The cover says a lot of what is to come — India on a globe with smoke rising up. Is the great Indian story going up in smoke? The author says it upfront, in the inside cover, “…the global financial crisis and our domestic policy have taken a toll on India’s economic performance.” Yes we all know that, so what’s new?
The articles draw from some excellent pieces penned by the author over a period of two and a half years – January 2009 to September 2011 – and published in Business Standard.
The Indian economy has many unique arrangements, idiosyncratic mechanisms and quirky characteristics that most cannot even begin to comprehend. But Shankar Acharya is different and his writing stands apart precisely for this reason — his unparalleled understanding of the innards of the Indian economy and policy-making. On top of that is his wide vision that encompasses the world, ranging from the most developed economies to the least developed ones. Taken together, it is a treasure trove of insights, views, recommendations and arguments all glued together with humility and humour: “…have I persuaded you? No? Never mind. We do not always have to agree!”
The book contains a very good introduction and seven sections comprising 38 chapters, each about 1,200 words interspersed with graphs and figures. The first section, containing eight chapters, deals with the global crisis. Here, the author first shines light on what happened abroad, and then on how India over-responded initially and under-responded later when the effects of the first crisis petered out.
The next section has five chapters that deal with economic growth in India. Here, the author gets more forthright — how successive failures on the part of the government may be impacting both growth and equity; and how the gains of the mid-2000s have been squandered (rather uncharacteristically, he also points towards Narendra Modi’s Gujarat as a beacon for Indian agriculture).
The third section, comprising six chapters, is where the author finally points towards what the government should be doing. The recommendations are sensible, practical, do-able and well known. What is most interesting about this section is how forceful arguments can be made without resorting to jargon or befuddling the reader with statistics and factoids.
The fourth section contains five chapters that deal with issues of employment and equity (and where, in the interests of transparency, I must note he refers to two studies with which I was associated). The author shows a different side to his interests — how employment and job creation lie at the centre of inclusion and how universal access to healthcare is among the most important determinants of a country aspiring to achieve developed-country status. More importantly, unlike many others who play with socio-economic and equity issues, the author shows a way of how good policy can marry soft-heartedness with hard-headedness.
The fifth section has six chapters dealing with budgetary and related issues. It is evident here that the author has a far deeper understanding than is generally bandied about by economic commentators. He is perhaps the only commentator who in the same piece can argue for sharply reducing the deficits while increasing defence expenditures and their share in the expenditure budget.
The sixth section is about external sector policies, but it deals mostly with exchange rates. The author is categorical and unambiguous; the government needs to guard against undue rupee appreciation.
The last section is more general (which is what it is called) and deals with three topics: Obama, Africa and September 2009. This was quite an enjoyable section – away from the problems of the Indian economy – and one wishes there was more here.
The book is a must for any student of the Indian economy. In 226 pages we get an overview of what occurred, what should have occurred, what may occur, and how India works. And couched in gentlemanly verse is the most hard-hitting take on the sad economic policies of the government we call the second United Progressive Alliance.
However, from someone who has experienced how political pressures, administrative imperatives, individual likes and dislikes and extraneous factors combine to mutate sensible ideas into nonsensical policies; and for someone who has seen clearly unsustainable and wasteful policies continue for years and decades; I want more. How does policy-making occur? Why are sensible and practical policies not taken up or discarded? Why do perfectly rational and well-meaning leaders give in to irrational or self-serving pressures? There is no one better than Shankar Acharya to throw light on India’s strange political economy. Perhaps his personal relationships get in the way, or perhaps it is merely the gentlemanly garb that he seems to have been born with. He would do well to cast them aside. For India’s sake.
INDIA AFTER THE GLOBAL CRISIS
Shankar Acharya
Orient BlackSwan New Delhi 2012
226 pages; Rs 425
