 "Chasing mirages")
INDIA'S LONG ROAD
The search for prosperity
Author: Vijay Joshi
Publisher: Allen Lane/Penguin
Price: Rs 699
Pages: xii+422
"The highly protectionist, highly controlled 'Old India Model' that guided economic policy in the first three decades after Independence was…a failure…[It] was abandoned at first gingerly in the 1980s and then more robustly in the 1990s. The response was indisputably dramatic. India's national income has grown at more than 6 per cent a year (around 4 per cent a year per capita) during the past three decades, a major achievement that puts it in the select club of the world's fastest growing economies. Even so, in the recent past, the momentum of advance has shown distinct and disturbing signs of running out of steam. If India is to make a rapid ascent to prosperity, it needs to undertake more sweeping reforms of a deeper variety."
That excerpt, restated many times in Vijay Joshi's new book, summarises his main thesis. The distinguished Oxford economist arrives at this conclusion after a thorough, if by now quite familiar, examination of India's record since Independence, with emphasis on the last 25 years, the period we have now come to call the reform era. The reader will find all the usual headings in the main bulk of the book: population and employment (unlike many others in this genre, Joshi deals specifically with quality of employment); prices, subsidies, economic reforms and their consequences for resource allocation; infrastructure; environment; macroeconomic stability (read deficits, fiscal and monetary policies and parameters); education and health; welfare measures (called here safety nets and protection) all make their appearance, as they do in all such books as well as in the annual Economic Surveys and the earlier reports of the Prime Minister's Economic Advisory Council. Political economy and international economic trade and relations rate separate sections of one chapter each. Joshi is thorough, but not spectacularly original, in this analysis.
The areas needing reform are grouped into seven categories (this is the order in which Joshi presents them in the concluding chapter, which I presume is also the order of their importance): macroeconomic stability; investment climate; deep fiscal adjustment and a universal basic income; markets, ownership and regulation; external economic engagement; social protection and enablement; and finally, reform of the state.
That is familiar territory, especially to those who have read T N Ninan's The Turn of the Tortoise that came out last year. That is no surprise, because as both authors have acknowledged at the outset of their respective books, they had planned a joint exercise in 2012. "We decided amicably to do two separate books and minimise the overlap," as Ninan puts it, when it "became clear that the two writing styles would not fit well between the same covers."
Comparisons are generally odious but become unavoidable when one reads the outcome of the joint exercise eventually pursued separately. No surprise then, that they both call India's policy changes of the last quarter century "reform by stealth", a most appropriate epithet for all the labours and travails of Messrs Manmohan Singh, Yashwant Sinha, P Chidambaram and now Arun Jaitley.
Both writers had access to the same data and have produced data-rich analyses. But Ninan's is not a data-burdened effort, with minimal recourse to tables and charts, while Joshi relies far more on data. Appendices, end notes, bibliography and index in the Joshi volume run to 100 pages - nearly a quarter of the total length. Both books are meant for lay readers and include much material and explanations that professional economists would consider as given.
While the Joshi prose is easy, Ninan's narrative is far and away the more readable. His use of the just right anecdotal evidence and his witty, at times acerbic, style engages the reader more. I am not sure if one who read both the books would consider his understanding and pleasure as being doubled.
Joshi is the latest to join the burgeoning ranks of scholars and journalists analysing where India is at. Even with deceleration, India remains the flavour of the decade, because it is the one-eyed king of the blind in the post-2008 world, as Raghuram Rajan so aptly put it, even if it cost him his job. I have reviewed half a dozen or more of these in the last two years and read many more. Their one-paragraph summaries would not be much different than the quote at the start of this review.
But Joshi's mining of data and depth of analysis serve his purpose well. Two features of his book seem to justify the claim of both authors to keep the overlaps to the minimum. His concluding chapter containing the reform agenda has a sharp focus on the Narendra Modi government's actions of the last two years and their scrupulous assessment. His strong advocacy of a universal basic income (an unconditional grant of Rs 17,500 in 2014 prices for each family) for all Indians in lieu of subsidies and other support may not sit well with most policy mavens, but is worthy of further analysis and debate.
The relentless concern of deeper reforms, which is the USP of the book, is also a source of grave discomfort for this reviewer. Joshi advocates India's aiming for sustained high quality (emphasis added) and high value growth. High quality growth to him is inclusive and environment friendly. That is unexceptional. But he does not discuss, except in passing, the most critical obstacle in this path: India's shackled peasantry carrying an unbearable burden of just surviving from one day to the next. Agriculture may account for only a seventh of the country's income, but is the source of livelihood of half its population. The concern for inclusive growth is vitiated at the outset by this gross inequality between the two sectors. Sustained high growth of agriculture has eluded all the various policy initiatives and will doubtless remain the Achilles' heel of India. Land is getting fragmented into uneconomic atomic holdings from which a vast majority of rural Indians must eke out a living. Their mindset and aversion to risks show no sign of change.
How can one talk of environment friendly growth when the quality of water in all our rivers, reservoirs, ponds and even aquifers underground deteriorates beyond description every year? Our dependence vulnerability to monsoon vagaries will increase in this age of global warming. Water wars, already in evidence, will become more pronounced and states will turn zealots to protect their riparian entitlements.
These spell an existential crisis for India in the foreseeable future, but our economists and policy makers, Joshi included (only 20-odd pages in the volume allude to agriculture), spare little thought for the area that needs the deepest of reforms. Would one be a Cassandra to think of their pursuits as chasing mirages?
