Similarly, managing the exchange-rate remains a difficult balancing act.

• Third, the government’s flexibility in dealing with the Left parties may have been severely dented by the outcome of recent state elections, but will this mean totally abandoning the legislative agenda? Finance Minister P. Chidambaram himself confessed at the recent World Economic Forum Summit at Delhi that action in the financial sector, namely banking, insurance and pension, was disappointing. He hoped that even in the remaining period of this government, progress was possible.

We need to encourage him to move in this direction. Incidentally, incorporating them yet again in budget announcements is pointless, because they have been said earlier but it was the implementation that remained mired in coalition politics. So between the prime minister and Chidambaram, a negotiating strategy is necessary to transit from this stalemate. This, of course, raises the larger issue of reactivating action in many stalled areas, because no credible government can remain in a holding mode or lame-duck state for the 14 months remaining in its tenure.

• Fourth, the pace and quality of public expenditure remains worrisome. Infrastructure projects in general are lagging behind with clear evidence of cost and time overruns. Public private partnership is still in a nascent phase. Chidambaram has been wary about the efficiency of public delivery systems and project implementation. We are overloading the state apparatus, and more so at the district level, with projects they are ill-equipped to cope with. Ask any diligent district official and he will not be able to truthfully recount the number of development projects he is expected to oversee. Each year, we add more projects but subtract none. While increased public outlays for infrastructure and social sector will remain inescapable, dependence on the traditional machinery for project implementation needs a basic rethink. We need to learn from better international examples. Increasing reliance on civil society and NGOs can ameliorate but we need to think beyond them on alternative means for implementing public outlays.

... contd.