YASHWANT SINHA
The Future of Indian Economy Edited by Yashwant Sinha and Vinay Srivatsava ; Published by Rupa; Pages 361; Price Rs 795/-
The book under review covers all aspects of reforms, ranging from foreign trade and balance of payments to industrial growth, finance and fiscal issues has been dealt with. The book is a useful documentation of economic reforms in India that takes one through different political regimes in power.
There are 18 essays divided into three parts. Part One deals with developments in the Indian economy in different spheres since 1991, in retrospect and prospect. The second Part focuses on fiscal reforms, which are analysed in depth to examine their implications in several aspects and for various sectors. The third Part is on reforms and changes in the public sector including disinvestment, in terms of its experience in the era of liberalisation. The discussion shows that it is not possible to separate economics from politics just as it is not possible to separate policy from practice.
The contributors include politicians, civil servants, policy practitioners, managers and analysts and they evaluate the Indian experience with economic liberalisation during the last 25 years. The book thoroughly analyses several aspects of reforms and about 23 experts have essays on subjects on which they are authorities
Yashwant Sinha and Srivatsava provide a historical overview of the economic reforms in India. Twenty five years since the ‘Reforms of 1991’ is an appropriate moment to make an assessment. The policies followed by Rajiv Gandhi led to the economic crisis faced in 1991. V.P.Singh and Chandrasekhar could not take any bold steps. Narasimha Rao took over as Prime Minister and appointed Manmohan Singh as his Finance Minister and together they ushered in a new phase of economic development which put India on a high growth trajectory and helped towards achieving our true potential. Today India’s economy is the 7th largest economy in the world measured by the base of GDP and the 3rd largest on purchasing power parity.
Dr.C.Rangarajan,ex-Governor of R B I discusses at length the reforms process. Changes in the institutional infrastructure relating to monetary policy, banking and exchange rate regime were an integral part of the reforms. Subsequent changes were in consonance with the original intentions, Institutional reforms are, however, the first step. They have to be supplemented by appropriate policies to achieve results and to tackle the problems as they emerge. He points out that the first step towards autonomy of the Central Bank was taken when it was decided to do away with the system of issue of ad-hoc Treasury Bills
N.K.Singh analyses the B o P situation during 1991. The need for fiscal discipline led to the idea of a Fiscal Responsibility Act, the idea of which was first introduced in the Budget presented by Yashwant Sinha. Parliament passed the FRBM Bill. The Act was notified in 2004.Under the FRBM Act, both the Centre as well as the States had to eliminate revenue deficit and reduce fiscal deficit to 3 % of GDP, thus ensuring fiscal discipline.
D.K.Srivatsava examines the fiscal reforms since the Ninetees—their salient domains, taxation, non-tax revenues, fiscal imbalance, government debt and expenditure and fiscal federalism.
Yoginder Alagh discusses the fiscal and trade policies with regard to the agricultural sector. The profitability of agriculture fell by 14/2 % in the 1990s. There was a revival of public capital formation in agriculture in the last decade.He emphasises the need to operationalize the incentives to turn the terms of trade towards agriculture and plan and implement the required infrastructure support as well as integrated water and land resources management.
U.K. Sinha provides a brilliant and comprehensive view on the capital market and its evolution with reforms. He explains the objectives of financial sector reforms to improve allocation efficiency of resources and accelerated growth process.
B.B.L. Madhukar and Kuldip Indiver contend that the Indian power sector has shown a significant growth since Independence. However, until 1991, the growth was limited mostly to the urban areas. The power sector has failed to become more efficient as intended by the liberalisation policies. Private sector participation has primarily been limited to electricity generation. Its role in transmission and distribution verticals has been marginal.
Much has changed in the last twenty five years for the average Indian. India’s emergence in these years has been noteworthy, and it will be more interesting to watch India in the next twenty five years. Challenges remain in areas like employment, job creation, poverty alleviation, food security, water management, urban infrastructure, etc. These need to be overcome by a well-executed plan, utilising our strengths in information, communication and technology, so as to emerge much stronger and vibrant. India, as it was during the cusp of economic liberalisation of the 1990s, has certainly moved from a scenario of insufficiency to a nation of abundance and self reliance. The future can be better.
This is definitely one book that needs to be on the shelf of every student, social activist, practising economist, as well as libraries.
P.P.Ramachandran.
3/12/2017
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