PROF--C T KURIEN

Economics of Real-Life: A New Exposition by C.T. Kurien; Published by Academic Foundation; Pages 249 ; Price Rs.995/-.

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“Age does not wither nor custom stale her infinite variety" sang the Bard of Avon about Cleopatra. The same can be said of Prof.C.T.Kurien who at the ripe old age of 90 has produced this delightful book. He is an eminent Professor of Economics. His students are legion and are found in every region, a number of them in exalted positions. He was Professor in Madras Christian College ;Director Madras Institute of Development Studies. He was one of the six economists invited by the Secretary General of United Nations to make an independent evaluation of the Global Food Situation.

The framework of the volume is one that permits  multidisciplinary analysis and throws the searchlight on the drawbacks  mainstream economics perspective. To name these, they  are emphasis on equilibrium, reliance on the  concept of a utopian economy, the artificial distinction between a market economy and the political system and public sector. He deviates from the mainstream division of the economy into households and firms, identifying instead  different units and the links between them.

To begin at the beginning, Kurien began with a study of Economics  fondly believing  that “through a study of Economics, (he) would be able to understand the causes of poverty and contribute towards its eradication.”

He  became a teacher and was blessed with brilliant students. He expended considerable time on  issues connected with poverty. He discovered his enemies were his own brethren in his profession—the neo-classical economists . He was distressed with role of government in alleviating poverty. He declared that  a ‘high growth’ rate means little unless it leads to reduction in poverty.

Kurien’s next stop was the Temple of neo-classicism --Stanford  ruled by  the Arch-priest  Kenneth Arrow who wore a crown in the guise of the  Nobel Prize. Kurien failed to be enchanted with the new-fangled  mathematical models and accompanying . He was convinced  that these exotica  distanced itself from  reality. He believed that for countries like India with “surplus labour” and prevalence of dual economies the models could hardly explain the factual position. His long discussions with  Arrow  did not take him anywhere near solution.  Kurien wrote bluntly  “The problem with neo-classical economic theory is that through its abstractions it has set up an economic universe almost completely removed from the real world and then claims it to be the ‘ideal world’ to be established on earth!”

Kurien ploughed a lone furrow and resorted to  an independent course of research based on economic issues rooted in real life. Wrote Kurien,” I have used ‘Production’ and ‘Transaction’, the two basic activities, to probe into the working of the most rudimentary economy to the most complicated economy of our times”. Kurien strongly backed eminent  development economists  like Rosenstein-Rodan, Ragnar Nurkse and Arthur Lewis. He assigned  a value to labour, not merely  as a factor of growth but also as a necessity to lift people from poverty. While many economists embraced Marxism  Kurien kept a distance . He opted for  the empirical method and published several books including Theoretical Approach to the Indian Economy , Rethinking Economics: Reflections Based on a Study of the Indian Economy and Wealth and Illfare . The present book is another step in Kurien’s journey.

According to him “the real challenge in economics is to identify the field of enquiry for which it is necessary to have a satisfactory notion of what the ‘economy’ is and to view it as an “Evolving Complex System.” It is necessary to have both conceptual and empirical approaches. This book is a successful attempt to delineate his ideas in a simple and straight-forward manner.

Kurien has no faith in Adam Smith’s theory that the market is led by an ‘Invisible’ hand’. “The capitalist market is, thus, not the mysterious ‘invisible hand’ that steers the economy; nor is it a smooth flowing stream. It is a choppy river expanding through the visible inter-mediation of the producer-trader combine in pursuit of profits.” The book traces the emergence of the complex market of today from the beginning with to today’s sophisticated instruments of  money and banking.

Kurien highlights the invaluable  role of intermediaries, traders or agents who intervene between the producer and consumer.They lead to  “commoditisation” of markets where the producer (farmer) is far removed from the process. With trading and finance having a dominant role, trading and/or arbitraging in “transactions” become an end in themselves. Financialisation, again, is seen as “the pattern of accumulation achieved through transactions in the financial sphere rather than through production of commodities or through trade.” Kurien offers brief  accounts of the rationale of economic policies .  He proves how  economic policies are part and parcel of  society and politics. The  intervention by the State ,in fact, saved the markets on a number of occasions.

Kurien  analyses  the Indian economy and the policies of the government over the years . He believes only in growth resulting in abatement of poverty. According to him, “for the vast majority of people, livelihood remains a precarious issue after approximately five decades of ‘planned development’ and two-and-a-half decades of high growth.” He pooh-poohs  talk of  “high growth” in India since  it serves only the interests of the state, capital and a the richer segments of the economy.

