The Hindu Business Line : Money matters

Macro Economics and Monetary Policy
Edited by Montek S. Ahluwalia, Y. V. Reddy and S.S. Tarapore
Publishers: Oxford University Press, New Delhi
Price: Rs 645

The book under review is a compilation of 14 scholarly chapters written by eminent luminaries of our times who have made a phenomenal mark in the fields of teaching, banking, finance and economics.

The editors and contributors have offered rich and glowing tributes to a teacher-turned-central banker-turned-administrator Dr C. Rangarajan, an eminent monetary economist enjoying worldwide reputation, for his distinguished career as a teacher in the academic world, besides his signal contribution in the Reserve Bank and Planning Commission.

The book consists of three parts — macro economic policy, banking and international finance, monetary policy and financial sectors.

Part I consists of five chapters covering economic reforms, growth prospects; correlation between inflation and growth; dynamics of inflation; business cycles, international linkages and exchange rates; foray in to development policy.

Some of the ideas expressed are:

India has good potential to grow at higher rate at 7 per cent to 8 per cent.

The need to refocus on government priorities in such areas where private sector can play a more efficient role.

Exchange rates to be employed in conjunction with other macro-economic policies to ensure stability in Balance of Payments position.

No quick fixes to tackle problems relating to economic development.

Employment increase can scarcely take place without real output improvement.

Low sustainable fiscal deficit is the need of the hour.

Part II consists of five chapters dealing with Role of Central Bank; Research and policy developments in Money, Finance and External Sector, India's vulnerability to external crises, Competition for private investment between and within developing countries and Managing external economic challenges.

Some of the ideas presented are:

Need for control over capital flows;

Containment of fiscal deficit;

Sharpening the financial system;

Maintenance of appropriate exchange rate regime;

Ensuring adequacy of reserves in relation to liquidity pressures;

India much less vulnerable than many emerging markets;

Stronger action to push reforms;

Appropriate external debt management etc.

The chapters in Part III deal with Transparency in monetary and financial policies; Autonomy of central bank, Dimensions of financial development, market reforms and integration and finally Role of debt market in infrastructure financing.

A few of the ideas expressed in Part III are:

The need for good transparency and financial policies for implementing reforms;

Redefining the role and functions of RBI;

Central Bank autonomy;

Dynamics of monetary and internal debt management policies;

Strengthening prudential and supervisory norms;

Greater flexibility for banks to improve credit delivery systems;

Emergent need to finance infrastructure projects;

Development of full-fledged debt markets in India etc.

The chapter-writers provide a rich fare to the students and researchers on Monetary Economics and Finance.

The best brains in the country have contributed through their thought provoking papers, candid views on a wide range of economic and financial issues besides suggesting workable solutions.

This book deserves to be read by all researchers, academicians and students of Monetary Economics.

The various chapters provide enough food for thought with abundant clarity and comprehension.

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