Female labour force participation rate has gone down, right? That shows women are postponing their entry into the labour market as they study longer. Wrong. The employment opportunities have collapsed, as Indian employers substitute capital for labour. Not really, but then? A large quadrant of high octane debate on the Indian economy never really ends. And not all of the extensions are the suspicious handiwork of editors, desperately looking for themes to populate newspaper pages.
Despite the tremendous interest in the narrative about the Indian economy, volumes on the subject oscillate in three degrees of freedom. The most popular are the efforts of solitary authors. The numbers are huge, but the quality is often suspect. For one, it is just impossible for an author to surf the entire range of issues that populate the Indian economy. Some of them do take the risk, because of which we land up with some legendary but still college undergraduate textbooks on the Indian economy (some of those still populate the rooms of many officers in the government and the private sector, whom one visits).
The second is the compiling authors slicing from journals, papers, reports, and even speeches of public authorities like the RBI governors loosely assembled into themes on the economy. Since the papers originated for different purposes, the quality oscillates. The third is the government and semi-government led efforts. The stand-out example is of course the annual Economic Survey and the RBI annual report. A pole position has been created by the slim Prime Ministers? Economic Advisory Council biannual report on the economy. In terms of comprehensiveness, of course, the five-yearly plan documents are a massive storehouse of data and succinct analysis.
The category that did not exist was a university-led effort to develop a read on the Indian economy that would be independent and authoritative. Surprisingly, Indian history has been served better. Sociology too has had the benefit of authors to reconnoitre the landscape.
It was this vacant spot on the shelf, which The Oxford Companion to Economics in India filled in 2007. Fixing the gap between rhetoric and often arcane data sets, each entry in the volume gives a clear understanding of a particular economic issue, as it has played out in India. Since then, the demand for a fresh look at the entries has only gotten strident. The project must have been rocky as one of the authors, Kaushik Basu, left academics to join policymaking after the first edition came out. But in The New Oxford Companion, Basu has stayed on to steer the project. The two-volume encyclopaedia has thus prospered. Output in Indian economics is often coloured by the institution one is involved with. A change of editors midstream would have harmed the project severely.
Basu?s witty and crisp style of writing suffuses the entries culled from an extensive field, even more nonconformist than the first one. Series editors Basu and Annemie Maertens bet on a multiplicity of authors bringing their own eclectic interpretations rather than a bright but limited in-house team. Each contributor was sort of playing a solitary innings and so willing to give the best. At any time an economy with heft can always do with an encyclopaedic reference set like this one, but Indian economy needs it more at this stage than most.
Why? At one level India has reconstructed itself in just a decade at a speed that?s just uncomparable with any other economy. Two, the speed of construction has demolished most of the direction-finders for the economy, like Five Year Plans, population as a pressure point, government subsidy for rural telecom and IRDP . Each feels so archaic today, but all of them were relevant even a decade ago. In 1998, then Prime Minister Atal Bihari Vajpayee had electrified an industry chamber event with the promise to lay 20,000 kms of roads. The investment planned was $16 billion over five years. We are exploring a $1 trillion of investment in infrastructure just a decade later. These are logarithmic scales of comparison.
Such perspectives are impossible to glean by visits to the internet or even the Five Year Plan documents. History is continually being revisited but The New Oxford Companion gives a sense of reading that history as its being made. Far more fun than reading the Economic Survey, for instance. But the Economic Survey is what one is reminded of when reading the other book about India from the same publisher. Before getting into that, tell me how many people have read the Economic Survey beyond the first chapter, or in the Basu era beyond the very engaging second chapter that has become his signature. Very few of us. Despite the potential of OUP?s A Critical Decade, the book edited by Rajeev Malhotra remains much in the same mould, in the second degree of freedom. As the blurb says, here are essays that explore the policies for India?s development. The theme couldn?t be better. As 2011-2020 will certainly be the most critical decade for Indian history for a long time in the millennium, just as this century is itself replete with possibilities for India.
The authors are from one of the most cerebral of India?s officer cadre, the Indian Economic Service. They have the advantage of, as Basu notes in his excellent foreword, in addition to their jobs as advisers in key economic ministries, having ?picked up knowledge and expertise in specialised fields at remarkable levels?. Basu?s glowing encomium leads one to expect quite a deal from the book. And this is where it frays a bit. Because the big questions for economic policymakers in India today are not about the minutiae but about the fractures in the polity.
What are the reasons, for instance, which promote crony capitalism? Does the control of the state over scarce resources create conditions for their capture by those who can operate the spoils system? These are the central issues India will have to resolve in this decade to decide whether it will grow to its potential or remain the God of small things Malhotra himself points out that issues of land and urbanisation have been missed in the volume, but so have those related to the minerals policy?including energy. How to explain the silence about regulatory overlap and ministerial interference, or about the ramifications of the Vodafone and the 2G cases, the accusations of urban and rural land grab, the stasis in education policies when India faces the dilemma of rising unemployment and skills shortage?
The authors have otherwise built up painstaking research exercises in the subjects they have touched upon. Anna Roy provides more than a scintillating account of how India?s infra story has learnt lessons right from the Enron fiasco onwards. Her laundry list rightly begins with how banks can be taken off the job of financing long-term projects. Malhotra in his analysis of the fiscal framework is guarded but his suggestion to make the general budget evolve into a State of the Economy address is well made. He assumes however the headaches of introducing DTC and GST are over, whereas dwelling on what could still snare the outcome would have been a great value-add. He accurately diagnoses that more than moral suasion, keeping the FRBM Act in place does far more to clean up fiscal debris.
The chapter which will be keenly read is that on financial sector architecture by CKG Nair. He whets our appetite in delving into the regulatory uncertainties. But after narrating the incendiary fires that have broken out in the landscape, describing them as ?institutional externalities? that happen when institutions dip below a threshold, he lapses into silence about what needs to be done. Possibly that?s more eloquent.
