India Still a Shackled Giant: Unbiased diagnosis of various problems plaguing India’s economy

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Updated: Jul 05, 2020 10:42 AM

A book presents an unbiased diagnosis of the various problems plaguing the country’s economy and some bitter pills as possible cures

A file photo of a protest by PMC Bank account holders outside the RBI office in Mumbai (Express Photo)A file photo of a protest by PMC Bank account holders outside the RBI office in Mumbai (Express Photo)

It is always interesting to read a book on how the Indian economy is perceived from outside as Indians tend to have definite slants when writing, as there are unconscious biases depending on the tilt to ideology of various political parties. However, Dev Kar, in his book, India Still A Shackled Giant, gives a rather unbiased view on the evolution of our economy and the road ahead.

His pitch is that governance has failed in India notwithstanding the various reforms brought in by the government post-2014. Here he quotes extensively from the World Bank Governance Index to show that things have not changed much, which is why there is little progress at the ground level. What one can make out from this overall exposition is that good governance is a necessary condition to bring about rapid growth, which addresses the issues of any emerging economy, especially with a population the size of ours, which also goes with the rather low quality of living indices.

He puts on the table quite frankly what we all know. There is widespread corruption in the political economy and the various scams that have tarnished the nation’s image have not changed the basic character of going about doing our business. There seems to be no retribution for financial scams and the entire series of telecom, coal, iron ore scams have finally not brought to book any of the perpetrators. The VIP culture even today is rampant, and getting to be a part of the government is interpreted as having inherited the right to a superior living. Even though there is a lot of talk about curbing the use of black money when it comes to elections, there is still a case for money power being the driving force. In fact, the relationship between muscle and money power ensures that parties that come to power have to include these power brokers in the elite as a kind of reward.

While this is something that is hard to crack, Kar also talks about how the institutional segment has lost its independence while trying to or forced to cozy up with the ruling elites. The CBI has been chastised by the Supreme Court and the perpetrators of riots never get punished as the processes are long and convoluted to the extent that human memory has its limitations for charges to stay. That’s how the nexus between the criminals and politicians gets symbiotic. The Panama Papers exposed quite a number of these instances, but the scamsters got away all the time, almost as part of routine.

Interestingly, the author also talks of how the independence of the RBI has come under a cloud of late and the controversy over the transfer of reserves does get mention. He argues for more like what happens at the level of the Federal Reserve, where there is less intervention from the government, and the appointments and tenures are immune to any such possible threats of dismissal. The reader here would definitely side with the author on this point.

Besides the political economy, Kar also takes the reader through the other economic and social issues that have shackled the country. Here we would be familiar with the data, as well as arguments, when the author talks about the low level of healthcare in the country, as the focus is rarely on the bottom of the pyramid where the political noises end with occasional monetary transfers especially at the time of elections.

The same holds for education levels, and quality of the majority which can become a threat given the demographic structure that we carry. Similarly, the issue of poverty and inequality can be debated with various numbers and studies.

But, at the end of the day, it is true that both of them have become eyesores which come in the way of the development of the country.

Therefore, the Indian economy will never quite reach the stature of what were called the east Asian tigers, as there is a lot of distance to be covered both in terms of enhancing the level of governance and quality of life. This has to be at the top of the agenda that has to translate into action. The author is appreciative of the steps taken by the BJP government on Aadhaar, UDAY, Make in India, Swachh Bharat, etc. Clearly, they have to be persevered with and taken to another level so that the quality of life improves for those at the bottom. This requires even stronger governance, which has to come from the top.

The book is quite balanced and cannot be faulted as being overtly critical, as there is a lot of data and research to back up the statements made. By bringing to the fore governance standards, it rings the warning bell to the government and exhorts it to bring about change. The deep-rooted malaise of low level of social and economic indicators should not be ignored, as we normally tend to gloss over macro numbers like GDP growth and get carried away by the now cliched ‘fastest growing economy’. It is evidently time to deliver and hopefully the policymakers should take lessons from this book.

Madan Sabnavis is chief economist, CARE Ratings

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