The first two quarters of the current fiscal are behind us, marking
a half way point of the fiscal year. Hence it would not be
inappropriate to look back and take stock. At the outset, we have
good reasons to feel confident. The combination of the economic
and political factors has made the first half of 2004-05
an eventful period.

On the economic front, the overall situation remains upbeat. GDP has posted a robust 
7.4% growth in the first quarter; Industry has clocked 8% growth during April-August and
exports are up 24% in April-September. And all this while global and domestic economic
circumstances have been less than friendly. What is more, India has increasingly begun
to attract attention of analysts tracking global investment flows. AT Kearney's FDI  
Confidence Index for 2004 shows India as the third most preferred destination for foreign
investors following China and the USA. And for the first time, manufacturing investors have  
considered India as a superior manufacturing location than even the USA.

Such news, I would say, could indeed be a cause for satisfaction. But it could also be a source  
for worry as well. When I say satisfaction, it is because this is the third consecutive quarter
when growth has breached the 7% mark and business confidence apparently is on an  
upswing. There is also a cause for worry because, looking ahead into the second half of  
the year, the question of sustainability of our growth rates looms large especially as the
impact of deficient monsoon does not find reflection in the first quarterly data. .

Let us also look at how other countries are doing. China's GDP has grown at an average rate  
of 10% during the last decade, almost twice that of India and its industry has clocked 20%  
growth as compared to 8% in India. Our country receives a paltry 4 billion dollars worth of  
FDI per annum. Smaller countries like Korea, Hong Kong and Singapore has been able to  
attract a lot more. Clearly, it will take a lot more than mere optimism to pull off the  
Indian dream of making it to the high table of economic super powers.

Unlocking India's potential would require a strong political consensus to put halting economic  
reforms back on a fast track. The priority should be to put into effect reforms announced in  
the Budget such as raising sectoral FDI caps in telecom and insurance. I would also say  
that we should desist from raking up sensitive issues that would not be perceived as 
pro-reforms, for example, the issue of job reservation in the private sector. I strongly  
believe that in this competitive era, the employer should be free to select the best talent  
available as per his requirement. Any statutory obligation to reserve the specific number  
of jobs for any particular caste would not only amount to interference in the Management's  
right to run their business but would have far reaching social consequences.

In my view, we should also stop tinkering with progressive policies such as the Electricity  
Act that envisages major reforms in the power sector such as unbundling of Electricity  
Boards and multiple players in distribution. Initiatives in banking, power and transport  
sectors are also needed. I strongly hold that the time for the Government to come  
forward to seize the initiative is now as the political and business environment today  
is highly conducive and demands bold measures.

(Ravi Wig)
President