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P. Jegadish Gandhi

Facets of The Indian Economy Ed by Rakesh Monan Publishers: Oxford University Press, New Delhi Price: Rs 625

Since 1990s, the facade and facets of Indian economic development have become a fascinating field of study and research. To mark the golden jubilee celebration of India's independence and macro economic dynamics, the National Council of Applied Economic Research (NCAER) had invited 12 distinguished economists both India and abroad to deliberate on issues of applied economics. The edited volume is a compendium of intellectual reflective lectures classified under three broad themes — Trade and International Finance, Political Economy of Development and Social development.

Anne Krueger examines the compatibility of further multilateral trade liberalisation and the continuing health of the international economy with the proliferation of the Preferential Trading Agreements (PTAs). After dwelling upon the rationale behind PTAs and a description of the key types of PASs and their functioning, he assesses how PTAs can affect India's interests in a multilateral trading system. PTAs would be harmful to India's interests. The reason for this is that India does not naturally fall into any of the major existing trading blocks. It is high time to recognise that failure to support the WTO and WTO processes is to support the moves toward regionalism and bilateralism. The latter are so clearly inimical to Indian economic interests.

T.N. Srinivasan provides an elegant and succinct history of the world trading system. He warns that the trend towards regional and preferential trade agreements with complex rules of origin, differing approaches to competition policies, investment, environment and labour standards, if unchecked, could undermine the progress towards a liberal system of international exchange.

C. Rangarajan makes a detailed comparative study of the East Asian and Indian experiences in capital flows and exchange rate management To him, the lesson to draw from the East Asian crisis as well as from our own experience is that capital account liberalisation and reform of the financial system should move in tandem. Joseph Stiglitz argues strongly for the introduction of competition. He observes that the public sector simply cannot compete: thus liberalisation of a financial system such as that of India would have to be accompanied by widespread privatisation of financial institutions. The actual process of financial liberalisation is never easy. Existing personnel unused to competition find it difficult to function in the new competitive environment. Focussing on the political economy of reforms in India, Pranab Bardhan finds that majors' trends in the Indian political culture are not hospitable for market reforms. The prospects for more reforms are not bleak, but one should not underestimate the scale and-nature of opposition.

Deepak Nayyar provides a remarkably comprehensive review of both political and economic developments in India in the post-independence period. He believes that the real issue is the mediation of tension between the economics of markets that are exclusionary and the politics of democracy that is inclusionary. At present, however, it would seem that these forces are moving the economy and the polity, for the first time in independent India, in opposite directions, without any concerted attempt at a reconciliation or a mediation. To Deepak Lal, the distinction between material and cosmological beliefs is important for economic performance because it translates into two distinct types of `transactions costs' which are of importance in explaining not only `market' but also `government or bureaucratic failure'.

Kaushik Basu attempts to understand the persistence of opposition to labour reforms in India. He observes that the vexed issue of child labour illustrates the general point that `good looking' policies may not be the best from the viewpoint of poverty reduction. We can get almost universal agreement that children ought not to work. We could also get similar agreement that children should not be coerced into work. But there may not be the same agreement on banning child labour since the existence of child labour essentially arises from extreme poverty.

Vinod Thomas lists six key aspects of good governance: voice and accountability; the absence of political instability and violence; over all governmental effectiveness; low regulatory burden in society; the expectations and enforcement of the role of law; and absence of corruption. It is found that higher values in the achievement of these characteristics are associated with higher economic growth.

Biwa Agarwal addresses the issue of how the family is treated by public policy. She examines in particular the assumptions relating to intra-family relationships which He behind the policies and legislations relating to inheritance and land ownership.

Overall, the contents of book are comprehensive in its coverage of all contemporary issues of post-reform development in India.

The reviewer retired as Professor of Economics, Voorhees College, Vellore

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