While all these are steps in the right direction they still fall far short of the truly enormous requirements of the large Indian population. Even as many States are deregulating to woo private investors, it is obvious that private capital cannot satisfy all the requirements. There are critical areas in social sector and infrastructure where only the government can provide the necessary money as well as drive. Many of the programmes, especially in the social sector, are not backed by fiscal reform and realignment of public expenditure. In the absence of fiscal reform, the critical minimum effort in infrastructure and human development is sadly missing. Fiscal reform at the state level is the one crucial element for redirecting State governments’ energies towards the social sector and infrastructure.

Furthermore, these programmes would not be sustainable unless they are conceived, designed and owned by the people and communities themselves. Most Indian States have large populations: a good number have more than 60 million people and one is large enough to qualify as the sixth largest country in the world! Within each State there are substantial regional variations in social structures and ethnicity, resource endowments, land relations, agro-climatic conditions, cropping patterns and the like. Quite often programmes and projects conceived in State capitals fail to account for such variations, and communities are not taken into confidence. Also, centralised implementation of projects prevents transparency and vested interests tend to gain at the expense of the people. A good example is the plethora of anti-poverty programmes and subsidies targeted at the poor. Their achievements in terms of poverty reduction have been found to be questionable and far from commensurate with the huge amount of funds poured into them. If the States have to ensure that reforms deliver at the grass roots they have no option but to decentralise in favour of local elected bodies at the village and municipal levels.