Bimal Jalan’s Emerging India is a journey through the last four decades or so across four sections and 25 chapters. The chapters are mostly lectures delivered in various forums and the views are more contextual at the time they were expressed. Jalan has served as an economist, central banker as well as a politician and has the right credentials to make his observations known in the course of this journey.
Although Jalan has been an astute and conservative central banker never given to belligerence either in action or in words, he is more forthright when commenting on the polity — even though he is politically correct in never taking names. This section is probably the best in the book. He praises India for having a democracy and freedom and traces the growth of the system through four phases, with the present one being framed with coalition parties, which is the crux of the country’s political problems.
He rightly points out that there has been a tendency for the role of Parliament to diminish over time and the bureaucracy to get politicised, factors that have hindered governance. The growth of regional parties and coalitions has blunted the accountability of governments, which have a limited time horizon in mind. Reforms evidently are required here. He gives examples about how the constitutional separation of powers of the legislature, the executive and the judiciary has been sidestepped, as was the case with Jharkhand.
It makes the reader smile when he talks about the multiplicity of administrative authorities — the ministry of education became the human resources development ministry which had various departments for education, culture, youth and women with further sub-divisions and commissions, thus multiplying functions when it was least required and leading to a heavy, inefficient administration. A curious observation made is that the country had grown despite a huge public sector and the best way to see the difference is to look at the white papers that have headlines of corruption, violence, law and order while the pink papers talk of profits, growth and mergers and acquisitions. The way forward is to lower the role of the public sector, lessen the administrative structures, control funding of political parties and increase the efficiency of the civil service.
The second section on India’s economic policy and prospects is a bit of déjà vu for the reader since the author advocates the need to open up the economy. His lectures in the two decades starting in 1991 had focused on two areas. The first is on opening the economy and getting integrated with the globalisation process. The other is improving the social conditions of the country where he talks of the role of science and technology with some vintage parallels drawn from the textbook as he advocated the Schumpeterian concepts of invention, innovation and diffusion. He laments that we have spent more on higher than primary education and on specialty hospitals than primary health centres — issues that are pertinent even today.
Part three covers quite extensively the banking space, which starts with a recollection of the Asian crisis and how we managed it through some conservative policies followed by the Reserve Bank of India (RBI). Though he sounds self-laudatory on occasion, he highlights some of the concerns at that time that are, quite ironically, also the issues that germinated the recent financial crisis — risk management, transparency, regulation and supervision, capital requirements and, most importantly, ethics. In a way, the RBI did display foresight in attempting to strengthen these inherent processes. The discussion on the virtues of a flexible exchange rate regime and caution against capital account convertibility, which distinguished India from the other Asian nations, has also been covered here.
Jalan finally does a round-up of economic reforms which actually were seen in the seventies through automatic licensing for imports and elimination of price controls which moved across diversification, delicensing, broad banding and so on. Although he is appreciative of the reforms that have happened so far, he is critical of the tardy pace of change in the public sector. While some of the points are now clichéd, there is novelty when he talks of the politics of reforms. He is confident that reforms will continue irrespective of the party in power as there is only one direction in which to go. Quite interestingly, he talks of a corruption multiplier, which is around four in India’s context — in terms of value of destruction due to incorrect choices that are motivated by greed.
How does one rate this book? Being reproductions of speeches has the disadvantage of lacking novelty. It would have been interesting to have had his present views added on the same subject. However, it still holds the reader’s interest because there are certain issues he had addressed, such as our social schemes or public sector, that are very relevant even today as we remain in the tyranny of their status quo.
The reviewer is chief economist, CARE Ratings
EMERGING INDIA: ECONOMICS POLITICS & REFORMS
Bimal Jalan
Viking (Penguin);
307 pages; Rs 599
