Finally, the next wave of reforms should encompass factor markets. In the 1991 reforms, the emphasis was on reforms of product markets by abolishing industrial licensing and import barriers. These reforms left the factor markets such as labour markets, land markets, capital markets, natural resources market such as water and institutions somewhat untouched. Notice that I am including "institutions" as a factor of production.

The term "institutions" includes state and quasi-state institutions as well as judiciary and civil society. The reforms of labour markets are particularly important. The new post-industrial revolution requires flexibility in all operations. This means flexibility in labour markets is of phenomenal importance so that companies can respond with speed to the changing market conditions. Our present laws of bankruptcy and corporate control also require reforms so that themarket for corporate control become competitive.

Factor market reforms would also need to cover financial markets. The reforms of factor markets would also need to be accompanied by innovative measures for creating a social safety net such as employment guarantee schemes of Maharashtra. In addition to such employment-oriented schemes perhaps time also has come to eliminate product-based subsidies including food subsidies and replace it by a negative income tax to improve equity. The interesting variation of such policy instruments could be experimenting with food stamps and education vouchers for meeting the needs of socially disadvantaged and weaker sections of the society.

These innovations recognise the fact that the government can be a financier but need not be a producer of such services. The heart of these reforms is to promote competition in all economic activities and support the creation of human capital particularly through enlargement of quality primary education facilities to all. Evidenceacross the various countries at different stages of development show that education or human capital provide a lasting success in promoting equality in a society.

I now come to my final point regarding the launching of next wave of reforms. We need to show greater vigour and greater sense of urgency. The reason for emphasizing the urgency is due to the unique state of our demographic transition. In the next couple of decades India will have once in a lift time chance of having a population structure where we will have the largest share of working population. Naturally, after these decades, the process of aging will catch and the vigour of the working population would decline. Like a satellite when it is put to the orbit, it requires high velocity to ensure exit from the earth's gravitational force, if our economy is to exit from the gravitational pull of poverty, it also requires a high exit velocity of doubt-digit growth rate over the next two decades.

This kind of high growth is feasible, as othermiracle economies achieved it precisely when the share of working population was highest, maintaining high savings and investment rates and also increasing labour supply and productivity.

As we enter into the new century, the Indian economy stands at cross roads. Either it can take the "business as usual" road which means continued poverty and a low growth trap or take the high road to prosperity through accelerated reforms. If we take this road, then there is a no reason why India, by the year 2020, cannot achieve a per capita income of more than $1,000 or more than Rs 50,000 of per capita income and wipe out poverty and illiteracy and also increase life expectancy by 10 years or more and become an economic super power. Presently, we are in the bottom 20 amongst all the countries in terms of Human Development Index. In the year 2020 we should be up to us to build the necessary consensus for accelerated reform and implement it.