Development: The tortoise to replace tigers?

New Delhi, Oct 16 (IPS/Dev Raj) - It is the year of the South Asian tortoise. With the decline of the East and South East tigers, the World Bank is now actually laying its bets on this long-reviled
region as an engine of growth.

The Bank's latest World Development Report finds South Asia's 4.6% growth rate slow but sees reason for optimism in the fact that the region is still ahead of Eastern Europe and Central Asia.

At this month's IMF-World Bank jamboree in Washington, India, by far the largest economy in the South Asian region, came in for rare praise for its cautious approach to liberalisation, especially on
capital account convertibility.

Though India's Finance Minister Yashwant Singh insists that the sluggishness was deliberate and part of "good management," it is more likely to have been owing to bureaucratic lethargy and sheer
resistance to change.

Professor of economics at the Jawaharlal Nehru University, (JNU) Deepak Nayyar, says India's liberalisation process, which began eight years ago, has been far more sluggish than the World Bank or IMF would have desired.

Nayyar who opposed faster liberalization under finance ministers Manmohan Singh and P. Chidambaram, in the earlier part of the decade, says what afflicts the Indian economy is under-governance rather than over-regulation.

Whether it was luck or lethargy which saved India and the rest of South Asia from 'contagion' the world seems to be rediscovering the virtues of strong regulation and macro-economic fundamentals while taking to the path of liberalisation.
At the local release here, this week, of the UNCTAD report on the world's weakest economies, another, economic expert, V. R. Panchmukhi said it is now well established that poor regulation and
fundamentals could undermine short-term gains from rapid liberalisation of financial markets.

But tight controls are not everything and South Asian countries pose other worries. India, for one, has a yawning fiscal deficit which stands in the way of investment, a fact pointed out by the
World Bank report itself.

Reflecting the right-wing Bharatiya Janata Party (BJP)-led government's blase attitude, Bimal Jalan, governor of the Reserve Bank of India (RBI) was on record recently saying that the fiscal deficit is a poor guide to economic health. After all the Asian tigers had decent fiscal balances.

While fiscal deficits can be turned to advantage, India's bureaucratic and political setup with its profligacy and lack of initiative are more likely to turn a large deficit into disaster, economists have warned.

India's much vaunted mixed economy based on 'Nehruvian Socialism', has over the years turned into a partnership between crony capitalism and crony socialism best illustrated by the huge sums
owed by sick industries to nationalised banks.

Money borrowed from the nationalised banks by private enterprises with little intention of repayment now stands at an incredible $10 billion, with public opinion articulated through a vibrant press and parliament helpless in recovering any of it.

The World Bank has also been critical of India's poverty alleviation programmes and public spending on health and education saying these efforts are "missing their mark, consuming  significant resources but yielding little gain in raising living standards for the poor."

In its recent Poverty Assessment report, the Bank advises the stoppage of the government's anti-poverty programmes and reassignment of the funds thus saved on more primary schools and
better health care facilities.

But the Bank is not saying anything new. The late former prime minister, Rajiv Gandhi, lamented that only a tenth of central government funds ever reached the people they were meant for with
the rest being swallowed up by corrupt officials and politicians working hand in glove with contractors and middle-men.

In particular, left-wing economists have been warning of the folly of super-imposing globalisation on such a corrupt structure. "There is no safety net for the 40% of people who live below the poverty
line," says D. Raja, national secretary of the Communist Party of India (CPI).

The CPI, along with other members of a leftist coalition, have been steadily opposing a gradual retreat by the government from the social sector and the cheap transfer of public sector enterprises
to private hands in the guise of 'disinvestment.'

Criticism by the leftist coalition is believed partly responsible for the Economic Advisory Council (EAC) - a body of eminent economists and government representatives - announcing, late Thursday, reductions in fiscal deficit and transparency in disinvestment.

Indian Nobel laureate for economics, Amartya Sen said at a press conference in New York, Wednesday, that globalisation without addressing issues like social opportunity, illiteracy and lack of health care would only generate problems.

Such problems, Sen said, could not then be attributed to globalisation but to the concomitant policies with which it was being married.