22 MARCH 1997, Page 29

Just like Nigel

THE AUSTINS are still on the road, which is more than can be said for the policies. I would not have expected, all those years ago, to see India's finance minister bring in a budget that cut the top tax rate to 30 per cent. For better or worse, Palaniappa Chi- dambaram now finds himself labelled the Nigel Lawson of India. Deregulation, free- ing up the economy's supply side, cutting taxes to raise revenue — he certainly can talk the language. His budget set the stock market alight, which is a happy coinci- dence, given the investment opportunities that he must plan to offer. The state still owns the less productive half of India's more or less productive assets. Disinvest- ment is his watchword — so much less politically charged than privatisation would be, and easier to get through a coalition government that includes not one but two communist parties, but coming to much the same thing. It is an odd turn of phrase, all the same, for investment is what India needs if its economy is to carry on growing at a compound rate of 8 per cent — invest- ment, for a start, in the new power stations that would let India's factories work all the time and not just some of it. Controls and shortages came in together, as they always do, but now they are receding. Controls, in fact, kept India short of the capital it need- ed. Any Indian who could move or make his money outside the ring-fence was not going to put it back — and the money held by Indians outside India is now reckoned to exceed $100 billion. The overseas. Chinese are major investors in China. When the overseas Indians follow their example and invest in India, that will be the next sign of change and in its way the most significant. Westerners who expect an instant transfor- mation will, of course, be disappointed. Rudyard Kipling, who was born here, could have told them:

The end of the fight is a tombstone white with the name of the late deceased, And the epitaph drear: 'A Fool lies here who tried to hustle the East.'

All the same, in the great two-horse race, my money is on India.