What is the reason for the economic slowdonw and how can it be reversed?

The economy is in a bad shape because of many reasons. It can be pulled out the situation. The answer lies with the Government. It has to increase spending on infrastructure if it wants the industry growth to revive. The infrastrcuture projects are not taking off. If the core sector revives, it will have a very good effect on the economy. In the long run, it will also add to the competitivness of Indian industry. The Government is spending, but it is all on non-plan expenditure. Very little is going intoplan projects.

The fiscal deficit is growing because the Government is spending money on all the wrong things. Money is being spent on non-value added activities.

Subsidies are not coming down. Why can't the Government speed up the privatisation process. Why is it taking so long? The attempts to sell small slices of equity of PSUs will not achieve much. The Government should just sell large chnks of PSU shares, and invest that money in core sector projects. The size of the Government itself is increasing. Some drastic decision are required to reduce wasteful expendiute. The bloated Government will have to be reduced so that the deficit is kept in check. If plan spending was high, the Indian economy would have been booming.

Are you saying that the reform process which began in 1991 has not achieved much?

If you really look at the reforms in India, you will find that real changes took place for very short period. There were only about three years of reforms in India. While everyone says thatIndia has seen seven or eight years of change, I disagree. It was only in the initial years of the Narasimha Rao Government that some effort was made to keep a check on fiscal deficit. After that, politics took over the economy again. The subsequent Governments including the present one have not been able to manage much. Coalition politics is also responsible, but in the end the economy is paying for it.

Is India ready for globalisation?

Globalisation is something which nobody can fight. Therefore it is better to try and cope with it. No country or company can possible reverse this process. The effort on part of the company should be to change so that survival becomes easier.

I find that smaller companies in India are more competitive than the larger ones. The large companies grew up in a restricted enviroment, during the license raj period. They are finding it difficult to live with competition.

The smaller companies always had to fight to survive. So they do not mind competition. Thesecompanies are the spine of the economy. They provide more employment per crore of investment than the bigger companies.

The Government should do something for them. Of course some will dies and some will survive in competition. But we should not get judgemental about it. I beleive that no one can or should try to keep a company alive with artifical support and measures. They should be allowed to die with dignity.

Everybody gets upset over the prospect of companies closing down. The rules of economy are very clear and cruel. They do not tolerate inefficiency. The problem is that the Government and the industry tend to get judgemental about the effects of change. They do not want any one to get hurt.

Why is the industry slowing down the pace of reforms by asking for protection some sectors?

People will get hurt when you change a system, but one can take steps to reduce the pain. I'm willing to live with some level of protection, because every country has it. I think that the changes in India havegone from one extreme to another. First every thing was protected, then everything was thrown open suddenly. Indian companies were not prepared for it and were swept away. One should allow a minority foreign stake for the first few years, then increase it gradually. This will allow the Indian industry to understand the competition and be prepared for it. And if then they can't compete, then no one can help.

India has been able to fight competition in areas like textile and two-wheelers where we were strong. But in other areas like white goods and consumer electronics, Indian companies have a very small share of the market.

The Government is doing well to go in for graded opening in the insurance sector. The foreign companies should be allowed a small equity now. And later when the Indian companies have gained enough experience in the sector, greater foreign participation can be allowed.

There is a perception that Indian companies talk about quality but do little about it. Would you agree?

Idon't agree with you about quality. I think a quiet revolution has taken place in the field of quality. Indian products today are far better than the past. In fact in some areas like textiles we are among the best in the world. There is perceptible change in the attitude towards quality in the minds of consumers as well. They are willing to pay a little bit more for quality.

Also competition is forcing companies to improbe the quality of their products and services. But the pace of change is slow. Indian companies are not changing fast enough to meet the new economic order. Once this happens, India will become a very competitive nation. Quality is like yoga. You have to practice it every day to keep fit.