Bumps in India’s economic journey

Venky Vembu | Updated on August 05, 2019

Title: The Rise of Goliath: Twelve Disruptions That Changed India Author: AK Bhattacharya Publisher: Penguin Random House India Price: ₹699

An anecdote-filled perspective of the disruptions that have shaped India’s policymaking experience since Independence

The arc of post-Independence India’s history doesn’t trace a neat line. Given the dizzying churnings that have characterised the polity and the social sphere in these 70-plus years, the country’s economic journey over this period has been far from smooth.

Indicatively, the very birth of independent India, which should have represented a moment of unalloyed joy, was somewhat clouded over by the scars of Partition, a bloodied blot on human civilisation.

Since then, many upheavals and ‘disruptions’ have wracked India, and taken together, they have profoundly shaped the nation’s destiny, its people, and its economy.

Not always malefic

As veteran business journalist AK Bhattacharya – AKB, as his peers know him – notes in this magisterial work, not all of the dozen ‘disruptions’ he has identified had a malefic effect on India. Some of them — for instance, the Green Revolution, which harnessed agricultural research in the cause of helping the nation acquire self-sufficiency in food — were by and large a force for good.

That benign verdict of the Green Revolution stands despite the criticism that it gave rise to income inequalities among Indian farmers and laid the foundation for a regime of “minimum support prices” and input subsidies, which have over time been hard-coded into the DNA of the economy and, for that reason, have had an adverse effect on state finances.

Some of the ‘disruptions’ that AKB has flagged were events in specific moments of time: the oil shock of the 1970s, the proclamation of Emergency in 1975, or, in more recent history, the demonetisation of high-value currency notes in November 2016. Others reflect processes and philosophies, such as the rise of statism in economic policy-making, from Jawaharlal Nehru’s time down to Narendra Modi’s.

Not all of these disruptions were sudden or unanticipated. Indeed, the ushering in of the Goods and Services Tax regime was a “planned disruption”, which had been in the works for more than a decade.

Even the demonetisation exercise, which came as a ‘shock to the system’ insofar as it sucked out nearly 86 per cent of the currency in circulation at that time, came with intimations of its advent months earlier, notes AKB.

(One minor quibble in this context: the author cites a news report in the Hindi daily Dainik Jagran dated October 28, 2016, to advance the claim that news of the government’s plans for a new ₹2,000-rupee note had leaked a fortnight before the demonetisation announcement. In fact, BusinessLine had ‘broken’ news of the planned ₹2,000 currency note, in the context of speculation about an imminent demonetisation of ₹1,000 and ₹500 notes, even earlier, on October 21, 2016. When then Finance Minister Arun Jaitley addressed a press conference to answer questions on the timeline for the demonetisation planning, he pointedly cited the BusinessLine article to say the schedule had had to be advanced since the news had leaked.)

Anecdotal back-stories

AKB concedes that his list of ‘disruptions’ may not be exhaustive, and acknowledges that unanimity of opinion on the wisdom of his choices may prove hard to secure. The strength of the book, which is peppered with lively anecdotal back-stories that bring the narrative alive, is in the manner in which it contextualises these defining moments against the backdrop of India’s politics, society, and economy.

The author also does a masterly job of distilling these narrative strands through the filter of his perspective, and offering meaningful insights into the impact that the events and processes had on the economy and on Indian businesses.

The passage on the rise of statism during Nehru’s time, and through Indira Gandhi’s tenure, in some ways point us to the ‘original sin’ that has bedevilled the Indian economy, given the fecklessness of the political class — across the spectrum — in reversing its deleterious effect.

Even those who reckon that there is no intellectual rigour in Modi’s repeated name-blaming of Nehru as the fount of much that is wrong with India’s economy may be persuaded by the case advanced here.

As AKB points out, many of the disruptions bring out the critical role played by a close network of advisers around the “disrupter”, be s/he Nehru, Indira Gandhi or Modi. Indicatively, Nehru was so in thrall of economist PC Mahalanobis, who, AKB reckons, was “as responsible for the disruption caused to India’s economic development pattern as Nehru. Indeed, given Mahalanobis’ central role in the formulation of the Second Five-Year Plan, he would be arguably a bigger disrupter than even Nehru.”

Likewise, the author argues, it may not have been possible for Indira Gandhi to have nationalised banks in 1969 without the kind of support and advice she secured from advisers like PN Haksar. “And could Narendra Modi have rolled out the GST without the support of his finance minister Arun Jaitley?” he wonders.

Looking ahead

Just as interesting as the rear-view-mirror perspective that AKB offers of the past are the insights into the disruptions that, in his estimation, could hit India in the next few years.

Some of them relate squarely in the political domain: the shaping of political contests in the Presidential mould, in the way that Indira Gandhi contemplated at one time and Narendra Modi still evidently does; the ‘one nation, one election’ concept that Modi manifestly favours; and the discourse over the abrogation of Article 370 and Article 35-A, which invest Jammu and Kashmir with a special status in the Indian Union (and which has been at the centre of intense speculation in recent days). The politics over the Ram temple at Ayodhya could also prove disruptive, as will any move for delimitation of electoral constituencies.

But in AKB’s reckoning, the disruption whose time has come in India is bank privatisation — to undo the negative impact of Indira Gandhi’s fateful move of 1969.

In the author’s estimation, the recent crisis of non-performing assets in public sector banks provides the ideal backdrop for considering a move that in earlier times may have been dismissed as “extreme”.

The other less likely disruptions that he would like to see, and which would do the Indian economy good, are the corporatisation of Indian agriculture as well as a reform of the administrative service – even if it falls short of the demand for scrapping the system in its entirety.

In sum, the book provides an authoritative overview of some of the defining moments in India’s political-social-economic history, with enthralling background perspectives.

AK Bhattacharya

has been in the field of journalism for four decades. In the early 1990s he was the chief of bureau at the Economic Times. He then went on to become the editor of the Pioneer and the Business Standard. Currently, he is the Business Standard’s editorial director. This is his first book.

Published on August 05, 2019

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor