But reforms are not an once-over switch that, once turned on, can be forgotten. Governments have to keep at them. New impediments arise — often, the very developments that reforms have triggered foment new impediments. These have to be removed. The process has to be extended to ever new areas. But look around. What has happened in the last two and half years? Apart from two areas — civil aviation and railways — reforms have come to a complete standstill. In several areas — for instance, the reversion to the administered price mechanism in the petroleum sector — there has been regression. The result is predictable: in little time, entrepreneurs and professionals will reach the edges of the space that has been cleared for them, and be blocked by walls again.

Many things account for the progress China has made — the incredible 49 per cent high investment rate, for instance — contrasted with our 28 per cent; the strictly hire-and-fire/no strikes/no unions/freedom to retrench labour laws, for another: no wonder, the World Economic Forum’s Competitiveness Report for last year, ranked India as 111 out of 117 countries, and China as 26th. But the main factor has been that, unlike us, China has transformed the nature of the Chinese state.

As for reforms, the first thing to remember is that China began them in 1978; we waited till the bankruptcy of 1991/92. That single fact has made such a difference: when things are not changing much, if we fall behind by a few years, we can catch up — the other fellow wouldn’t have got far; but when things are changing rapidly, being late by 14 years makes it almost impossible to catch up.

... contd.