Study of institutions forms an important part of economics. A nuanced view of society and its economic dimension can be developed through a focus on ownership, authority, inter-mediation and asymmetry of information. As intermediaries and knowledge asymmetries are important, social structures evolve, resulting from and enhancing differences.

 Kurien  presents a clear description of his analytical structure of the economy . It can be seen as a network of participants and activities, units and links. These result in nine different types . There are not only various types of households and economic units such as firms and banks, but also traders are separately identified. “If multilateral exchange is one of the main links in a modern economy drawing in practically all its different units into interaction, the role of the trader cannot be minimised” . In addition, he expressly states that the economy is “always in a state of flux”, challenging the perspectives that focus on equilibrium.

As a further step away from economics based on perfect competition and closer to reality, “most markets are controlled by a few producer-trader combines that can easily fix prices” .

One chapter is dedicated to  the emergence of MNCs and provides  a broad sweep of global world economic events since 1945.

 Central to the book is the view that economies are always changing, and so economics must adapt also to be relevant to the country and time under consideration. Consequently there is a need for ‘substantive logic’ based on the nature of the problem under consideration, rather than internally logically consistent axiomatic approaches.

Kurien’s book contributes in a big way to solving the problems faced by a Society with burgeoning needs and demands.His book is compulsory reading  for all students of economics and those who evolve policies.

P.P.Ramachandran.

18/11/2018.

SUJATA ANANDAN--MAHARASHTRA

Maharashtra Maximus: The State, Its People & Politics by  Sujata Anandan ; Published by  Rupa; Pages 244 ; Price  Rs 395/-

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If you proclaim “West Bengal” the image that springs up is that of Subash Chandra Bose. If you call out “Gujarat” it is Mahatma Gandhi and if you invoke “Maharashtra” the figure that emerges is Chatrapati Shivaji.

 Sujata Anandan a veteran journalist, who is working with Hindustan Times, in her earlier book  “Samrat” wrote about another name that had equalled the status of Shivaji—viz  Bal Thackeray. She  explored the life and times of Balasaheb and  as Vir Sanghvi put it—“'The book is an attempt to understand the milieu that Thackeray operated in and to capture the essence of his style amidst the shifting stands and the politics of pragmatism'.Thackeray not just changed the name of Bombay to Mumbai but quite altered the character and fabric of the city even though he was driven not by ideology, as might have seemed to most outsiders.

In the book under review  “Maharashtra Maximus: The State, Its People & Politics” she has spread her wings and extended the scope of her study with the help of  her deep understanding of Maharashtra politics and its people.

Sujata Anandan explains with great acumen the mystique  of Maharashtra politics and its ramifications.  “The Gateway of India” is in Mumbai and Maharashtra also can claim to be the  “Gateway to India” .  The beginnings of the fight for “Swaraj” began with  the movement of Self-rule – or Swaraj –  with Chatrapati Shivaji Maharaj.  That sterling leader  also worked hard for  social integration –which initiative gave birth to  unique and remarkable  movements for the abolition of castes and for ensuring  justice and social equality .  “Marathas gave to India the concept of Swaraj and federalism, and kept it largely Hindu.”

Sujata has cleverly explained the applicability of the concept of the “Triad” in the history of the State .Three major regions --Bombay,Vidarbha and Marthwada  were merged to make  Maharashtra as we know today. Sugarcane, Cotton and Onion  are the major crops of the  State. The Trio who cast maximum  influence on the growth of the State are  are Yashwantrao Chavan, Vasantrao Naik and Sharad Pawar.  What was their philosophy,asks Sujata and answers-- The tripartite spirit of Phule-Shahu-Ambedkar philosophy that firmly laid the foundation of god governance . Finally the three communities that have a paramount influence in Maharashtra are Mahar, Maratha and Brahmin communities,

According to the author  Maharashtra Dharma goes beyond Hindu Dharma and incorporates  nationalism.

 Shivaji Maharaj was the first of the indigenous kings to realise the importance of naval power.  “One can today describe him as the father of the Indian navy. One of modern-day India’s naval training ships is named INS Angre after Kanhoji Angre, a formidable naval commander during the time of Shivaji who conquered many sea powers and seized many islands from both the Portuguese and the British on the Konkan coast. The Indian navy has also named its training ship in Lonavala as INS Shivaji, in tribute to India’s original naval power.”

