been largelyneglected. With the opening of the Indian economy, Indian industry andenterprise of all kinds have to be competitive with the best in the world.T hey will be handicapped if the cities that they inhabit are themselves not asefficient as their counterparts elsewhere.

Hence, the acceleration in growth of Indian enterprise will be constrainedwithout adequate empowerment of the public sector in terms of management of Indian cities. T his is a job that the private sector clearlycannot do.

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H uman Resource Development

Primary and Secondary EducationVocational T rainingHigher EducationHealthPublic Sector Management

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P rimary and Secondary Education

T he performance of public primary schools has been widely brought intoquestion. T here is also increasing evidence of a shift from public to privateschools, even by the poor, and often their quality is no better.

Even poor parents spending a lot of money on primary education, whichshould really be provided for by the state, there is a clear demand for it andrecognition of its utility for upward mobility. T he expansion of governmentprogrammes will certainly expand the quantity of education being offered.

T he quality of education, which would emerge if there is greater localaccountability of the school system and greater local involvement in

general.T

eachers themselves need to be in centivised and better trained;and teaching materials have to be provided and improved. Clearly, theseproblems are the most pronounced in the poorest parts of the country thatare also underserved in terms of basic infrastructure like power, rural roadsand communications.

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With the success is achieved in the expansion of primary education andreduction in drop out rates after primary schooling, the next thrust will be theburgeoning demand for secondary education.

As we progress, incomes increase and production processes need greater and greater skills to be competitive, primary education will no longer beadequate for performing lower skill tasks.

We will need to expand the supply of secondary school teachers verysignificantly, invest large resources in school buildings and in thepreparation and distribution of education materials.

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V ocational TrainingT echnical training has essentially been provided by Industrial T rainingInstitutes (I T Is) but they are not many, and often do not turn out studentswith the relevant skills.

It is interesting that in India there are 175 defined trades that can be subjectto organized training; in Germany there are 2500 such defined trades andoccupations, each with its organized training syllabi, training certification,and availability of training institutions.

T he famed German vocational training system involves a very complex webof interaction between the federal government, state governments, local

chambers of

A beginning has been made in seeking the up gradation of 500 I T Is withindustry participation, but much more needs to be done to ensure regular skill up gradation in all vocations.

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H igher EducationT he success of a few elite institutions such as the Indian Institute of Science, Indian Institutes of T echnology (II T s), Indian Institutes of Management (IIMs), the N ational Institute of Design, the more recentN ational Law Schools, have masked the general lack of quality in Indianhigher education.

Among the elite institutions, only three were included in the top 500 higher education institutions in the world as ranked on objective criteria by a groupof Chinese researchers. Because of the good quality of Indian secondaryschooling on a relatively wider scale, competitive processes lead to theemergence of a large number of very bright Indian students who can thenexcel despite the poor quality of instruction and environment in higher educational institutions.

T here is a severe shortage of resources: tuition fees are extremely low andthe government is strapped for resources. T here are legitimate competingclaims for scarce resources for primary and secondary education, not tomention vocational education.

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We need to search for new systems of governance that can allow for diversity in delivery. While providing appropriate incentives for theachievement of excellence with the great increase in compensation levels inthe private corporate sector, and the lack of even basic facilities in collegesand universities, attracting brighter students to take up teaching careers hasbecome even more difficult than it was hitherto.

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H ealthT here are significant issues related to the delivery of public health,particularly the availability of clean water and sanitation but there areequally important issues to do with the delivery of curative health.

T here is widespread evidence of the deterioration of public medical systemswhich are being replaced by private providers. Given the availability of newtechniques, new drugs, and diagnostics, the less well off are increasinglyfinding it difficult to access these services at any semblance of affordablecost, and health insurance is in its infancy.

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P ublic Sector Management

Make public service prestigious again: not for the exercise of power andauthority, but for tackling challenges for efficient public service delivery.

Most public service delivery operations, including those run by the civilservice, need the injection of outside expertise at different levels. Each of our public authorities discourages lateral entry and therefore tends tobecome inward looking and suspicious of new ideas. Lateral entry of outside experts would do much to inject new energy and even publicentrepreneurships.

Public private partnerships are not easy to foster, as one is non-profit while

the other is profit seeking. Overall there has to be a search for innovativeforms of public service delivery. T his would also involve realignment of compensation levels. If individuals of high levels of competence are soughtto do the most complex tasks they will need to be compensated adequately.

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Conclusion

Yes, we need to step up the pace .we can achieve this by followingT he economic reforms process carried out in India over the last 15years has brought forth a burst of new entrepreneurial energiesacross the board in almost all sectors. As a consequence, thecountry is now recording substantial economic growth in excess of 8

per cent. T his growth could possibly be constrained by the lack of both quality and quantity of public services supplied by theGovernment and its various authorities.

Hence there has to be all-round improvement in investment in and

delivery of public services.

T he new focus of economic reforms has to be the empowerment of the public sector to do what it is supposed to do: public services.

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economic reforms sec a

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