Paying a fair price

    It wasn't too long ago that The Economist was projecting India's growth rate to overtake China's. In less than 2 years all that has given way to overarching gloom. It could be argued that the pessimism is overdone. To be sure, there are some bright spots. Parts of infrastructure development are gathering momentum, finances at the state level are improving steadily and the recent decline in crude oil prices should help.
  
    The more worrisome part is the lack of broad support for reform:

Second, as the bureaucracy has degenerated, politics has fragmented. The two big parties, the ruling Congress and the opposition Bharatiya Janata Party (BJP), are losing support to regional ones. For all the talk of aspirations, voters do not seem to connect reform with progress. India’s liberalisers over the past two decades, including Mr Singh himself, have reformed by stealth. That now looks like a liability. No popular consensus exists in favour of change or tough decisions.

    For us the average middle class Indians, the idea of paying market prices for petrol, diesel and LPG is still a heresy. We are outraged when electricity prices go up even as most state distribution companies drown in mounting losses. Drivers take a dim view of having to pay tolls for usage of newly built roads.

    The recent governments deserve criticism for not adequately opening up the economy for investment and competition. A bigger failure has been their inability to convince middle classes to pay adequately for the public goods and services they consume. In the long run, that is a harder problem to solve than having to persuade people to tolerate Wal-Mart setting up shop in their neighborhood.