Riddle of the 5.3 per cent

Unfortunately, it took sleazy stories of corruption to raise the spectre of India's investment being largely delivered through underpricing resources and flouting regulations. If growth had remained at 9 per cent, we would have looked the other way, but with growth at 5 per cent we have turned indignant and righteous.

Reversing these perceptions now requires implementing difficult second-generation reforms, not just keeping calm and carrying on. But so far, a national consensus on such a need has been elusive. The burgeoning public indignation hasn't been tapped to rally support. Instead, it is being exploited to trade charges on what went wrong and who was responsible.

So what would be the core elements of such change? I would place a permanent fiscal responsibility act that commits the government to hard budget constraints, a framework to price natural resources transparently, a land acquisition framework that balances the interests of sellers and buyers and a transparent set of election finance rules very high on that agenda.

To be fair, the government has embarked on some of these changes. The direct cash transfer scheme is one and the national goods and services tax (GST) is the other. A national GST can be gamechanging. For the first time, India will have a single, unified consumer market and a tax base capable of delivering significantly higher revenue, addressing the second key concern of the rating agencies. But this needs the opposition's help to be passed. There is really no technical impediment holding up the GST, just the fear in some quarters of doing so before the 2014 elections. The big fight over GST was fought when the states implemented the value added tax, back in the early 2000s. An easy compromise would be to pass the needed constitutional amendment in the budget session, but hold back implementation till a new government comes into power in 2014. Hopefully, both the government and the opposition will see past their own interests and do the right thing. If this is done early, then along with a sensible budget, it won't let 2013 be another wasted year.

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