Available evidence of the outcomes of the reforms process shows there is no cause for great enthusiasm
There is much debate on the need for pushing reforms faster these days. Foreign critics, especially investors, are loud in blaming the UPA-II government for “policy paralysis.” Indeed, the reform process has had a cyclical character in most countries. Often it is rocky and never a bed of roses.
It took some years for the Washington Sisters to agree that there is no “one-size-fits-all” and that the contents have to vary from country to country. Success and speed of reforms are related to the existing socio-economic structures and the trading, financial and manufacturing capacities inherited from the past. Finally, the people should perceive reforms as changes leading to better quality of life and distributive justice.
Recent years have seen a mushrooming of literature on reforms. There is a kind of Manichaean divide between those who see every virtue and those who see all evil in them. With some experience of years of the reform process and the rugged path it has taken, there should be a better understanding of the impact of the reforms.
The book under review is one such attempt. All the essays are highly scholastic and free from ideological baggage. They were contributed at a conference held in 2008 at Thiruvananthapuram jointly by Centre for Development Studies (CDS) and British Northern Universities’ India Forum (BNUIF). Scholars from leading universities in the U.K. have made weighty contributions. Indeed, there is the risk that delayed publication of papers may make them out of date given the fast developments. However many of the trends captured and conclusions drawn remain relevant.
The book is organised into three parts. Part one deals with regional growth and development and examines the experience of Kerala, Andhra Pradesh, Karnataka and Bihar. The second is devoted to child labour, nutrition and education. The last part delves into issues such as the impact on employment in manufacturing sector, international trade on manufacturing, technology and labour.
The leitmotiv of the conference was that growth by itself may not lead to development or trickle down automatically to the poor. Growth will have to pull up the poor and this requires efficient finance, credit, and marketing institutions and infrastructure facilities, including education. It is against such a broad matrix that the papers study, what the editors call “a patchwork quilt with differing colours and shapes” that do not mesh on closer examination.
The chapter on ‘Migration and growth in Kerala’ is rather abstruse and draws its conclusions inspired by the analytics of Becker’s theory of household allocation of time in migrant households. This is an exotic analysis which explains how Kerala has become a consumption-driven economy where the demand is met through regional/external trade and financed by remittances. Added on to other historical and social (caste) baggage, this trend has not facilitated a robust manufacturing sector, but only the service sector in construction, etc …
A study of Bihar captures the complexities and contradictions permeating the state and how it has been (mal) administered by successive governments. Land reforms, crucial for agricultural growth, were only on paper. As the study notes, “during this period (liberalisation years of 1990s) the state’s growth rate and its record in development deteriorated.” These were the years when Lalu Prasad lorded over Bihar as the Chief Minister. There is a grim description of caste wars, factional fights, and efforts to dislodge the upper caste from political power: all efforts to distribute public sources within caste groups. As the authors conclude, economic liberalisation is not just about dismantling tariffs and privatising publicly-owned enterprises ... it is not just about removal of economic distortions, it is also about removing distortions caused by caste, creed, and religion.
The part dealing with child labour, nutrition and education goes into great statistical depth into various aspects. However, the data are confined to years ending 2004 and do not go beyond. A complex, scholastic attempt is made to analyse them and draw conclusions. However, the conclusions are so banal that all attempts seem pedantic. For instance, on child labour the author says, “… increased demand for labour plays an important role in increasing child work.”
The chapter on high skilled migration and remittances throws new light on some aspects of the phenomenon. Sadly, data are confined to 2006 and better coverage is now available with the Reserve Bank of India. The author explains that India has a very low stock of scientists and engineers engaged in R&D. He gives good reasons for this state of affairs. He concludes how the government of India seems to have settled down with a policy which is a tradeoff between ‘brain drain’ and inward remittances which they need more as balance of payment support.
This book is a valuable addition to the literature on reforms. The evidence provided by the authors on the process should guide us to be less enthusiastic about the outcome and the time span. Foreign investors may also be disabused of their notions that reform process is a road to nirvana.
GROWTH, DEVELOPMENT AND DIVERSITY — India’s Record Since Liberalization: Edited by K. Pushpangadan, V. N. Balasubramanyam, Oxford University Press, YMCA Library Building, Jai Singh Road, New Delhi-110001. Rs. 875.