The Hindu Business Line : Essays in honour of Manmohan, the professor

LAST week, the Finance Minister presented the first Budget of the new government, factoring in all that is dear to the Prime Minister. An essay in honour of the Prime Minister, one might say, considering Dr Manmohan Singh's comment on Mr P. Chidambaram's work thus: "Has done an exceedingly good job".

But here is a whole book with `essays for Manmohan Singh' edited by Isher Judge Ahluwalia and I. M. D. Little. Titled, India's Economic Reforms and Development, and published by Oxford University Press (www.oup.com) the book is into its fifth impression and should do well considering that the hero of the work is at the helm of the government.

There are 15 chapters, arranged in four sections, named: India's development strategy, transition to an open economy, poverty and reform, and Centre-State relations. A bit dated, one might feel, but the list of contributors reads like a who's who, so it's worth paying heed.

The introduction by the editors rewinds to the 1950s, when "young Manmohan had set out to examine the role that foreign trade could play in India's quest for self-reliance" in his Ph.D thesis.

You can fast forward the heap of positive descriptors such as he being "a voice of sanity, good sense and moderation", "mild-mannered but firm in approach", "modest and unassuming" and so on, to touch base with Jagdish Bhagwati's "Design of Indian development".

The initial speed and scope of reforms in India were just about right, he says. "Changing India's uniquely damaging policy framework, nourished for over three decades, is a task akin to cleaning up after a typhoon: the task is enormous and cannot be done all at once."

He concedes in a convoluted sentence: "It is hard to double-guess politicians beyond a point when, while they move in the right direction, they claim that they must be allowed to traverse the political minefields in a democracy as they, and not we technocrats, see fit as far as speed and strategy are concerned."

Then comes Meghnad Desai's question: "Was there an alternative to Mahalanobis?" A chapter that ends with this line: "It is to Manmohan Singh's credit that India has a second chance." Should we rephrase it by swapping the two nouns?

C. Rangarajan writes on `development, inflation, and monetary policy' and what does he say of his predecessor at RBI? "It was Dr Manmohan Singh who drew attention to the fact that inflation hit hard the poor as they possessed no hedges against inflation. That was why he at one time described inflation control as the best anti-poverty programme." To make his job difficult now, inflation crossed the 6-per cent mark in the week ended June 26, touching its highest level after a gap of 21 weeks.

Next comes Amartya Sen's `theory and practice of development' that opens thus: "John Major, I am told, was the only boy ever to run away from a circus to become an accountant. Manmohan Singh is not the only professor to run away from a university to take charge of governance, but he has certainly been the most successful one to do so."

On the `contradictory' goals that Manmohan pursued, Prof Sen has an explanation: "As a civil servant in a democracy, Manmohan could not but follow the policies of the elected government. As a Finance Minister he could make his own policies."

Montek S. Ahluwalia writes in a chapter titled `Infrastructure Development in India's Reforms' of how he met Dr Manmohan Singh in 1970, when he was `a very young staff member of the World Bank' and at Dr Singh's encouragement left the Bank to join the Ministry of Finance as Economic Advisor.

Ashok Gulati deals with Indian agriculture in `an open economy' and criticises the `anti-agriculture' bias that have prevailed in Indian trade policies since 1950s.

Globalisation could be the antidote, he feels. "The degree of success depends upon the vision of reformers, and the priority they accord to going beyond markets and ushering in institutional and price reforms on the supply side."

Vijay Joshi declares in the `fiscal stabilisation' chapter: "Manmohan Singh will go down in history as the main instigator of the long-overdue liberalisation of the Indian economy... Manmohan embodies the great Indian tradition of fiscal prudence, now regrettably under severe threat." But then, `now' is then, please note.

Ajit Singh's chapter is on the stock market where he questions the desirability of `the market for corporate control'. That's `a bridge too far' he feels, because "a developing country like India simply cannot afford the burden of the extremely expensive, and hit and miss system of management change takeovers represent."

India's export performance is the subject of T. N. Srinivasan's discussion. His verdict: "The capacity and efficiency of functioning of airports, ports, electricity boards, railways, roads and telecommunications are nowhere near where they have to be if India is to compete effectively and aggressively in the world markets for goods, services and capital."

Deepak Lal's paper is on `economic reforms and poverty alleviation' where he concludes, "there is no case for attempting to institute a Western style welfare state in India."

Instead, "there are feasible ways of dealing with the inevitable pain that the necessary reform of India's labour market will involve, but it is going to require political courage."

In the chapter on food security, Kirit S. Parikh explains, "A country is food secure when it is able to provide adequate food to all its citizens under all circumstances that can be reasonably expected."

To ensure that food is a matter of right, and the poor are not subjected to humiliation to get it, employment guarantee is his suggestion; that would remove poverty and also generate productive assets.

Suresh D. Tendulkar too looks at policy versus poverty: "The asymmetry in the impact of reform-related policies on rural and urban poverty seems to reflect the interplay of interest group pressures in a pluralistic society where the democratically elected minority government introduced reforms in a situation of crisis without explicitly articulating and debating their ideological implications." Communication gap, in other words.

Amaresh Bagchi critiques the tax assignment in the Indian federation. `Flawed in several respects,' he says. Fundamental flaws are: dysfunctional allocation of tax heads with splintered bases, and source-based taxation at the sub-national level.

To improve centre-state relations Raja J. Chelliah suggests "a proper blend of autonomy, fiscal discipline and interstate equity."

The last chapter by V. A. Pai Panandiker predicts that by 2015 "the Indian middle-class, growing at the rate it is, will be the most formidable influence on Indian political economy." Essential read to know the minds of those who matter these days.

Economics@TheHindu.co.in