Rakesh Mohan, a distinguished economist who has held some very prestigious positions, is known to be an excellent thinker, speaker and writer. Anyone who has heard him or read his works will agree with Mohan’s triad of expertise. This book, India Transformed: 25 Years of Economic Reforms, is edited by Mohan and is a collection of articles on various subjects in Indian economics that carry analyses of what has happened over the last 25 years. This book comes on the heels of Yashwant Sinha’s collection of essays on the same subject, having some common authors as well.
Mohan’s emphasis is on industrial policy, and he gives a backdrop of both the situation as it was before 1992 and the change that was sought. For readers who are not aware of the country before 1992, some of the rules and regulations that existed would sound hilarious, especially when one reads about the number of ministries and departments required when investment was involved or forex required. The economy has definitely made significant progress in terms of unshackling of industry even though India still remains fairly low on the World Bank’s ‘doing business’ scale.
An account is provided by Montek Singh Ahluwalia, who was one of the brains behind the implementation of reforms. It is fairly factual and takes us through some of the subtle nuances of what reforms involved. Omar Goswami has two essays, one on a ‘before’ and ‘after’ treatise, which would again be eye-openers for the new generation which may not be aware of telephones or bank tokens. For instance, he narrates the controls that existed in the textile sector, where one had to use cotton and could blend man-made fibres, but not use the latter completely. This led to companies finding innovative ways to circumvent the rules. His second essay is on corporate India, where Goswami shares that reforms have churned corporate India and efficiency has increased. If one juxtaposes this with Mohan’s essay, where India appears to have progressed over the years, the question not posed is, why we still seem to be low on the World Bank’s index of ease of doing business. This is a gaping lacuna that is not captured by the authors.
TN Ninan has a very thought-provoking work here, where he studies the political economy of reforms. He argues that the reforms introduced have caused little pain as such and have been calibrated and incremental, which is quite true. More interestingly, he has brought to the fore the fact that reforms that have been carried out have had no political backlash. This is probably the right way of looking at reforms because, given that we are a democracy and that the population is large, reforms can never be thrust from above and people have to be taken along, a fact missed by critics, who often seem to be in a hurry to see more action all the time. A similar conclusion is also drawn by Harsha Vardhana Singh when he writes on trade reforms, where he avers that all the changes were made without any major disruption.
There is a section on governance where Sarwar Lateef argues that where India has suffered is on the institutional front, where they have failed to keep pace. Here, he has some interesting data to present on the Parliament and Election Commission, and highlights the criminal background of the MPs. Related to such elections, he also takes a swipe at the civil service, which, he says, has become subservient to the political forces and can’t operate independently. This has to change. The same holds for the police, as well as judiciary, he writes.
YV Reddy has a well-analysed piece on Centre-state relations and concludes that the relations have been better progressively. With this prelude, one can move over to Laveesh Bhandari’s analysis of the same issue, which again supports Reddy’s view. States have not been mere spectators or beneficiaries of the Centre, but have played a positive role by adapting to the new environment.
Another well-placed article after the role of states is a brilliant piece by Ashok Gulati on agriculture. There is evidently a lot of work to be done here and his four-point agenda includes the following. First, growth has to be inclusive and touch all farmers with less than two hectares of land. Second, farming has to be become economically viable or else will lose its froth. Third, we need to address the issue of environment sustainability, as the pressure has increased on both land and water over the years with some serious repercussions. Last, farming has to become globally competitive.
There are sectoral essays by Baba Kalyani, Vikram Mehta and a detailed treatise on infrastructure by Vinayak Chatterjee. His conclusion is that the private sector can’t be looked upon to provide capital unless we are able to put in place enabling institutions, laws and processes to put capital to good use. In the course of this discourse, he discusses in some depth the issue of PPP and gets into the reasons as to why it has not quite worked out.
The section on human development has articles by the likes of Nachiket Mor and Devesh Kapur, which are quite incisive. The financial sector is well evaluated by C Rangarajan, who is probably one of the best in the field, and Deepak Parekh, who is an expert on the subject of housing finance. The last part on corporate India has essays by Mukesh Ambani, Naushad Forbes, Gita Piramal and Rama Bijapurkar, which make for engaging reading. Having successful people present their views on various aspects of business is like hearing the story from those who have made it big and can’t be contested.
On the whole, this book should interest all kinds of readers. The author writes with his usual flair, which is quite droll, especially when he narrates anecdotes of how bureaucrats and ministers loathed change just because of limited understanding of reforms. However, there does not appear to be any criticism of reforms in terms of what has not been done or why growth has not created jobs commensurately or why there are still many poor people in the country. Hence, one may not get a balanced view on reforms and will not be able to reconcile reality with the image of successful reforms.
Madan Sabnavis is chief economist, CARE Ratings