In May UPA-2 was mandated to perform and deliver over 1,826 days. 64 have passed. 1,762 are left. Each counts. From experience UPA-2 must know that India confronts enormous challenges in: securing its borders and terrain; pacifying its neighbourhood; anchoring high growth and welfare; and contributing to the stability/prosperity of the larger world. Doing that requires: (a) upgrading rapidly its physical and social infrastructure as well as its governance capacity to achieve growth of 9-10% p.a. (or more) and (b) ensuring that growth dividends are better shared. India will not be respected because it creates 10-20 new billionaires each year. Respect will be earned when it has eliminated poverty (and not just in the rural areas that UPA-2 seems to be obsessed with) by 2020 at the latest. It has to get halfway there by 2015.

GoI and state governments cannot do much about poverty without exacerbating their extremely precarious fiscal and public debt conditions. They must undertake major ?switching? on their asset-liability and income-expenditure accounts to create headroom for putting more money into poverty reduction through income support, financing rural infrastructure and creating opportunities for non-farm employment in rural areas. They cannot have their cake and eat it too. They have no choice but to divest themselves of responsibility for owning and running PSUs, as well as for financing urban and cross-country infrastructure, that the private sector could own, invest more in, and manage much better. That fundamental ?switch? has to be a major objective of all reforms. So must the ?switch? from producer price subsidies to income support. A third ?switch? must be to change the orientation of government from ?command-control? to ?facilitate-regulate?.

To accomplish these tasks, UPA-2 cannot carry on doing business as usual. It cannot be satisfied with making slow, incremental progress from now to 2014. But that seems to be its default setting. Bad decisions (like nationalising banks or banning certain financial instruments and activities) are taken without concern for the consequences, foresight or forethought. They are acted on instantly even when politically contentious. But good decisions in favour of sensible and necessary change take forever. In such circumstances, snail-pace gradualism is worshipped; as if it is un-Indian to make progress more rapidly or to take the right decisions and act on them quickly. The criticality of time in the process of development is ignored. Or it is subordinated to the compunctions of political ignorance, or ostensibly to achieve some ethereal, elusive consensus.

America, Europe, Japan, Singapore, Korea and China have clocks and watches. But India just has time?all the time in the world! That is not said to obscure the reality that every reform is difficult. Reform invariably throws up winners and losers. For reforms to be durable winners must not just outnumber losers. Losers must also be compensated (in the broadest sense) and accommodated to adjust. But merely because there might be losers is not a reason for slowing down reform. Yet, being afraid of reforms is the impression that UPA-2?with its internal political and policy contradictions (which it can no longer blame the Left for)?is giving. The light it is flashing for overdue reforms is neither green nor red. It is forever amber.

It is taken for granted in UPA-2 officialdom that the Indian boat cannot be rocked or be allowed to sail at more than 2-3 knots. It might capsize. This is conveniently perceived fragility. India is a robust, resilient and adaptable country. It is not shaken or destabilised easily. It hungers for more rapid change. The alleged fragility that is a perennial excuse for going slow on reforms is unacceptable to India?s impatient young globalised population. The real reasons for slowing reform down are different.

Superannuated fonctionnaires and the dysfunctional institutions governing India, its PSUs and its financial system are reluctant to relinquish power (which they continually abuse) anytime soon. That includes politicians, bureaucrats, and countless other beneficiaries of the state?s misplaced largesse and inefficiency, its unnecessary and counterproductive ownership of enterprise, and its control over all due process. They should not have had such power in the first place. But they do. It will not be ceded easily. If they have to cede it, they will do it slowly, reluctantly and begrudgingly. That is why reforms are proceeding so slowly.

In this day and age it is impossible to assert rationally that the Indian state has to own Air India, BSNL, MTNL, Coal India, GAIL, SAIL, banks, insurance companies and a plethora of other PSUs to serve the public interest. These could all be run better by private domestic and foreign shareholders and managers (not just the politically connected). Then they would make fewer demands on the exchequer. More likely they would contribute far more to it by way of taxes on profits. Their privatisation would result in massively increased inward foreign investment. They would become far more efficient. Some would be made extinct. But in total such reforms would, for example, accelerate broadband and financial services penetration and provide far better services to the public and especially to the poor. Moreover, their sale would enable the Indian state to reduce its burgeoning public debt that is becoming perilous. Contrary to UPA leadership opinion, the crisis of 2008 does not prove otherwise. We lost a decade learning the wrong lessons after the Asian crisis of 1997-2000 and pulled our horns in at the wrong time. We may repeat that colossal mistake yet again.

Some PSU outfits like Air India are buckets with no bottom into which money must keep being poured. The airline flies more for the convenience of its ministry, staff, and political owners than for the travelling public. It is overstaffed and uncompetitive. It is no longer needed. It would be better off being run by Tata, Mallya, Goyal or Branson. Must the state keep pouring money into it ostensibly to protect the interests of the public and the poor? The contention is laughable. Those are the two interests most compromised by state ownership, management and control. In India it is a mistake to equate public ownership with public interest. What history has shown with remarkable clarity is that public ownership in India means taking care of the private interests of those elected as well as those hired professionally to govern or to run and work in PSUs. It does not benefit the governed. The public does not even figure in their thoughts except as a nuisance.

?(To be continued)

The author, an economist and a corporate finance expert, chaired a committee on financial reforms