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| Finance Minister Yashwant Sinha: minced
no words telling industry to quit complaining and start focusing
on competitiveness |
For
a world stricken with the ugly fallout of terrorism, there was plenty
of hope and optimism coming from some of its most influential citizens,
including America's former Vice President Al Gore; the International
Monetary Fund's outgoing advisor, Stanley Fischer; Sinophile Laurence
J. Brahm; Union Finance Minister Yashwant Sinha, the central bank
Governor Bimal Jalan, and Anil Ambani, Managing Director of Reliance
Industries. The event: the first-of-its-kind India Today Conclave
held in New Delhi from 20 to 22 January, 2002.
 In
a session barred for the media, Gore-sporting a salt-n-pepper beard-delivered
the keynote speech in which he praised the 1.7-million-strong Indo-American
community for its contributions to American society and business.
''India and the US will be the two (dominant) it powers," he
told the 220-odd participants.
Watch for China, though, was the message from
Sinophile and China expert Laurence Brahm. Next decade, he said,
belonged to China, when the country will achieve a 7 per cent rate
of growth on the back of robust industrial growth. "It's a
misconception," he told the audience, "that China is a
communist country. As far back as 1992, Deng Xiaoping put China
on the road to managed marketisation (where the state leads the
economy towards free market)."
But as a new member of the World Trade Organisation,
China assumes greater significance in the world economy. Just how
will India be impacted? It was up to Anil Ambani and RBI Governor
Bimal Jalan, who chaired that session, to throw up some answers.
The governor said that India was one of the least globalised countries,
and although the playing field within the WTO was not even for all
countries, India must fight the battle from within. He also cited
three reasons why globalisation was inevitable: the death of distance
because of information technology, the services boom, and the flow
of capital to the most attractive and deserving markets. "Thanks
to these," Jalan said, "we can no longer blame external
factors (for our troubles). Our destiny is in our hands."
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| The Reserve Bank of India Governor Bimal Jalan
speaks on India and WTO. "It is a world that is in India's
favour," he said. |
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| Reliance Industries' MD Anil Ambani at the podium,
pushing strongly for labour and taxation reforms. |
As the managing director of a global-scale company,
Ambani agreed with Jalan's rationale for integration with the world
economy. He also saw merit in lowering import tariffs, but said
that the reductions should be gradual and must be preceded by measures
to enhance local competitiveness. For that, he urged the government
to focus on factors that make India a high-cost economy, and push
ahead with reforms in labour policy, taxation laws, and capital
account convertibility.
As for navigating the new lay of world trade,
Ambani suggested that the government should use its negotiating
power to leverage India's intellectual capital, and join hands with
countries that may have similar concerns. "WTO presents us
with a great opportunity, and not a threat," he noted. "We
know what needs to be done (second-generation reforms) but are caught
up in implementation issues," he added.
Day Three, last day of the conclave, saw Finance
Minister Yashwant Sinha and IMF advisor Stanley Fischer paint the
macro-picture for India. As if to prepare industry captains for
his budget next month, Sinha came out plain and strong. He urged
industry not to clamour for protection and instead focus on improving
its own efficiencies, which was the only way India could break out
of its Third World status. On the import tariffs front, Sinha made
it clear that the government was committed to lowering rates to
20 per cent over the next three years.
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| India Today Group's CEO Aroon Purie (left) in
an informal chat with Maruti's Udyog's MD Jagdish Khattar |
Coming down hard on protectionist lobbies, the
finance minister said that one company's finished product was another
company's raw material. "The last one decade, since liberalisation
began in 1991, was enough for domestic industry to prepare for competition,"
he said. At the same time, he indicated that certain sensitive items
could be protected by increasing tariffs within the World Trade
Organisation's bound rates.
Fischer, whose speech followed that of Sinha,
appreciated the progress India had achieved in its first decade
of reforms, but pointed out that more reforms at the structural
level needed to be done (See "Continue With Reforms").
Praising the report put out by the Prime Minister's Economic Advisory
Council in February last year, Fischer said that India already knew
all the key areas where reforms needed to be carried out. It was
just a question of implementing those suggestions. "Just do
it," he urged India.
After three days of interactive brainstorming,
one thing was loud and clear: that globalisation is inevitable and
India's options were only two-either be a part of it or get marginalised.
INTERVIEW WITH STANLEY FISCHER
"CONTINUE WITH REFORMS"
|
 January
was his last month at the IMF, but Stanley Fischer,
Advisor to IMF, didn't hold back any punches in telling India
what to do. Excerpts from his interview to BT's
R. Sridharan
How do you assess India's situation against the backdrop
of a global slowdown?
The overall economic situation is quite strong. The external
situation is very strong, there is considerable exchange rate
stability, very high reserves, and reasonable current account
inflows. So there is an element of stability in the country's
economy.
What are the areas of concern from your perspective?
The fiscal situation continues to be a matter of grave concern
and it is also disconcerting that India is not growing as
fast as it should because of the waning of the reform momentum.
Also the challenges confronting India are very large. In fact,
if India has to grow out of the third world status it has
to grow much, much faster.
What should be the areas of focus?
The Prime Minister's advisory council prepared a report last
February what India needs to do to break out of the third
world. It is a report that talks about the reforms in agriculture
industry, trade, infrastructure, social infrastructure, and
the financial sector. Those are the areas where something
needs to be done. Again in the social sector, health and education
needs to be looked at. For a country which has been independent
for the last 54 years, the literacy rate is astonishingly
low.
Finally, when do you expect recession in the US to lift?
The turnaround from relative decline to increase is likely
to happen within a couple of months in the United States and
a bit later in Europe.
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