Maharashtra is vastly superior to other states of India. However ,within the State undeniably there are backward or under-developed regions.  Marathwada is backward. Located on  the edge of a desert, water is a major issue  here. Not a single district including Aurangabad can be labelled  industrialised. Attempts made earlier  to develop industries in and around Aurangabad were not successful. Sujata quotes an authority ---according to Prof. Sudhir Gavhane, “The per capita income and human development index here are even lower than those of Bihar, and if you separate areas around Pune and Mumbai from Marathwada, the entire region comes under the most poverty-hit districts of the country.”

Of course the inevitable subject  Shiv Sena comes up for discussion. No one can afford to  ignore it. Shiv Sena is part of NDA and shares power with BJP in central as well as state government. But, at the same time they are playing role of opposition party. The party has strong base even after death of Bal Thackeray. The author correctly says, “The Shiv Sena’s stubborn and unequivocal position on a unified Maharashtra resulted in the resignation of the state’s advocate general Shreehari Aney who was rooting for the separation of not just Vidarbha but also Marathwada.” BJP is for the smaller states. BJP is in favour of statehood for Vidarbha but it cannot afford separation because that could result in its losing control of Maharashtra. Maharashtra will continue to remain more important than Vidarbha, even if separate state of Vidarbha becomes a reality.

BJP leadership has acknowledged the influence of Shiv Sena when Amit Shah, party president, addressing a meeting on the party’s foundation day in Mumbai said, “It is our ardent desire to contest the 2019 elections with the Shiv Sena.”

The reality is Maharashtra is passing through a dark phase like any other state. Sujata  rightly contends  “It is not confined to Maharashtra alone. There is a general disconnect between the masses and the leaders across India.” These disconnect between the people and political leaders are not a good sign for the democracy.

 The book is an ideal introduction to the great State of Maharashtra and in a brief analysis the author tackles a number of questions—such as--What is Maharashtra? What has been the contribution of various communities and castes in making the Maharashtra of today? What makes Mumbai a centre of political power?  Who is a Maharashtrian? .

P.P.Ramachandran.

11/11/2018.

RAHUL  BAJORIA  ON  RBI

The Story  of the Reserve Bank of India by Bajoria ; Published by Rupa ; Pages 281 ; Price Rs.595/-

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The “ Economist ” of London while reviewing Prof.P.R.Brahmananda’s book “Principles of Maximisation of Welfare” wrote “The learned Professor has proved that he has read all the books on the subject—proof that was not  required”. A similar comment can be made of the book under review “ The Story of the Reserve Bank of India” by Rahul Bajoria. He has read all  the books on the subject and he quotes  profusely. There are a forbidding number -- 693-- of  endnotes !.

The author cannot claim much of a close association with the  R BI. He is a post-graduate from the National University of Singapore. Too, he has a decade of service in Barclays in the Asia Desk.

 The book is an attempt to analyse the evolution of R B I and closely studies its autonomy and role in financial development of the country. Bajoria also assesses the role of different Governors and their link with the Finance Ministry.

As everyone knows RBI  played an important role in the Nation’s economic development. Its role since the 1991 reforms has resulted in introduction of best practices in India’s financial markets, especially in the theatres of bank regulation, minority investor protection and bond market relationship . The RBI occupies the primal position in India’s financial labyrinth and it is bound  to play an increasingly dominant role.

Chapter One is on the origins of R B I. There is the mandatory journey taking the reader through, the Fowler Committee, the Chamberlain Commission, the Hilton-Young Commission with the celebrated quote of Lord Montague Norman— “the RBI  should  treat the relationship with the Bank of England as that of a  passive Hindu housewife.”

Rahul moves on to deal with nationalisation of RBI, the advent of the S B I,  the infamous connection between Governor Benegal Rama Rau and the hot-headed T.T.Krishnamachari leading to the Governor’s resignation, the Mundhra scam, the 1966 devaluation of the Rupee and inauguration of the Deposit Insurance Corporation.

We are furnished details of Bank nationalisation which has been covered in a masterly way in D.N.Ghosh’s book “No Regrets”. Next comes the foolhardy intervention of Sanjay Gandhi and the imposition of his henchman Shri.K.R.Puri as Governor. This period also witnessed  the deplorable  and  ignominious exit of Shri.R.K.Talwar from the S B I.

Bajoria analyses the second round of Bank Nationalisation and the establishment of special institutions like Nabard, etc.

The much-bandied subject of “Devaluation” is discussed in one chapter. Narasimha Rao’s single largest reform was Industrial delicensing. By one stroke Government abolished industrial licensing for all industries except eighteen industries on the negative list, regardless of the level of investments. Same time Manmohan Singh presented his historic  Budget which the London Economist called “an economic revolution”

The other significant event was  the  Harshad Mehta scam and its repercussions. Bajoria writes of the Epochal moment in India’s banking system and for the RBI  in September 1994,when the Government signed an agreement with RBI to phase out direct and unlimited monetisation of the fiscal deficit, thus giving the R B I  greater control over its monetary policy. Details are furnished of the Reports of the Committee—headed by Shri.S.S.Tarapore—on preparing a road map for full Capital Account Convertibility.

The Rangarajan era saw not only a significant change in both the regime and form of the Central bank, but also fundamental changes such as the phasing out of ad hoc treasury bills, full convertibility and the reintroduction of private banks into the banking system,

Rangarajan’s successor, Dr.Bimal Jalan  changed the course of monetary policy by postponing the CRR cuts announced in the earlier policy decisions and tightening short-term liquidity in the money market through a new instrument of fixed rate repo- transactions.

The second Narasimham Committee report advocated greater autonomy for public sector banks and a reduced role for the Government and RBI in running the banks, along with a gradual reduction in government ownership to 30 per cent. It also recommended reduction in number of public sector banks through mergers in order to create internationally competitive institutions.

Bimal Jalan presided over one of the longest periods of monetary easing in RBI History. He declared that his term in RBI was spent in demystifying policy making as that led to transparency—accountability—responsibility.

Dr.Reddy succeeded Dr.Jalan and had a long term of five years. The Market Stabilisation Scheme introduced during his term allowed the RBI  to issue special securities to withdraw excess liquidity on behalf of government. This boosted the RBI’s autonomy to conduct its monetary policy. The Reddy era has been presented clearly. As all are aware Dr.Reddy obtained a certificate from no less a person than the Nobel Laureate Joseph Stigler  who  declared, “If America had a central bank chief like Y.V.Reddy, the US economy would not have been in such a mess”Reddy success fully insulated India from being burnt by the flames of the Global crisis.

There was a ding-dong battle between the next Governor Dr.Subbarao and the Finance Minister Pranab Mukherjee--- even resulting in rejection of an extension of the term of Ms.Usha Thorat---who had a brilliant track record. The Government set up a Financial Stability Development Council. The Finance Minister was not happy with RBI’s aggressive positioning on monetary policy.

Subbarao was succeeded by the “Rockstar” Dr.Raghuram Rajan who announced --on his Day One--a string of  measures to stabilise the currency, improve confidence and increase the flow of foreign capital to boost reserves. Rajan declared in his book “I Do What I Do”—“The key policy objective was to present a façade of confidence, to assure the public and the investors that RBI knew what had to be done.” Rajan’s re-orientation of monetary policy won him international acclaim Rajan won “The Central Banker of the Year” Award. However he decided to return to Academia at the end of his three-year term. Government announced the appointment as Governor Dr.Urjit Patel, then sitting Deputy Governor.

 “Demonetisation” attracts one full chapter discussing pros and cons. The author quotes Dr.Y.V.Reddy—he said that he would  have advised the Government against demonetisation had he been Governor. He further added, “If overruled, I would have admitted myself in hospital and resigned after some time.”

From RBI’s point of view the exercise has been stressful and laborious and it has not necessarily added to the Institution’s credibility in the short term.

The book will be useful for students of economics and those interested in the history of banking in India.

P.P.Ramachandran.

28/10/2018.

SAIFUDDIN  SOZ

Kashmir: Glimpses of History and the Story of Struggle by   Saifuddin Soz; Published by  Rupa; Pages 236 ; Price Rs.595/-

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Throughout its long, diverse, distinctive but scarred history, the beautiful and bountiful land of Kashmir has captured the imagination of travellers, kings, historians and nations. Kashmir has seen it all. Kashmiris fought the Mughals, the Afghans and the Sikhs in the past. However, it was their fight against Dogra autocracy that ultimately led to their disillusionment with the Indian establishment. With Pakistan feeding the emotions of deeply alienated and disenchanted people and the Indian government using force and taking a harder stand by the day, this unique culture now stands completely besieged. In the book under review Saifuddin  Soz takes a passionate and compelling look at the past, present and future of a vastly misunderstood people.

 The first half of his book is a studied, well annotated recount of the historic and cultural roots of the Kashmiri people and its society right up to the time when which      J and K acceded to Union of India. The second half is how the understanding of that “past” helps  resolving the present political crisis in a pragmatic fashion,  that is acceptable to all stakeholders in J and K. In this backdrop,  the larger secular, pluralistic cultural legacy of Kashmir stands out, a vision that defined the Jawaharlal Nehru-Sheikh Abdullah equations, notwithstanding the painful and tragic developments J and K has seen post-1947.

The author very fairly records that in recent years two former Prime Minister, Atal Beharji Vajpayee and Dr Manmohan Singh tried their best to take forward the wisdom of the Kashmiri past to resolve the issues by simultaneously engaging with Pakistan, even while trying to normalise the ground situation.  But both efforts remain as unfinished projects, while Kashmir 2018 is again on a precipice.

Well-known historians Kalhana, PNK Bamzai and travellers like Hiuen Tsiang, Marco Polo, Al-Beruni, Francois Bernier and George Forster are some of the many names whose assessments, travel accounts and descriptions Soz has dipped into in a bid to unravel Kashmir and trace its recorded history which dates back to 3000 BC. 

His  history  of the region captures Kashmir  from Rajatarangini to the contemporary period. Kashmir has had a rich civilisation of its own with its unique culture that has been well   portrayed  in this book.

 Soz has discussed the contemporary period and the post-independence Indian period of Kashmir’s history. He has also  suggested a method  to tackle the Kashmir issue.  Says Soz-“In my opinion, it is futile to look to the UN for any workable help for the resolution of the dispute as the powers holding the authority of veto have all along responded to the situations keeping their own strategic interests in view.”

Soz’s approach is not  of a trained historian  nor that of a chronicler of historical events . He has problems with the Sikh rule in Jammu & Kashmir; he talks of the "brutalities committed by the Sikhs". He has problems with the Dogra rule; he says that Kashmiris struggled for freedom from the Dogra kings as they felt humiliated. He reproduces a passage from Captain Knight who wrote that the Kashmiris were "handed over to the tender mercies of the most thorough ruffians that ever was created" But he goes overboard in hailing the Islamic rule. He writes gushingly, "The advent of Islam created a new feeling of equality and harmony among the people and introduced a set of human values that were unknown till then."

He talks of a "unique situation of cultural synthesis" during the Muslim reign. Later in the book, Soz is compelled to admit that the Kashmiris were disgusted with the Afghan and the Mughal rulers, though the injustices the latter committed were "mild-mannered".

The author has high praise for Jawaharlal Nehru and Sheikh Abdullah, but he casts aspersions on Vallabhbhai Patel and the Dogra ruler, Maharaja Hari Singh. In what is a pathetic attempt to defend Nehru's disastrous policy on J&K, Soz seeks to put the blame at Lord Mountbatten's door. He takes pain to demonstrate that Nehru had strongly opposed the idea of taking the Kashmir issue to the United Nations, but agreed only on conditions favourable to India.

On the other hand, the author chooses to show little appreciation of Patel's shrewd move to link plebiscite in Kashmir with that in Hyderabad. Patel knew Pakistan would not agree, given that it would lose in Hindu-majority Hyderabad. Soz fails to realise that in doing so, Patel saved Kashmir from acceding to Pakistan. He also glosses over the fact that in a meeting at the Indian Prime Minister's residence in the aftermath of Pakistani invaders entering Kashmir, it was Patel who told the Kashmir delegation that its members had no reason to accept Pakistan's terms and that India would stand by them. It was only after his resolve that Nehru stirred into action and ordered Indian troops to drive away the invaders.

According to Rajmohan Gandhi's book “ Patel: A Life”,   it was for the J&K's ruler to decide; the Iron Man of India knew well that the Maharaja was not inclined towards Pakistan. While on the subject,  Soz has not elaborated on how Patel, as minister of states, was sidelined on Kashmir affairs, with Nehru taking direct control and making a mess of the situation?

Soz  holds the "RSS ideology and narrative" responsible for the failure to establish peace in the Valley, and the appointment of Jagmohan as Governor of J&K for a second time in January 1990 for the escalation of violence and the atrocities against Kashmiri Pandits.

The author meticulously goes over the birth of the National Conference under Sheikh Abdullah and traces in good detail the historical circumstances including the British Partition of the subcontinent, events leading to the “Delhi Agreement of 1952”, how a ‘special constitutional arrangement was evolved’ and provided for in Article 370 of the Constitution. He then points out how when Sheikh Abdullah was trying to give a “final shape to the constitutional relationship with the Union of India”, some “small minds” in Sheikh’s own party and in New Delhi sowed the seeds of how he toyed with the sole idea of an “independent Kashmir”.

Sheikh Abdullah’s subsequent arrest, the long years of incarceration, how Nehru’s last gambit for a peaceful political solution was cut short by his death and what it did to J and K’s politics later, the rise of armed militancy in the late 1980s’ and its aftermath, the ‘exodus’ of the Pandits, have all been dispassionately elucidated.  

Saifuddin Soz is very clear that the ‘way forward’ needs to include New Delhi talking to the    Hurriyat groups in Kashmir, even while the Governments of India and Pakistan should strive to settle the Kashmir dispute” in the backdrop of the ‘Musharraf- Vajpayee-Manmohan formula’.

 The book extensively mentions the miseries, atrocities and betrayals heaped on the Kashmiris time and again since Independence and earlier, but no one will miss to note  that the chapter on exodus of Pandits mentions the number of Kashmiri Pandits who stayed behind but forgets to bring up the number that left the Valley, and how.

The concluding chapter, The way forward, offers a number of solutions to reach a settlement on the decades-old dispute. The suggestions lay focus on the “Centre showing compassion to people of Kashmir”, “internal dialogue with people of three regions” and “reducing the presence of Army” in the strife-torn state. On the whole, no new solution comes on the platter.

Mutual trust and dialogue, but not force or religious polarisation, is the way to heal a ‘wounded’ Kashmir in the author’s ultimate analysis. The book is a must-read for all those who wish to understand J and K in the contemporary context.

P.P.Ramachandran 

21/10/2018.

BIMAL  JALAN

India Ahead 2025 and Beyond by Dr.Bimal Jalan; Published by Rupa ; Pages 161 ; Price Rs 495/-

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                 Dr.Bimal Jalan was a highly respected member of Parliament from 2003—2009, Chairman of the Expenditure Management Commission. He was India’s representative on the Boards of the I M F and the I B R D. He is one of the distinguished Governors of RBI and he was the Consulting Editor of the Fourth Volume of RBI History.

 Dr.Jalan has several books to his credit—the latest two books being : “India’s Priorities for the Future” and “Politics Trumps Economics”—(Both reviewed by me).

The book under review is aimed at promoting India’s interest in the long run—irrespective of whichever political party holds power. The book is a testament of a hard core nationalist committed to putting his country on a high pedestal in the comity of nations.

There are very few developing countries that are as well-placed as India to take advantage of the fundamental changes that have taken place in production techniques, international trade, capital movement and employment of skilled manpower to realise the full potential. India should take decisive steps towards deeper reforms and reduce the pervasive and procedural political and administrative hindrances.

The book deals with priorities that result in high growth combined with alleviation of poverty. There is an imperative need to generate sufficient political will to pursue appropriate policies and jettison the dead weight of the past.

The inaugural chapter “Definitive Agenda for Political Reforms” emphasises the priorities to ensure that the present system becomes more accountable and results in enhancing the working of the different agencies, especially the Parliament and the Government to ensure expeditious implementation of public policies.

The National Commission to review the Working of the Constitution ( 2002) had stressed the mounting concern in the Media and the Public about the decline of Parliament’s standards of debates, erosion of the moral authority and prestige of the supreme tribute of the people. Dr.Jalan asserts boldly, “Since then, there is very little doubt that the functioning of the Parliament, if anything, has worsened and disputes between the leading party and coalition parties have increased substantially”.

Dr.Jalan devotes one chapter to the working of the Parliament. He highlights the developments that took place in the Parliament on five days—18 to 23 March—during the Budget session of 2006. These reflected the diminishing role of the Parliament in the conduct of the Nation’s affairs and the power of the Government to do what it wishes to do, irrespective of the actual outcomes of the Group. He makes a stirring call for making necessary constitutional amendments to confer adequate powers to the Chairs of the two Houses to control the unruly behaviour of the Opposition parties or Members. The Learned Banker  wants the Anti—Defection Law to be made applicable to the small parties and not just individual members.

We have a trenchant discussion on “Criminals in Politics”. According to a Survey of recent elections—as observed by Dr.Jalan “ Nearly 20 per cent of the candidates of  the Lok Sabha had criminal antecedents. In the present Lok Sabha, which as 543 seats in all, over a hundred members, elected  in 2014,had criminal cases pending against them.” According to him,there is a need to reduce the incentives for convicted criminals on bail, such as contesting elections.

 The chapter on “Corruption Multiplier" is an acute analysis of the consequences of high corruption on India’s economy and what steps can be taken to combat it. What is required is Transparency in the decision making process and full disclosure of decisions actually taken by different ministers to implement policies, especially those with financial implications.

Dr.Jalan writes eloquently on the need for “ Enhancing the Quality of Life” and lays emphasis on three crucial parameters. These are “Nutrition” ; Life Expectancy” ;and “Literacy”. These parameters are used to measure the ranks of different countries on the H D I. There is a crying need to widen the reach of the PDS among the poor and make it more cost-effective and equitable . In the field of literacy, priority ought to be given to substantially increase financial support by the Centre for elementary education rather than higher education in colleges and universities. For effective decentralisation of public service, Government must provide adequate financial authority to local bodies to implement social programmes assigned to them.

The Asian Financial Crisis ( 1997—99) held out important lessons to all of us. The chapter on  “ New Paradigm for the Financial Sector “ deals with issues relating to the substantial growth in the depth and widening of the financial sector and the policy framework for the future.

Dr .Jalan has something  important  to say on the vexed problem of  “ NPAs”. To quote him--  “A vigorous effort has to be made by all banks to strengthen their internal control and risk management system and to set up early—warning signals for timely detection and action. Henceforth, the resolution of the NPAs problem also requires greater accountability on the part of the corporates, timely disclosures in the case of defaulters and an efficient credit information system with the help of stricter accounting and prudential standards, the problem of NPAs could be effectively contained in the future”.

Dr.Jalan analyses the role of Government and administrative reforms. Recasting the role of the Government in the economy and introducing some important administrative reforms in the coming years would ensure substantial opportunity for India to achieve in the first quarter of the 21^st century what could not be achieved in the previous fifty or hundred years.

The chapter “ The Twenty-First Century is India’s Century” and the Epilogue “The India of Our Dreams” emphasise some significant issues  that have to be tackled for us to realise the Nation’s full potential and rightful place in the global economy and in the comity of nations.

On an optimistic note Dr.Jalan concludes, “In future, by 2025, if there is sufficient will and cooperation  among different branches of the Government—i.e  Legislature, Judiciary, Executive. It should be potentially less difficult to find solution to the problem faced by the country. Like never before, India’s destiny is now truly in the hands of its people, With the determination to realise the country’s vast potential, India’s economy can become one of the strongest in the world in the not too distant future, Widespread poverty, illiteracy and disease would then largely disappear and democracy would have given the people their just rewards.”.

P.P.Ramachandran.

14/10/2018.

DR.VASUDEVAN

  "  Macroeconomic Policies for Emerging and Developing Economies " by Dr. A.Vasudevan and Dr.Partha Ray. 

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The book under review has twin Fathers. Dr.Vasudevan’s two earlier books are “ Central Banking for Market Economies”  and “Monetary Governance” ( both reviewed by me ). He was Executive Director of R B I, Adviser to the Executive Director for India at the I M F. He held with distinction exalted positions in the Central Bank of Nigeria. In addition, he has written two Novels.

Dr.Partha Ray has almost identical qualifications.  He too held high positions in  the  Department of Economic Research and Policy of R B I and worked as Adviser to the Executive Director for India at the I M F. Ray is currently Professor in  the I I M, Kolkata. He has several books to his credit, the latest being, “The Global Economic Crisis through  an Indian Looking Glass”.

The volume under review is a thorough discussion of the Global Financial Crisis of 2007-2008 and its impact on the fiscal, monetary and  exchange rate policies for financial stability in emerging developing economies. The downfall  of the modern macroeconomics consensus springing from  the global financial crisis has opened up space for creative rethinking about macroeconomic policy .The authors view macroeconomics as much more than the theoretical postulates of academicians who fashion out economic policies. The volume tackles problems posed by fiscal, monetary, exchange rate and financial stability policies and their inter-connection with  strategies of the country’s development. The authors relate efforts of rapidly emerging economies, such as India, to face up to the economic challenges of today's closely  interconnected world. Indubitably  the economy is more than economics. It incorporates  finance and behavioural sciences and takes into account people and their unfathomable behaviour, as well as the politicians' search for measures that would improve general welfare and enhance the longevity of political leaders themselves.

The authors opine that in spite of voluminous literature on the subject, the  understanding of the solution to such crisis is quite incomplete.  

The  “Foreword” which is at once succinct and brilliant  is by Dr.Y.V.Reddy. All of us are aware what the Nobel Laureate Joseph Stiglitz wrote of Reddy—“ If America had a central bank chief like Y.V.Reddy, the U S economy would not have been in such a mess." .So Dr.Reddy’s words are worth their weight in gold. According to  him—“The response to the crisis and the introspection about the crisis have led to re-balancing of thinking and policies in several directions. The “Old Ideas” are being replaced by the wonderland of macroeconomic policies. There has arisen a more nuanced approach than before on the thinking on macro—issues. Price Stability forms the primary objective ;Flexible inflation targeting has become appropriate; Focus of models on the role of money should be on important relevant development; There is a need to supplement counter-cyclical monetary policies with counter-cyclical macro-prudential recognition; Monetary policies have to be coordinated within the country and with counterparts in other countries.

We are furnished a clear background to Development Strategy. Strategies  owe much to the ideas that have found place in the literature on economic development. One of the interesting aspects of the literature is that it sprang from two events: one, the consequences of the October Revolution of 1917 in Russia and the second is the Great Depression leading to the decline of classical economics and upsurge of Keynesian economics. Classical economists had unshakeable  faith in markets and their infallibility, whereas the Keynesian economics laid stress on state intervention to usher in  economic recovery and progress. There emerged a plethora of Growth Models. Four major development strategies were pursued by developing countries;

Industrialisation with emphasis on production of consumer goods including agriculture ; Emphasis on production of heavy and capital goods ; Export promotion; Development through reliance on foreign capital. The authors provide a succinct analysis of the Indian experience—the different Plans, etc.

In contrast was the Washington Consensus which emerged from the experience of the economies consequent to the severe debt crisis at the end of the 1970s and 1980s. In sum, there emerged a comprehensive macroeconomic and structural policy programmes ever since the second half of the 1980s. The authors emphasise that it is vital that institutions are developed to  ensure that development goals are achieved in each period and by the terminal year. Fiscal and monetary policies should be regularly revisited and these could be in the form of an internal exercise or an evaluation by outside experts.

Fiscal policy assumes a commanding role. It covers three aspects of government activity---Taxation, Public expenditure and Public borrowing. The conclusion is inevitable that the fiscal side of Monetary Economic Policy cannot on its own drive up growth; it needs to be buttressed by other components of  monetary, economic policies and structural measures.

Monetary policy should help keep commodity price inflation under control and within a tolerable level. The twin objectives are inflation control and growth in output and employment. In recent times there has been one more aim—securing of banking and financial stability. The two  economists are of the firm view that cooperation with the government should be the raison d’etre of central banking, and differences in views on economic conditions and corrective actions should be settled in a manner that positively promotes overall economic and social welfare.

When Queen Elizabeth visited the London School of Economics to open its New Academic Building in 2008, she asked the assembled distinguished academicians, “If these things related to the global financial crisis were so large, how come everyone missed them?.”

After due deliberations a number of leading economists from LSE gave a detailed reply. Read their clever reply.

"So in summary, Your Majesty, the failure to foresee the timing, extent and severity of the crisis and to head it off, while it had many causes, was principally a failure of collective imagination of many bright people, both in this country and internationally, to understand the risks to the system as a whole."

It is hard to  assess the book better than  has been done by Dr.Reddy. His verdict-“ The book carries the imprint of rich experience of the authors at the policy level both at home and abroad, and deep scholarship of the most critical aspects that underlie not merely the conventional macro-economic policies, all placed in the development context of most emerging and developing economies”.

This unusual and elegantly  written volume  springs from the rich global experience of the writers but also in reality. It stays true to their aim “essentially to lay bare the processes, institutions and analytical underpinnings of macroeconomic policies”.

The book is a veritable gold mine not only for postgraduate students and teachers of macroeconomics but also for policy makers and analysts and   deserves to be read by  those  associated with  policymaking—students of economics, planners and teachers as also those of the Fifth Estate.

P.P.Ramachandran

07/10/2018.