Articles by Ajit Karnik

The finance ministry's Mid-Term Review of the economy needs to be more than a mere fulfilment of an obligation. It must become a document with analytical content. It must serve to point out the gaps that have emerged in the budgetary process and also offer credible reasons for those gaps. And finally, it must lay out the road-map for the second half of the financial year and specifically spell out corrective action where needed.

Political obstacles to the reforms process is a genuine problem in most reforming economies. Such obstacles, it is feared, shackle a reforming government, which is then unable to complete the reforms agenda. This paper argues that the magnitude of political economy problems may be exaggerated and that a way out of the impasse is possible. An approach to political calculus is developed that sets out the conditions under which broadbased reforms may be introduced by the government without electoral dangers. This approach is tested using Indian data.

Can fiscal policy play a key role in the revival of the economy? The problem is that this question has had to be posed in the context of deteriorating fiscal balances of the centre and the states, whose combined deficit is today slightly worse after 10 years of reform. The states' gross fiscal deficit has deteriorated significantly. It is absolutely necessary, therefore, for the centre to be seen to be fiscally prudent, which will be a signal to the states of the centre's seriousness in regard to fiscal management. A contrary signal will undermine any restraint that the centre can bring to bear on the states.

In the panic that has gripped Indian business and government policy circles, it is easy to recommend measures which can be best described as quick fixes. But it is important that quick fixes be avoided if long-term development is not to be compromised. The main reasons for the current slowdown are structural and must be addressed as such. This calls for boosting not any kind of government expenditures, but expenditures that will raise productivity. Alongside must be tackled the institutional impediments that continue to obstruct private investment. Ten years after the initiation of economic reforms it is urgently necessary now that we recognise the important role that the institutional environment plays in development.

The Microsoft case has thrown up interesting issues in the area of regulation of anti-competitive practices. This has relevance for India in the context of the Competition Policy that is currently being debated. The main objective here is to examine in detail the case against Microsoft and the remedy that has been proposed by the court. The paper also looks at the proposed remedy from a transaction costs perspective and puts forward some conjectures on the likely effect on innovations in the software industry. The paper touches upon some of the more contentious issues regarding the Report of the Committee on Competition Policy.