THERE is a reformist turn in the Indian economy. Fuel prices have been decontrolled. Disinvestment is in sight and there is promise of more floating stock on the bourses. A new coal allocation policy has been adopted and rules for land purchase are being simplified. The Centre and the states are moving towards an accord on the unified goods and services tax (GST). A fall in crude prices has produced ripples in the country. Market-determined diesel prices free from administrative control would reduce subsidies on petroleum products. The economy can absorb the shock should global crude prices go up. Now that diesel prices have been decontrolled, similar reforms should be introduced in other areas. The Union Cabinet has cleared a blueprint to acquire the coal mines and the plants built on them through an ordinance with a view to e-auctioning them. Highly restrictive conditions were imposed by the UPA land acquisition legislation last year. It is a hurdle for industry to buy land. Ambiguous titles of ownership, environmental issues, poor compensation and social concerns thwart land acquisition. It should be remedied soon. The government should also raise the FDI cap in the domestic insurance sector from 26% to 49%. Life insurance penetration in India is now about 3.17% of GDP while it is 10% in Japan and 6% in Australia.
Many other crucial reforms call for urgent attention. The public distribution system has to be toned up. A contemporary income tax code should be introduced. No half measures will do. There must be a 100% effort to ensure 100% fitness of the economy. What is most important, however, is to ensure that the skewed income pattern in the country should be set right. Billionaires are fine but the needs of hungry millions are of the utmost importance.
