Not in favour of big bang but gradual reforms: Montek Singh Ahluwalia

Former Planning Commission vice chairman Montek Singh Ahluwalia on Thursday said he is in favour of gradual reforms in a phased manner instead of big-bang reforms. The last vice chairman of erstwhile avtar of NITI Aayog advised the government that it should not move towards protectionism by raising customs duty and other measures.

In Indian context, he said the gradualism approach has worked reasonably well except it has taken too long.

"I have never been in favour of big-bang reforms. They have never worked. Gradualism is something that is not going to be done instantly but spread over a period of time with phased transition," he said during discussion over his book 'Backstage' organised by the Centre for Policy Research here.

Citing example of 1991 reforms, he said reforms in a phased manner were followed more or less in taxation, reducing import duties, on bringing in the first round of regulation in the financial system etc.

"The second approach is that you point in the broad direction, but you don't lay out the protocol. You do it when it is politically feasible. That is opportunistic approach.

"The third one is where you don't even do, don't even assert the direction. You just do it when it happens and that's what I call reform by step. Frankly, most politicians have an element of each of these," he said.

On the present protectionist policy of the government, he said, there is in a sense reversal of reform taking place which is not being debated.

"You are today seeing a reversal (of reforms). It was on things like customs duty...I don't necessarily believe that just because you've done it in the past, it's right. Somebody should say this is all wrong...that's why we're going back on our tracks and changing, and that debate is not taking place," he said.

On the role of state in liberalised economy, he said apart from maintaining law and order, the government has major role in infrastructure development.

"Many people wrongly interpret liberalisation where government has no role to play except policing and so on...all you need is government gets out of way and private sector does it. I never believed this and all those people for reform believe this," he said.

"The government has major role to play, apart from maintaining peace and harmony which is fundamental, in infrastructure development because risk mitigation infrastructure development cannot be done without the government taking active role," he said.