April 15, 2002	Monday	Safar 1, 1423

India’s journey on the road to market economy has been cautious, but steady, maintained India's Deputy Chairman, Planning Commission, Mr. KC Pant who was in Islamabad last week for the two-day Saarc finance and planning ministers' conference.

While discussing with Dawn his country's experience with the 'opening up' over the last 12 years or so. Mr Pant who is also the Chairman of Prime Minister's Task Force on Infrastructure and member, National Security Council, said that in order to protect the poorer sections from the immediate negative fall-out of massive restructuring the Indian government has undertaken a number of safety net programmes with emphasis on job generation both for the rural, urban poor and for the urban educated youth.

A member of the Parliament (both Lok Sabha and Rajya Sabha) for 26 years, Mr. Pant felt that the support from across the broad political spectrum to liberalization policies had contributed significantly to their success so far.

The visible achievement of the on-going restructuring, according to the former Indian minister who has held at various times the portfolios of finance, defence, education, steel and heavy engineering, irrigation and power, energy, mines could be seen in the country's growth rate which over the last 12 years has moved at over 5 per cent on an average annually against the growth rate of only 3.5 per cent in the years preceding the 1990s.

He was also happy to see the private sector responding positively to the policies of globalization, liberalization and competition by moving in quickly to take up the space being created by gradual reduction in the public sector involvement in industries. He, however, thinks that India still needs to keep a close eye on the small industrial enterprises to protect them from sudden market fluctuations due to competition.

India's progress on the privatization front, though visible still appears rather cautious, perhaps in order to take the powerful trade unions of the country along. With the privatization process in full swing, efforts are also being made to set up regulatory authorities for utilities to protect the consumer from excessive profiteering by the private sector. For other sectors, Pant thought there was no alternative to strong consumer protection movements. The following are Mr. KC Pant's detailed answers to questions put by Dawn. Experience with market economy:

Well, as a result our rate of growth has now gone up to the level of annual average of 5.5 per cent. Earlier, it had stayed on 3.5 per cent. So, if you take that one big achievement, certainly it has helped. The real change is that with the progressive movement toward globalization, it has meant customs duties being brought down in a careful but definite way with some advance notice to industry so that they can adjust, but they are being brought down steadily. Competition is growing and whereas we had protected market earlier, today the market is very much more open.

And we have introduced competition in some areas. For instance, telecommunication area and now even in the petroleum area.From that point of view pressure has come now on industry to also raise its efficiency and productivity and this is one of the long term positive fall-outs. And this process is going on. Small scale industry also is likely to be hit, so at times one has to watch very carefully. Even if necessary to protect small scale industry as far as possible from sudden exposure to competition. In the long run even small scale industry will have to find its own niche like in any other country and the element of protection will have to go down. So that is the direction in which we are moving. And it is something which is never easy in our situation. One big plus is that almost across the board, across the political spectrum there is agreement now that it is inevitable and has to be done. And that is an advantage.

So even in communist-ruled states like West Bengal they are in fact now going in for this. They are inviting private sector. They are inviting foreign direct investment and so on. With more of competition and globalization, liberalization, cutting down on licensing, regulations so on and so forth, one aspect that emerges is that now the private sector will be investing more in industries. At one stage there was a large public sector. But through licensing one was able to take care of regional disparities much better. We were able to see that there was certain even distribution of industries in various parts of the country. Once we take away licensing this is not possible. Therefore, the major emphasis has to be placed on infrastructure. Infrastructure must be such which attracts private sector and so we are concentrating on infrastructure more in social services, education, health and so on. This is the broad thrust of last ten years' efforts.

Regulating private sector: For instance, in the power sector, a regulator has been appointed. In telecommunication sector a regulator has been appointed. And I think in all public services wherever public utilities are involved, I think regulators become necessary because then there has to be a balance between interests of the consumer and the producers directly because these are public utilities. Therefore, this is coming. We are encouraging this and watching it carefully and we want to see it that it becomes successful. And so far, it has begun to function now. But I think we will have to watch it a little more to see in which areas how effectively it is functioning, whether any changes are required, may be in the composition so on so forth in the system. In the public utilities the regulators are functioning. In other areas one has to build up proper consumer movements. It is essential. We don't have such kind of strong movements throughout the country. But there are individuals who are working.

Negative fall-out: You see, for many years now we have had programmes which are directed to meeting the minimum needs of the poorer people. And the programmes have sometimes been changed in the context of coverage and items. Broadly speaking that has been the effort. Now one is the public distribution system that takes care of at least the supply of food at cheaper rates to those below the poverty line. Now at the moment we have large stocks of food grains and so we are planning for much larger food for works programmes on the one hand. We have increased the supply of free food for certain areas where there is endemic poverty. For the poorest of the poor. And generally speaking we have a number of schemes which are aimed at creating employment because as against the old trickle-down theory, now everybody is convinced that there has to be much more direct approach to creation of employment and income. So, a number of such programmes are there and they go up to the level of building rural roads to other local asset creation in villages and panchayats. And the programmes cover rural as well as urban poor. So these are, to a large extent, a cushion,