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(v) Reforms in Critical Areas
The second generation reforms also commit to suitable reforms in the infrastructure sector (i.e., power, roads, especially as the telecom sector has been encouraging), agriculture, agricultural extension, education and healthcare, etc. These areas have been called by the government as ‘critical areas’.35
These reforms have two segments. The first segment is similar to the FRMs, while the second segment provides a broader dimension to the reforms, viz., corporate farming, research and development in the agriculture sector (which was till now basically taken care of by the government and needs active participation of the private sector), irrigation, inclusive
education and healthcare.
Other than the above-given focus of this generation of reforms, some other important areas were also emphasised:
(a) State’s Role in the Reform: For the first time, an important role to the state was designed, in the process of economic reforms. All new steps of the reforms were now to be started by the state with the centre playing a supportive role.
(b) Fiscal Consolidation: The area of fiscal consolidation, though it was a major co-ordinate of reform in India since 1991 itself, gets a constitutional commitment and responsibility. The FRBM Act is passed by the Centre and the Fiscal Responsibility Act (FRAs) is followed by the states as an era of new commitments to the fiscal prudence starts in the country.
(c) Greater Tax Devolution to the States: Though there was such a political tendency36 by the mid-1990s itself, after the second generation reforms started, we see a visible change in the central policies favouring greater fiscal leverage to the states. Even the process of tax reforms takes the same dimension. Similarly, the Finance Commissions as well as the Planning Commission start taking greater fiscal care of the states. And for the first time the states had a net revenue surplus collections in the fiscal 2007–08.37
(d) Focussing on the Social Sector: The social sector (especially healthcare and education) gets increased attention by the government with manifold increases, in the budgetary allocation, as well as show of a greater compliance to the performance of the development programmes.
We see mixed results of the second generation reforms though the reforms still continue.
Announcement of the third generation of reforms were made on the margins of the launching of the Tenth Plan (2002–07). This generation of reforms commits to the cause of a fully functional Panchayati Raj Institution (PRIs), so that the benefits of economic reforms, in general, can reach to the
grassroots.
Though the constitutional arrangements for a decentralised developmental process was already effected in the early 1990s, it was in the early 2000s that the government gets convinced of the need of ‘inclusive growth and development’. Till the masses are not involved in the process of development, the development will lack the ‘inclusion’ factor, it was concluded by the government of the time. The Eleventh Plan goes on to ratify the same sentiments (though the political combination at the centre has changed) and views regarding the need for the third generation of reforms in India.
This is not an official ‘generation’ of reform in India. Basically, in early 2002, some experts coined this generation of reforms which entail a fully ‘information technology-enabled’ India. They hypothesised a ‘two-way’ connection between the economic reforms and the information technology (IT), with each one reinforcing the other.