THE PRINCIPAL THOUGHT BEHIND THE ESSAYS THAT APPEAR IN THIS BOOK IS THAT, IN THE PAST TWENTY YEARS, INDIA'S CAPACITY TO GROW FASTER THAN EVER BEFORE HAS INCREASED SUBSTANTIALLY BECAUSE OF ITS COMPARATIVE ADVANTAGE IN RELATION TO OTHER COUNTRIES.
P P RAMACHANDRAN
India is ruled by an ex- RBI Governor and ex- Finance Minister.
The PMs Economic Advisory Board is headed by another ex- RBI Governor. Yet the nation is teetering on the precipice of economic decline with a reduction in annual growth and burgeoning inflation. Why, with such a fund of expertise? The book under review is an attempt to solve this riddle.
Dr. Bimal Jalan was a distinguished Governor of the Reserve Bank from 1997 to 2003. He became a nominated member of the Rajya Sabha. Apart from serving as Chairman of the Economic Advisory Council to the PM, he has held high positions in the Planning Commission, in several ministries and represented our country in the Boards of the IMF and IBRD. He has written a number of books, noted for their clarity, conciseness and clear grasp of the problems that plague the nation. His is a voice to be heard with respect.
The book under review is a collection of his selected papers, lectures and a few unpublished notes — relating to 1990 to 2010. They provide a birds eye- view of the evolution of Indias politics, economics, governance and economic reforms and the lessons for tomorrow. India could boast a couple of years ago of a high reputation as a democracy and a growing global power. But today it is riddled with reports of ever- widening corruption, misgovernment and utter despair about the working of its political system.
Our future is a big question mark! In the last two decades India displayed a capacity to grow faster than ever before, eliminating poverty to a considerable extent. Certain reforms seem imperative now to ensure future success. According to Jalan the main areas of concern are the growing disjuncture between economics and politics and the emergence of a 'Public- Private 'dichotomy in the growth trajectory, diminishing accountability of the Executive to Parliament, rising corruption, the preponderance of criminal elements in politics and the emergence of small regional parties in multi- party coalitions.
There is a definite decline in the quality of public administration at all levels. Economic disparities have enlarged and pose a serious threat to unity.
The book is divided into four sections.
The first section, with five articles, concentrates on political issues that cry for a solution to ensure that India retains its position as a global power. In view of the socalled 'Compulsion of Coalition'our political system is characterised by features not thought of by our Constitution makers. Governments have become non- accountable.
Inner party democracy is non- existent.
Political corruption has become rampant.
An Independent judiciary is unable to deliver justice swiftly due to heavy backlog of work. There is a compulsion to create an efficient and transparent administrative mechanism at arms length from Government as also a need to simplify procedures. Ministries ought to be made more accountable.
The next Section is on Indias economy, policy and prospects and has six essays.
Indias emergence as a global power is due to our competitive advantage in providing skill- based services to the rest of the world — thanks to the infrastructure of technological institutions, skilled workers and low labour costs. One paper analyses the impact of Globalisation on India.
The third Section on Money, Finance and Banking is the meatiest part of the volume and has seven articles discussing in depth our management of the financial sector during the Asian Crisis and later. Banking ethics are also scrutinised.
Jalan suggests that India must remain in the forefront of global regulatory norms to ensure soundness of international banking system. Revolutionary changes in banking and consequential impact are analysed succinctly. The economist strongly supports sustained growth with financial stability.
Exchange rate management ought to be in the form of a flexible but managed one. The IMF has declared our policy as realistic and competitive.
The concluding Section has seven pieces on Indias economic reforms.
Three of these articles relate to 1974 and 1975 and have a historical value. We must accelerate the pace of banking reforms leading to efficiency of operations and reduction of costs. India must adopt global best practices in financial sector regulations and adapt these to domestic environment.
Why was Indias reform process during the last forty years limited in scope?. These are answered in the article, 'The Politics of Indias Reforms'. What can be reformed and what cannot be gets determined politically. 'Compulsion of Coalitions'affects economic reforms.
Corruption has enveloped every sector and is a serious threat to the security and well- being of the citizens and is an affront to democratic values. The Lok Sabha has 100 members with proven criminal records.
Jalan concludes on an optimistic note. India has the capacity to realise its full economic potential and become one of the fastest growing countries. This book is a sterling contribution to making this possible.