Book Review: Wonked! India in Search of an Economic Ideology by Vivan Sharan

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March 29, 2020 2:03 AM

At another level, he is critical of the governments, past and present, which have tended to be protectionist at various stages, ensuring that we have not really gained from globalisation.

Further, his argument, where there could be detractors, is that all our policies are centered around the consumer rather than the farmer.The author recommends a second green revolution in the country’s agriculture sector to enhance productivity. (Bloomberg image)

Vivan Sharan starts off his book Wonked with the view that ever since we went in for reforms, we have not quite changed the way we approach policy; and while every party talks about doing things differently, at the end of the day, it is the same package in front of us. In a way the author is right because when we read the political manifestoes of parties before elections, they read the same, with only the language and numbers being different. This, according to Sharan, is the problem with making policies that fail to leverage our advantages.

The view presented is quite pessimistic, as it is critical of things not being done. Hence, while we make much ado about being part of various groups of nations, like say BRICS, we have not taken any advantage of the same and get caught up in clichés. His suggestion is to leverage global supply chains and ensure that the country moves up the ladder. In fact, he goes a step further and says we need to work closely with other developing nations and become a lighthouse for them on how policies like direct benefit transfer can work or how productivity in the dairy industry can be improved.

Curiously, he points out that one reason why we falter, and here one can probably look at the current context, is that we do not encourage debate. He gives the example of how Amartya Sen was ridiculed for his views on demonetisation, which shows that this intolerance has led to policies from the top that don’t work because they have not been debated. In fact, he goes ahead to say that we need to change the way in which we carry out administration and that there is need to have lateral recruits in public service—something which is not acceptable either at the government level or even within the bureaucracy. This shows his distinct leaning towards the right, which may find support in the corporate world.

He dissects various sectors in the book, devoting separate chapters for them. For agriculture he recommends that we go in for a second green revolution which is required to enhance productivity, given that there is a large population employed here. Further, his argument, where there could be detractors, is that all our policies are centered around the consumer rather than the farmer. This has to change and the MSP has to be used more effectively (which he feels is better than loan waivers in terms of cost to the exchequer). He is all for getting more of the market than government and the need to get the APMC laws out of the way.

His take on manufacturing is interesting, because while he agrees that small is beautiful, we need to help these SMEs scale up and become self-sustaining rather than keeping them small forever. Besides finance, there is need to change the management structures too, as there exists a perverse incentive to remain small to draw the benefits provided from the top without getting competitive. He is also critical of the fact that despite the Make in India and digital campaign, we have actually gotten the government to be easy on imports, especially from China, which has come in the way of indigenous development. Further, we do not really give incentives for big innovation and while we are very good in frugal innovation, which comes under the term jugaad in common lexicon, there is no real support to scale them up and become leaders in the world. Hence, what works in a village is not picked up and extended across the country so that it can be sold in other nations too.

The author shows his proclivity towards less regulation as he argues for lighter regulation rather than stringent regulation. This is the only way in which innovation will pick up and the concept now being spoken of as ‘regulatory sandbox’ fits in. He has pointed out that our approach to regulation has turned out to be stringent because at this level there is nothing much to be done as most of the prospective activity is prohibited. On the other hand having lighter regulation means closer monitoring and becomes onerous for regulators. Here the view can be countered, especially on the financial side where the regulators have certainly opened the doors wide for players, and hence his contention may hold in specific cases and cannot be generalised.

On infrastructure, he believes we have messed up, especially in power where we produce more than we can use, have an unnecessary government presence in telecom and not sure on how much of PPP should we go in for given financial constraints. This has led to the rather weak structures that we have created. He believes we should be getting more funds from overseas markets given the limitations of the government to spend and our financial system to provide such support.

At another level, he is critical of the governments, past and present, which have tended to be protectionist at various stages, ensuring that we have not really gained from globalisation. It is true that we have always tended to be inward looking and various issues relating to nationalistic spirit are raised which has come in the way of leveraging benefits of globalisation. He gives the example of e-commerce, which he believes can bring about a lot of integration within the supply chains. But we are unwilling to be open about it and quite clearly there are political motivations.

This is what the author has not discussed—politics. Most of the recommendations made have been debated in the media and several commentators have supported such action. But it is the compulsion of politics that finally makes all parties move towards the same agenda and approach, as any drastic change in policy can mean loss of votes. Therefore, our policies are in a way ‘wonked’, where we don’t think beyond the prism we hold which makes actions repetitive.

Madan Sabnavis is chief economist, CARE Ratings

Books details

Wonked! India in Search of an Economic Ideology
Vivan Sharan
Pp 320, Rs 599

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