ET2000 ⁽¹⁴⁾

During his forthcoming visit to the United States, Prime Minister Atal Behari Vajpayee will have an unusual opportunity to promote the Indian viewpoint among the U.S. leaders and policy makers on issues of mutual interest to the two nations. Economic Times, August 30 2000 During his forthcoming visit to the United States, Prime Minister Atal Behari Vajpayee will have an unusual opportunity to promote the Indian viewpoint among the U.S. leaders and policy makers on issues of mutual interest to the two nations. For the first time since Rajeev Gandhi’s visit more than fifteen years ago, all eyes in America will be on a visiting Indian Prime Minister. Among those watching Vajpayee will be George W. Bush and Al Gore, the Republican and Democratic presidential hopefuls, respectively, as well as Bill Clinton, and the Congress. A key area in which the Prime Minister must take initiative to influence the American thinking is the new WTO Round. It may be recalled that the efforts to start such a round at the third WTO Ministerial Conference in Seattle in December 2000 had…

The ban on retrenchment has produced few winners. Under the threat of strikes, it has forced firms to tolerate extreme inefficiency. The ban also discourages entrepreneurs from seeking entry into labour-intensive sectors and employing labour-intensive techniques. Economic Times, July 19 2000 Moving steadily ahead with its reforms agenda, the Vajpayee-Sinha combine is entering an area of policy that promises to be most fruitful but is also politically difficult: labour laws that effectively deny enterprises with 100 or more employees the right to exit and workers many of the basic benefits. In the heyday of the license raj, any entrepreneur lucky enough to obtain an investment license was guaranteed a handsome stream of profits. Because the entry of new firms was tightly controlled and imports were subject to strict licensing, poor buyers had nowhere to go. As late as 1980, the Hindustan Motors could produce the Ambassador car that had been discarded everywhere else in the 1950s and expect a queue of customers extending to two or more years into the future. This cosy arrangement, covering the entire organized sector, did…

The calls for very large duties on imports by Prakash Singh Badal, the chief minister of Punjab, are misplaced Economic Times, June 21 2000 “Imported dairy products flood Punjab's market, sounding the death-knell for marginal farmers,” says the headline of an article published in a recent issue of Outlook. Thanks to the “glut of imported butter oil and milk powder,” continues the article, Punjab has been turned from “the proverbial land of milk and honey” into “the land of milk, more milk and tears.” The magazine’s claim is, of course, disingenuous. The phenomenal success of the dairy industry under the charismatic leadership of Dr. Verghese Kurien has culminated in India becoming the world’s largest producer of milk today. One wonders how just 40,000 tonnes of imports, which is all the milk that has been imported according to Outlook’s own account, could lead to a glut in a country that produces 75 million tonnes of its own milk every year. To be sure, dairy farmers in Punjab and elsewhere are under stress; prices of milk and milk products have experienced a…

While Prime Minister Vajpayee and Sinha must fight their own battle with the Swadeshi Jagran Manch, the gratuitous attack by the critics on the left is altogether a different matter. Economic Times, May 24, 2000 Finance Minister Yashwant Sinha has recently said that the consensus in favour of reforms is breaking down. Coming from the general leading the charge for reforms, these are ominous words. In trying to understand Sinha’s plight, one suspects that he is reacting to simultaneous attacks from two extreme sources which, though otherwise diametrically opposed to each other, have one thing in common: hostility to economic reforms. Thus, from the right, the “swadeshi” constituency within the BJP is asserting itself, pulling the government away from its agenda. And from the left, armed with some new evidence of dubious quality showing that poverty has stopped declining since the beginning of the reforms in 1991, the traditional critics of growth-oriented reforms are striking back. While Prime Minister Vajpayee and Sinha must fight their own battle with the Swadeshi Jagran Manch, the gratuitous attack by the critics on the…

The Meltzer Commission has harsh words for the manner in which the World Bank has served the poor in developing countries in recent years. Economic Times, April 26, 2000 “At the entrance to the World Bank's headquarters in Washington, a large sign reads: ‘Our dream is a world without poverty.’… Unfortunately, neither the World Bank nor the regional development banks are moving rapidly toward that objective.” Thus begins the indictment of the World Bank by the International Financial Institution Advisory Commission, chaired by the distinguished economist Allan Meltzer of the Carnegie Mellon University and including, as a member, the eminent Harvard economist Jeffrey Sachs. Appointed by the U.S. Congress in November 1998, the Meltzer Commission was asked to consider the future roles of the International Monetary Fund (IMF), World Bank and regional development banks, which include the Asian Development Bank (ADB), African Development Bank (AfDB) and Inter-American Development Bank (IDB). Last month, the Commission came out with its report, recommending sweeping changes. Though the Commission’s recommendations are not binding, they offer much food for thought to those interested in the…