"Reforms" have come to be identified with economic reforms and fiscal corrections and the withdrawal of the state from economic activities in favour of the market are usually seen as the essence of economic reforms.
The authors in this volume try to give a broader connotation to reforms. Statements such as, "economic reform will be essential in order for India to overcome the challenges of poverty and low human development," and "the essence of reforms is the enlargement of the concept of freedom," can be seen in Part I that deals with general issues. There is also the recognition that as governance at the state level is closer to the people, reforms at that level cannot be the same as at the Centre, which deals primarily with macroeconomic problems.
In the substantive parts of the volume three aspects of reform are considered, viz., the fiscal conditions and programmes of state governments, their off-budget activities, mainly public sector enterprises, and matters relating to governance.
The accent is on the first two. Chapters 14 and 15 in general terms and 16 and 17 through case studies of Uttar Pradesh and Karnataka respectively, provide detailed and valuable accounts of the fiscal problems of the State Governments and the attempts that they make to overcome them.
What is common to practically all the States is that their committed expenditure consisting of salaries, pensions and interest payments far exceed (especially after the implementation of the Fifth Pay Commission scales in the late 1990s) their revenue receipts resulting in current account deficits. Subsidies provided in the user charges, electricity in particular, and the poor performance of public sector enterprises add to the problem. Hence expenditure moderation and revenue augmentation are their primary reform tasks.
The third item on the States' reform agenda, governance, is dealt with in Chapters 18 to 22 with an accent on civil service reforms and E-government. Chapters 7 to 13 provide lessons from international experience in economic reforms in other federal situations as also reforms in governance from other parts of the world including Asian countries.
The message of the book can be summed up as, "In brief, first, the major focus of economic reform in India has to be the States. Second, the interstate issue will have to be a major concern of governments."
"Third, the focus of economic management may shift from ministries to regulatory bodies. Fourth, the major thrust of reform is to expand what may be called social infrastructure, especially drinking water, health and sanitation, elementary schools and so on.. ."
"Fifth, the objectives of reform can be attained by fiscal reorientation towards a larger responsibility for the States to provide public goods and social services, including anti-poverty programmes, with a concomitant rollback of fiscal activism in commercial activities."
Does that sound a comprehensive package or is it a mere resonance of Margaret Thatcher's celebrated three Es — economy, efficiency and effectiveness? If it is the latter it is because in spite of all the embellishments put in, and the pious dedication to the poor, Indian reform still remains a matter of fiscal and administrative management.
In the volume, the former Chief Minister of Madhya Pradesh, Digvijay Singh refers to it: "Currently, there is not even an Indian word that encapsulates the economic reform process to make it meaningful to the people of this country... It is not just an issue of finding an appropriate Indian name, but a question of having an agenda accepted by the people at large."
If so, what else should be added to the agenda of reforms? If reforms are meant to overcome the challenges of poverty in a country where the poor are substantially assetless, should not reforms aim to provide asset base to the poor so that they can enter into the market? (Remember land reforms?)
How about a programme to provide new skills and jobs to those who are being systematically thrown out of their traditional occupations by the market of the reforms?
If indeed the reforms are meant to improve the conditions of life of the vast majority of the population, these and similar matters must come to the top of the agenda, especially at the state level. They are related to the fourth E, equity (often misconstrued as equality and then dismissed as an impossibility) which may be possible to glide over in the U.K. or Australia, but cannot be evaded for long in India.
The rolling up of the window against this crucial E is the main weakness of the reforms as they are being implemented in India now. A lack of recognition of this fact in the volume is its weakness.
- STATE-LEVEL REFORMS IN INDIA — Towards More Effective Government: Stephen Howes, Ashok K. Lahiri and Nicholas Stern — Editors; Macmillan India Ltd, 2/10, Ansari Road, Daryaganj, New Delhi-110002. Rs. 450.
