The government’s announcement of review of the policy on rehabilitation of land-losers in SEZs indicates the complexity and contention involved in land utilization and industrialization in a densely-populated, poor country like India.

In the midst of robust growth indicators, one issue which is causing concern is the black economy and the role of real estate in that. Some estimates put this parallel economy between 25 and 50% of the accounted GDP.

The impact of economic liberalization on poverty levels in the country has been vigorously debated by economists and politicians over the years. The data seems inconclusive, and scholars often seem to arrive at conclusions suspiciously close to their own ideological proclivities. The broad consensus appears to be that poverty is declining; it is difficult to conclude that all the decline in poverty is attributable to liberalization and rapid growth; and the decline in poverty is less than what the free market enthusiasts hoped.

One of the great challenges in any society is increasing administered prices, or reducing subsidies in a politically palatable manner. All democracies wrestle with the problem of reconciling the clash between the short-term political price a government has to pay for temporarily unpopular decisions, and the long-term social good which results from such decisions. Political parties and governments are always mindful of the fact that unpopular decisions, even if they are in the long-term interest of the people, may cost them their power.

The redoubtable Economist (June 3rd – 9th, 2006), in a special report on Indian business, asks the provocative question: “Can India fly?”.  The answer is that it has taken off; but its people could fly much higher without the fetters imposed by poor policies and incompetent government.  Most objective observers share this cautious optimism.

The policy issues are mired in politics and populism.  But Indian entrepreneurs and workers have a way of boosting production and productivity despite policy errors.  The real problem areas are infrastructure, education and healthcare.

align="left">The Union budget for fiscal year 2005-2006 is due in just over two weeks.  This is the period during which a lot of pressure is usually brought to bear on the Finance Minister (FM) to increase budgetary allocations for this or that panacea to transform India and eliminate mass poverty.  With greater continuity and stability in the tax regime the usual excitement about tax rates and the guessing games have been missing in recent years.  Therefore, much of the debate is about allocations, expenditure and fiscal deficits.

Despite fractious politics and short-term populism, Indian growth rate at about 7% per annum, is next only to China’s among major economies.  This reflects the underlying strength of our economy.  However, comparisons with China are inevitable, given our comparable sizes, length of history and civilization, and somewhat parallel developments after the Second World War.

Since the 1980’s India emerged out of the relative stagnation of the ‘Hindu’ rate of growth.  In the liberalization phase starting from 1991, these robust growth rates are consolidated.  India is now the second fastest growing nation among large economies. Global comparative studies indicate that our competitive advantage may continue for the next several decades, thanks to the young demographic profile, low cost economy, and large, ambitious, skilled manpower.

The Union budget for fiscal year 2005-2006 is due in just over two weeks.  This is the period during which a lot of pressure is usually brought to bear on the Finance Minister (FM) to increase budgetary allocations for this or that panacea to transform India and eliminate mass poverty.  With greater continuity and stability in the tax regime the usual excitement about tax rates and the guessing games have been missing in recent years.  Therefore, much of the debate is about allocations, expenditure and fiscal deficits.