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Wanted: CEOs from India

: The volume India and the Global Economy edited by Rajiv Kumar and Abhijit Sen Gupta is mainly a collection of papers commissioned for the silver jubilee conference of the think tank ICRIER in late 2006. The conference sought to spell out the challenges and opportunities before India while it strives towards faster and more inclusive growth.

The highlight of the book is the first paper by Manmohan Singh, which was the inaugural address at the event. Singh is in his right element when discussing the research agenda for economic think tanks.

Noting that India’s global environment is more benign today than at any time in recent history, he points out the large deficit in expertise on economic trends in the global hot spots and the geo political dynamics, which are the key to understanding the emerging economic relationships across the globe. He flags some of the most important issues that needed to be better understood like India’s strength in services trade, the possibilities of a reverse brain drain, the resource constraints to growth, the impact of capital flows in addition to the traditional research issues like competitiveness.

The next three papers discuss the various issues in infrastructure and highlight the need for more innovative structures, especially in the financial sector, to meet the growing need for resources for building infrastructure. Other papers on the domestic economy relate to risk management in agricultural credit, environmental degradation, under investment in agriculture, the potential for mass manufacturing and the generic constraints to growth therein. The priority areas for policy intervention are also investigated.

One area where the book falls far short off the mark is the discussion on the policy regime in the external sector. In fact one of the papers which discusses the pros and cons of the various combinations of exchange rate regimes and degrees of capital account convertibility notes that India’s current external payment regime will continue to best serve the country’s economic interest over the next five to ten years.

But what must be considered is that two years back, there would have been very few people, if any, who would have taken a bet that India’s central bank would be forced to deal with the impossible trinity and also grapple with double-digit inflation in such a short time.