Among a section of the Indian intelligentsia today, there is a firm belief that all of India’s economic progress happened after the 1991 reforms. The period preceding that – 1947-91 – is portrayed as a dark medieval era where nothing of significance in the economic realm happened.
Gautam Chikermane’s book, Reform Nation: From the Constraints of PV Narasimha Rao to the Convictions of Narendra Modi falls firmly within this intellectual tradition. Chikermane’s tone is deliberately provocative, polemical and even acerbic. Jawaharlal Nehru gets short shrift and his economic policies are repeatedly called “povertarian” throughout the book.
But if the reader ignores the anti-Nehru rhetoric (and that takes some effort) and soldiers on she will be rewarded, as the book is a well-researched one. Chikermane has painstakingly analysed and dissected all seven industrial policies starting from the ‘Statement of Industrial Policy of 1945’ to the ‘Industry Policy 1990’. He also flags off another important issue – the difficulty in accessing those documents and Chikermane must be credited for his perseverance.
In the first part the most interesting section is the one on the changing contours of the very concept of economic reform. The chapter deals with the history of the famed ‘Washington consensus’, how the meaning of reform has evolved, and how it is tied to political power and ideology.
Chikermane is right is saying that it’s not hard data or force of ideas but, “hard power and the success it crafts that has determined and continues to define reform”.
He is severely critical of the Nehruvian state-led, public sector driven, “commanding heights” strategy of industrial strategy pursued in the early decades after Independence. That this strategy was the zeitgeist of that era and was adopted by many decolonizing nations is grudgingly conceded by Chikermane. But he accuses Nehru of putting politics before economics, which is puzzling given that Nehru had virtually no political opponents at that time.
Chikermane is at his acerbic best in dissecting the Industrial Policy Resolution of 1956, which set the tone for the public-sector led, licence-permit Raj and how the subsequent policies of 1973 further stifled the private industry with a myriad set of controls and a spate of nationalisations.
Chiikermane’s endorses the political economy argument of the subtle shift of Indira Gandhi’s stance towards big business in the 1980s. With her ‘Garibi Hatao’ slogan was running on empty, Indira Gandhi needed good growth and she judged that state support to big business would not prove politically costly.
Rajiv Gandhi gets surprisingly favourable treatment despite his half-hearted reforms attempts. He sees Rajiv Gandhi’s “policies as a bridge that had one foot in the past and one in future”, but these are attempts at “policy repair” than “policy reform”.
Then comes the reform era, which Chikermane says “was a magical moment in the intellectual journey of economic policy making”. The major players of that era – PV Narasimha Rao, Manmohan Singh, P Chidambaram and Jairam Ramesh and key bureaucrats Rakesh Mohan, Amarnath Verma and Naresh Chandra come for appreciation and rightly so. A detailed account of the debates and viewpoints of Montek Singh Ahluwalia, Jairam Ramesh and even Pranab Mukherjee makes for interesting reading.
It is indeed ironical that the Congress, the originator of economic planning, was the Party that presided over these momentous reforms – something that Chikermane is only too aware of. But is “The 1991 story… one of economics defeating ideology”? Wasn’t free-market economics the ruling economic ideology of that era especially after the collapse of Communism?
PV Narasimha Rao gets effusive praise for laying the reforms road on which subsequent Prime Ministers happily travelled.
The third part, which runs over 65 pages, is a detailed list of 69 major reform initiatives taken since 1991 starting from the abolition of licensing, easing of foreign investment, trade reforms, equity and financial markets to IBC, GST, DBT and Atmanirbhar Bharat.
Chikermane in the end sets an agenda for future – how crucial it will be for India to negotiate with technology, geopolitics and narratives; engaging with producers, consumers and regulators. In his rant against Left-wing ideology, woke and toolkit politics, Chikermane lays bare his ideological predilections. But the important takeaway is, “Economic reforms, going forward will need to look beyond economics.”
There is much to disagree with this book but that should not be the reason to shun it. Chikermane has in his deliberatively provocative style written an engaging book on India’s economic journey
Check it out on Amazon