With exponential growth in computerisation and data processing procedures, statistics has become an inseparable adjunct to policymaking. Indeed, the quality of decision-making depends highly on the quality and timeliness of the data.

The Reserve Bank of India (RBI) may be proud of its achievements in establishing the Department of Statistics and Information Management (DSIM). In a speech delivered at the Annual Statistics Conference at Chandigarh in March this year, Dr. Mohanty explained the role of the DSIM within the RBI and how “The statistician in the Reserve Bank performs a multifarious role.” It encompasses collection, compilation, analysis and dissemination of information relating to monetary, banking, corporate and external sectors. The RBI's web-enabled Database on Indian Economy (DBIE) is a gold mine for researchers both within the country and abroad.

While the research undertaken in the departments of the RBI located in Mint Street are well known through publications, Reports, Occasional Papers, etc., not much is known about the work done in the regional branches. This book is an attempt to disseminate research done by some of them.

Appropriately it is titled “Regional Economy of India.” It divides the study into three broad categories: Growth and Inflation; Banking and Financial Inclusion; and Structural Issues. The collection as a whole has no thematic cohesion. If there are common threads running through them, they are: relationship between credit and growth; financial inclusion; structural transformation. The broad picture given by some of the papers is somewhat depressing. For instance, sector-wise/region-wise allocation of credit indicates that there has been a decline in credit to agriculture and industrial sectors across all the regions over the period 1980-2008 and the share of credit to services sector has increased substantially in all the regions during the same period. If we take into account the sector-wise dependency of population, it suggests that agriculture is getting marginalised and its productivity reduced.

Some papers show that a larger share of bank credit goes to cosmopolitan centres to the neglect of rural areas. Except Kerala, the states are not able to reach the RBI goal of 100 per cent financial inclusion. Surprisingly, it is seen that the demographic outreach of banking sector in J&K is better compared with other states/UTs while the geographic outreach is worse. Is it the quirk of politics or geography? The transformation in Punjab Economy (Naveen Kumar) has been done with great skill and incisiveness. It is disturbing to note that Punjab which was a poster child in the years of Green Revolution has become a sick baby. As the chapter concludes, Punjab has been a victim of the “reform process” which commenced in 1991 due to its failure to readjust its investment and project priorities.

The paper on Microfinance (Moses et al.) is a disappointing study and paints a rosy picture of micro financial institutions. It does hint at some of the later day difficulties hurting the sector. However, it fails to take note of the large malpractices, exploitation, resulting farmer suicides, etc.

There are two papers (Dhanya) on Kerala: one is on bank credit and growth and another on financial inclusion. Data suggest how the much publicized Kerala Model of development has been turned on its face. Analysis reveals that though Kerala's economy is more diversified, its dependence on external economy has increased with more externally oriented sectors (e.g. plantation) coming into prominence. Further, it continues to be consumption-oriented with demand for producer services met from other states.

There is a structural shift in the deployment of credit from productive purpose to consumption purpose as revealed by the increasing share of personal loan segment. Though the study links growth in real estate and construction to remittances and NRIs, it is surprising when it says that “little data is available on the extent of investment by NRIs in Kerala.”

One paper (Raj Rajesh) attempts a study of Bank finance in real estate in Bihar. Here again data suggest concentration in urban areas like Ranchi and neglect of interior areas, which lack in infrastructure like roads. It reports that banks do not lend to housing companies and the loans are given to individuals. This is the fall-out of the RBI's own policy. What is surprising is that 70 percent of the loans to individuals are given by the State Bank of India. The paper (Sarat Dhal) on monetary transmission is technical and raises interesting issues at the regional level. It clearly suggests asymmetry in the credit and bank lending channels of transmission mechanism and how they impact differently on regions. It finds that “poor states are likely to be more affected by tight money policy.”

On the whole this is a pioneering effort and more such studies by the RBI covering more regions/issues would be welcome. However, we have to add, the papers in this collection are of uneven quality. An author index giving details about the authors would have been helpful.

REGIONAL ECONOMY OF INDIA — Growth and Finance: Edited by Deepak Mohanty; Academic Foundation, (in association with Reserve Bank of India, Mumbai), 4772-73/23, Bharat Ram, Road, Daryaganj, New Delhi-110002. Rs. 1095.

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