Friday, September 29, 2017




RAKESH    MOHAN



                                          
                               Inline image 1


India Transformed  Edited by  Rakesh Mohan; Published by Penguin (Viking) ; Pages 656  ; Price Rs 999/-

                             ************************
Rakesh Mohan is Senior Fellow at the Jackson Institute for Global Affairs, Yale University and Distinguished Fellow at Brookings India. He was Executive Director of the I M F, Deputy Governor of RBI, Secretary, Economic Affairs and Chief Economic Adviser to the Ministry of Finance. He has several books to his credit on urban economics, economic reforms and monetary policy.

The book under review is on the progress in the Indian economy during the last twenty-five years since the beginning of economic reforms in 1991. The focus of submissions is on political economy, financial development, trade and globalisation, technology and innovation, agricultural and industrial development and the interaction between the public and private sectors.

The contributors include some of the key policy makers of the period who designed and implemented the reforms, business leaders who grasped the new opportunities that emerged and built some of India’s most successful businesses and analysts and observers who have been among the most critical and thoughtful of this tribe.

India has grown at an annual average rate of around 6.5 % for almost thirty five years. This was a significant acceleration over the average rate of 3—3.5 % over the previous thirty five years. The challenge facing the next generation is to have an annual growth rate of 7 % or more for the next twenty five years.

During the twenty five years since 1991 in some areas the change has been truly transformative, while in others much more could have been done, particularly in the areas of health, education and agriculture.

 The introductory chapter by Rakesh Mohan is a narrative of the road to the 1991  policy reforms and beyond. The progenitors of the 1991 reforms were Prime Minister Narasimha Rao, the Finance Minister Manmohan Singh and the Principal Secretary, A.N.Verma. Manmohan Singh provided the intellectual leadership while Narasimha Rao’s political sagacity, management skills and courage were essential to the reforms project. A.N.Verma was the enforcer of the economic reforms over the next five years.

Rakesh Mohan writes at length on the industrial policy reforms which were implemented in one shot on 24th July,1991. The other reforms were carried out over a period of time.

Montek Singh Ahluwalia provides a vivid first person account of the macroeconomic mess the country faced in 1991. The IMF and the World Bank applied pressure. The Balance of Payment difficulties arising from the oil price increase in 1989-90 had necessitated the use of SDR 3.9 billion from the IMF Extended facility.

 The 1991 crisis—the shock of the 1990 Gulf war pushed the deteriorating balance of payments into a full-blown crisis, leaving the country’s reserves with just enough foreign exchange to cover the import bill for barely three weeks and on the verge of a default on its external loan repayment obligations—gave an unlikely team of a politician, a technocrat-finance minister and a bureaucrat the perfect excuse for executing difficult change.

 One of the distinguished features of macro-economic policy making during the period was the very cooperative relationship between the Ministry of Finance and the RBI resulting in coordinated monetary, banking, fiscal and exchange rate policies right through the Nineties.

Rangarajan provides a first hand account of the sequence of reforms that were carried out. The gradual calibrated sequence of financial sector liberalisation contributed to the maintenance of financial stability throughout the 1990s and the 2000s despite the occurrence of the East Asian crisis and the North Atlantic financial fiasco. Jaimini Bhagwati documents the sequenced financial sector reforms that enabled the institutional reforms and infrastructure building which helped the capital market.

Y.V.Reddy  provides an overview of how Centre-State fiscal federalism is gradually shifting fiscal power to the States. As exemplified by his recommendations as Chairman of the Fourteenth Finance Commission he is all for giving greater fiscal autonomy to the States.

Harsha Vardhan Singh outlines  the progression of trade reforms ; he provides new data on the openness of the economy that has now been achieved. According to him current effective tariffs are not different from some of the most open economies of the world.

Martin Wolf, the highly respected International commentator has used his long-standing engagement with the Indian economy to provide an external view of how perception of the Indian economy’s stance on trade has changed over the reform period. He feels that India will increasingly need to take a leadership role in the evolving global economy.

The great churning of the 1990s among the leading companies in India is ably presented by the  contributions of Mukesh Ambani, Baba Kalyani and R.Gopalakrishnan who grabbed the opportunities and flourished beyond their wildest expectations. Narayana Murthy, Sunil Mittal, Deepak Parekh and Vinayak Chatterjee  illustrate the new entrepreneurship that recognized the new opportunities. New Indian businessmen have emerged who successfully leveraged  the burgeoning market provided  by the Indian consumer and attained competitiveness in international consumer markets.

Three authorities deal with India’s strategic and securities policies in keeping with the reforms. Shyam Saran and Shivshankar Menon furnish first hand accounts of the progressive change. The geo-political shifts that occurred by the fall of the Soviet Union caused a fundamental rethinking on the part of the Indian foreign-policy establishment. Sanjay Baru analyses the increasing Indian defence expenditure that resulted in the fiscal excesses of the 1990s. He also documents how fiscal prudence flowing from the reforms could have handicapped the Indian defence forces to reduce expenditure.

An interesting theme running through the volume is a comparison of India’s performance with the East Asian benchmark, especially China.

In an erudite and extensive “Foreword” Strobe Talbott, who has studied Indian economy for fifty years speaks highly of the contributions by the  international policy makers and business leaders who have created  the incredible transformation of India.

“ India Transformed “ is a consummate  guide for all  who want to comprehend  the context, content and progress of the reform process. This outstanding book is compulsory reading for all students of banking, economics, planners and those interested in India’s progress in the world stage.


 P.P.Ramachandran
24 / 09 / 2017

No comments: