Books on the post-reform Indian economy have been hitting the stands with metronomic regularity. The India Development Report on the same theme promises to be a cut above the rest.
A compilation of papers by economists, researchers and students affiliated to the Mumbai-based Indira Gandhi Institute of Development Research (IGIDR), this volume has been tightly edited by well-known economist, Kirit S Parikh.
The India Development Report provides a clear macro-economic picture of industry, agriculture, rural development, banking and the securities market. It also touches on infrastructural issues, and outlines the broad debates relating to the environment, labour laws and the ever-widening fiscal deficit.
It also concisely sets out the country's achievements on all these fronts, while drawing attention to what course future policy reforms must take.
The study is lively and thought-provoking, laying adequate emphasis on the need to overcome poverty and protect the environment. It outlines the challenge which faces the nation in its quest to transform the Indian economy into a vibrant one. It points out the difference between a high rate of growth and a high sustainable rate of growth, thereby highlighting the subtle difficulties which arise when one wishes to achieve a sustainable rate of growth.
The essays illustrate that while availability of foreign exchange and infrastructure could be binding constraints on the sustainability of envisaged growth, these are merely necessary conditions for growth, and not sufficient by themselves. A favourable socio-political environment is a must for providing these sufficient conditions. This includes coordination between various ministries especially with regard to giving out the right signals to the private sector. In keeping with this, a speedy disposal of litigations and, above all, a credible government is the need of the hour. The cooperation of the entire society as a whole is needed for the a higher growth rate to materialise, the study states blandly.
Most importantly, the study draws attention to the conflicting interests that plague any developing economy. It points out that till these conflicts are resolved in a satisfactory manner, India's transformation into a high-growth economy may be a distant dream.
At the same time, the volume hits the nail on the head when it points out that ultimately high growth is the best way to reconcile conflicting interests. The trouble, the report correctly points out, is that the country is moving towards market reforms but is unable to give up its distrust of the market and the profit motive.
India Development Report is a handy volume. Not so much because it chronicles the change that has swept the country but because it goes beyond ordinary reportage to provide sound analysis.
However, the book has nothing new to offer in terms of practical solutions. Well-written and well-presented it undoubtedly is, but it says very little which has not already been said time and again.
The book also appears to have slipped up badly in certain areas. It makes a strong case for privatisation and further liberalisation in several key sectors but says nothing about how to tackle counter issues such as India's growing unemployment. Does partial disinvestment of public sector undertakings work very well in the long run? Liberalisation of agricultural exports is another case in point. The policy step may well be desirable but the initiative is bound to hit the weakest section of society the hardest. The volume also throws up very few solutions for tackling poverty and endemic deprivation.
Undoubtedly, the single most worrying policy issue in these times is that of reducing the fiscal deficit. Unfortunately, this burning issue has drawn pitifully little discussion in this book. While the volume clearly mentions the failure of the centre to bring down budgetary deficits to manageable levels, it fails to address the issue of how the problem may be resolved.
The book, however, may prove to be a good primer for students and researchers looking for elementary information regarding India's five-year-old reform process.
The essays put India's economic problems in a sociological context and campaign for stronger political will to push forward the required change.
