22 September 2017
On first look, with more than 600 pages, the book is daunting. But that is deceptive as one finds it fascinating to read about the economic miracle wrought upon India, guided by some outstanding bureaucrats. ‘India Transformed’ is a timely initiative by Brookings India. It is edited by Rakesh Mohan, one of India’s foremost economists, and has 32 chapters, each written by a top-class luminary. Rakesh Mohan is one of the unsung heroes of India, who was responsible for drafting the Industrial Policy, instituted the same day as the outstanding 1991 budget of Manmohan Singh. Between them, AN Verma and the PM amongst others, they unbound the entrepreneurial spirit of India, which ultimately pulled a vast population above the poverty line. The first chapter is by Rakesh Mohan himself, where he sets the stage by giving out the genesis of the Industrial Policy, which reads like a thriller with overtones of humour. The ‘License Control Raj’ had completely bound the country in its coils and as one reads one realises the transformation wrought about in barely 25 years. The chapter by Kiran Mazumdar-Shaw is particularly enlightening. One only wishes that our top industrialists, who have contributed so well to this book, had not pulled their punches while writing. One well realises what they went through in those troublesome days. Narayan Murthy has written the last chapter, aptly so, as he encapsulates the heroic struggle the Indian industrialist had to go through to get a venture going. Rakesh Mohan gives credit to those who deserved it as well as pointing out those who proved stumbling blocks, including stalwarts in the Congress Party. Only because of the imminent crisis, where India had barely two weeks of foreign exchange reserves left, could this revolution have been brought about.
The second chapter by Montek Singh Ahluwalia sets the stage for the rest of the book. He analyses the pace and impact of the reforms, which are further elaborated by other Authors expertly. Though the chapters are universally brimming with expertise and data, a few of them proved a bit obtuse to me. I found the ones written by Onkar Goswami, TN Ninan, Sanjay Baru, Sarwar Lateef, Vinayak Chatterjee and Devesh Kapur easier to read for a novice like me because they were incisive in their critique, though I did not agree to some of their conclusions; particularly Sanjay Baru’s, who ruthlessly supports the subversion of Indian Defence to the Economy. In an area of dangerous volatility, where we have the longest undemarcated borders of any country in the world, there’s no doubt that our chickens will one day come home to roost. One only wishes the Defence Forces had utilised their capital funds fully, so that this failure would not give an excuse for low allotment of funds. One wonders if Nirmala Seetharaman, who did little as India’s Commerce Minister, will be able to do anything about it.
All the essential issues have been covered, though some less so. The reader will notice that the Railways have been cursorily covered. They may be the biggest failure of Indian reforms. Rakesh Mohan himself had submitted a three-volume report on reforms in 2000, it was ignored. Another report in 2014, seems to be gathering dust. With no reforms in sight, expect one disaster piling upon another. I find Healthcare, which has been covered in Chapter 20, too optimistic. Unless budgetary allotments increase with greater oversight, tragedies like Gorakhpur will recur. Education is another big failure of modern India. As Devesh Kapur so lucidly points out, creating institutions of higher learning is of little use if the quality of intake at secondary level is abysmal. A complete overhaul of the teaching profession is essential if our youth is to face the challenges of the future. As of now 75% of graduates are unemployable. C Rangarajan, the venerable former Governor of the Reserve Bank of India, while writing on banking reforms sounds strangely optimistic, whereas he forgets that the RBI did not cover itself with glory during the demonetisation crisis. The banking sector is under severe strain because of wilful defaults and non-performing assets.
The book carries optimistic overtones expressing hope in the direction the economy is heading. However, the present government seems to have forgotten the one major lesson this book brings out; unless there’s a major crisis, reforms in democratic India succeed if carried out incrementally. Perhaps out of confidence, pig headedness or ignorance, the Government has piled shock upon shock through demonetisation, RERA and GST. As things stand the economy is heading for a depression. Investments are down, government expenditures are down, private consumption is down and exports are down. The options of reducing interest rates and pumping money into the system, by increasing the deficit, have their own problems. The book is an interesting handbook for our economic masters to consult.
A last point. I request that the publisher includes a glossary of acronyms and abbreviations in the next edition. For the lay reader, the plethora of such words get confusing.
It is Rakesh Mohan’s standing amongst his peers and help from Brookings that enabled him to collect such an excellent galaxy of top economic thinkers to contribute to this Book. The reader will also notice that his contribution to many other aspects of the economy has been substantial over the years. The book comprehensively lays out India’s journey from 1991 to the present day, as the country endeavours to become an economic power house. I recommend the book for the lay reader and the expert.