India's unshackling problem

Unshackling India: Hard Truths and Clear Choices for Economic Revival

Author: Ajay Chhibber and Salman Anees Soz

Publisher: HarperCollins

Pages: 492

Price: Rs 699

For decades, India has been brandishing its credentials as a superpower in the making. In the 1980s, then Prime Minister Rajiv Gandhi had talked about the dawn of the century and India turning a new page. Similar sentiments were relayed by Manmohan Singh, as the finance minister of the government that initiated India’s first-generation reforms in 1991. And later by Atal Bihari Vajpayee as he steered India into a new millennium with second-generation reforms. Many economists and authors have written extensively on the subject, but the Indian economy, like a stubborn child, refuses to unshackle itself. Ajay Chhibber, India’s first director-general of Independent Evaluation Office, and Salman Anees Soz, a former World Bank official, have made yet another attempt to explain the factors that have kept the economy shackled for so many decades and what the next generation of reforms should entail.

Unshackling India: Hard Truths and Clear Choices for Economic Revival details every aspect of the Indian economy with solutions to remedy the failures of past policy. The book is divided into five sections and 19 chapters, with a set writing style, where the authors start with the problem, build a historical context and end with their conclusions. If you have been reading Dr Chhibber’s columns over the years, then the book resembles a compilation of years of column writing. Although that does help the reader get a bird’s eye view of the Indian economy and its many failures, it also puts the authors in a predicament because there is not enough time to deliberate on each issue. What makes the authors’ analysis different from many before them is the focus on missed opportunities. In detailing each of the issues, ranging from institutions to human capital, climate change to technology, the authors also present a detailed analysis of how the governments missed the opportunity to initiate the great reset. The book also tackles new challenges like climate change and technology, which are rarely discussed in building a new economy. There is no single constant theme to the book, but administrative reforms find space in many pages. Similarly, the authors don’t shy away from castigating governments for their failure to recognise this as a policy solution.

The need to incorporate everything, however, has its drawbacks. The detailed analysis and chain of thought that you expect from Dr Chhibber and Mr Soz sometimes gets lost in the rush of covering more ground. For instance, in the section on the role of the government, the authors rue the missed opportunity to expand on cooperative federalism. One example is the transformation of the Goods and Services Tax and the promise of ensuring a 14 per cent assured revenue guarantee. They do not consider that their solution of changing the nature of subsidies to cash-based transfers also requires state support. The government had to bend to the states’ will to agree to the 14 per cent-clause. Implementing a cash-based subsidy of the kind that the authors propagate will be as difficult as no state government would agree to rationalise the existing set of subsidies to the farm sector.

Similarly, the section on technology is mostly rushed through without considering the implications of technology adoption in the context of trade, social benefits and society. Although the authors are not expected to present a solution to every problem that ails the country, the section on education explains the issues on policy without offering anything concrete for improvement except strengthening the institutions of evaluation. In some contexts, statements such as India needs to initiate sweeping administrative reforms seem too vague to be considered a solution. There is a similar problem on the issue of fiscal devolution. While the authors recognise the folly of states’ policy of dole-outs, leaving them to administer their finances cannot be a solution when there is no stick for bad behaviour.

The problem, as the adage goes, is good economics seldom makes for good politics. While India needs some form of these solutions to be implemented to be finally unshackled, any economic solution that does not incorporate political considerations cannot be viable.

As for the book, if you have been a voracious reader of the opinion sections in newspapers and magazines over the past few years, there is little that is new. If you want a quick overview of India’s failings, however, this book is a good starting point. Even if you don’t agree with their solutions, at least the authors offer you a timeline of India’s failures and compel you to think.