A festschriftin honour of Montek Singh Ahluwalia, this brings together essays by economists who have been closely associated with him in college, the World Bank, or in government. There is palpable adulation over his role in the reform process.
India's reform process has not been smooth. It has indeed been subject to the vicissitudes of coalition politics. The nature and content of reform are being debated endlessly.
If, against this background, a reader expected to get from the festschriftan insight into the contribution made by the person being honoured to the reform process, he will be in for disappointment. Some of his personal qualities have come in for praise by some of the writers.
There is internal evidence that these articles were done in 2008, much ahead of the Lehman collapse. It is clear that the chapterson the financial sector had undergone a hurried revision and post-scripting aided by post-Lehman hindsight. This can also be said of the chapter discussing stock markets. They reflect the rethinking on financial reforms. “Calibration” and “gradualism” of bank reforms and capital-opening are respected clichés now. Truly, this is not what ‘red hot' reformers wanted in the pre-Lehman era.
Those who have been following closely the reform process are well aware of the differences between the Government of India and the Reserve Bank of India and the intense pressure the former mounted on the RBI to speed up financial opening. Fortunately, the RBI stood firm and saved the banks from the crisis. It would have been instructive if any of the authors who were ‘insiders' had spoken about Ahluwalia's contribution to the policy deliberations during that time.Surprisingly, there are only three references to the views of Venugopala Reddy, then Governor of the RBI.
On ‘infrastructure', there is a strident attack on the public sector undertakings, — their inefficiency, corruption, et al. It fails to give credit to the PSUs for their role in creating investment demand, filling production gaps, and so on. Unfortunately, the various instruments of privatisation — PPP, BOT, etc. — have not been successful in promoting infrastructure.
In fact, the chapter provides a doleful account of failures in infrastructure areas such as power, roads, and airports, where the private sector involvement was tried out as a part of reforms. The author goes on to narrate how the change ended up in replacing the “licence permit raj” by a new “contract raj” and nurtured rentier class. On the ‘power' front, there is a reference to the Enron debacle, but the role played by Ahluwalia in promoting it is glossed over.
In his article on “inequality and growth,” Suresh Tendulkar provides, rather strangely, an apologia for inequality during years of high rates of growth — this, at a time when the government's avowed policy is for ‘inclusive growth.' Sadly, his work is based on studies that have since been set aside by new research which takes the view that inequality might hinder growth.
Ashok Gulati's piece on ‘accelerating agriculture growth' is provocative. At a time when the country is worried about the state of agriculture, he is upbeat — a mood that stemmed from his studies. He dismisses concerns over food security, including those expressed by Dr. M.S. Swaminathan, as media ‘hype.' He calls for a shift in emphasis from the “farms” to “production chains” backed by a support structure and linked ultimately to the retail chains.
In Isher Judge Ahluwalia's essay on ‘public services', there is no recognition that public services have been constrained by the fiscal reduction enforced under ‘reforms.' The suggestion that education and health services could be improved through a coupon system engaging the private sector is unrealistic. Can the States underwrite a bottomless pit, given the current levels of capitation fees and medical charges in the private sector?
When work on this volume started, the authors would have been in a celebratory mood, and understandably so. Sadly, the financial crisis has played spoilsport in the intervening year. In the event, what we are left with is a collection of musings tempered by the crisis, nothing much about Montek Singh Ahluwalia's contribution in various areas.
INDIA'S ECONOMY— Performance and Challenges: Edited by Shankar Acharya and Rakesh Mohan; Oxford University Press, YMCA Library Building, Jai Singh Road, New Delhi-110001. Rs. 795.
Essay on Economic Development in India
An economist and an administrator will take upon these changes as an sign of increasing social welfare. But an average person has his own way of judging the economic development. He is primarily concerned with the betterment of his own lot. A Government exists for people; it exists and functions for the good of the common-people.
The economists simply guide the government to enable it to serve the interest of the common-people. But what is the position of common people today? The answer is clear; the average person, today, is neither materially better off nor mentally, as well as, psychologically happier than what he was under the alien rule in the country.
Along with the huge economic development, prices of all consumer-goods are soaring dreadfully and there are many classes of people whose incomes have relatively fallen. Food, the primary necessity of life, is becoming dearer and dearer. It seems that the rising prices would help the agriculturists. However, in the long run he, too, must suffer, sharing with his brethren the common miseries of life.
Apart from the miseries of common person, as a nation, too, we are most discontented. As a nation, we are steeped in debt. Of course it is necessary for a growing country to borrow money; the international situation is such that foreign powers willingly lend us money. From, where has money to come for the repayment of all our debt? We are hoping for a greatly increased productivity of our economy. But it must be noted that it is the debt.
The average person has to put his hands in his pocket to supply the money for the redemption of the mounting foreign loans. But it is the common man whose interest is neglected today.
Our Government is proud of the great industrial plants which have started functioning under the Plans, and more are to be established under the new Plan. For example, we have mighty steel and power plants in various parts of the country. But the failure to move requisite quantities of coal to the plants has been adversely commented upon.
Agriculture is the backbone of Indian Economic Development. Regarding agriculture, it is clear fact that there has been much more to do. Of course, with the abolition of zamindari system, peasants have heaved a sigh of relief. But due to inadequate management and slackened control over the ownership of ‘seer’ Land by the ex-zamindars, especially in Uttar Pradesh., Bihar and Madhya Pradesh, the relief which peasants expected, has not been offered to.
There is lack of the latest scientific tools for cultivation work. Further, The village dwellers are streaming into urban areas, being attracted by a false notion that the industries would absorb them. But in reality migration tends to intensify the complexity of our unemployment problem.
To sum up, the economic situation in the country since the independence has been that the rich have become richer whereas the poor have become poorer. The laborers and common men have not yet been able to spare themselves from their economic wants of life.
Category: Essays, Paragraphs and Articles