In recent years, former governors of the Reserve Bank of India (RBI) have enriched our understanding of the niceties and travails of monetary management through their books. They offered insights into economic episodes and how they handled them.
I.G. Patel was the earliest to delight us with his books and speeches. Indeed, C. Rangarajan made scholarly contributions to monetary issues. In many ways, Y.V. Reddy was nonpareil in his speeches, made while in office, and later through his books, the latest being Advice and Consent . D. Subbarao maintained that tradition with his book: Who Moved My Interest Rate ? Raghuram Rajan was incomparable for his articulation of policies and his book is out too.
Bimal Jalan is a renowned economist who had a long innings in the higher echelons of policy-making in the government. He was also governor of the RBI for four years.
However, his books have been of a different genre. He does not offer a first-hand account of his stint in the RBI; nor provide sensational stories of his times in the bank. His books traverse mostly the common ground between economics and politics, like his latest. It is difficult to say that he has the depth or his analysis captures adequately the inter-relations between politics and economics the way economists like Joseph Stiglitz or Dani Rodrik have done in their works. At heart, Jalan is a market aficionado and allows a role, rather grudgingly, to the State.
He has a very low opinion of public sector undertakings. While he wants banks to be privatised, he wants the government to have controlling shares.
‘Dark’ years to reforms
Broadly, he takes the view that the years from independence to the end of 80s were ‘dark’ years for India and the country began to look forward to growth only after 1991 when the ‘reforms’ were introduced. He faults the earlier models to promote development and how India got into the trap of stagnation or low growth. Its dependence on promoting growth through public savings/investment was flawed. As he says, “The government, which had become overextended, needed to intervene less. Markets, which were monopolistic and protected, should have become more open.” This is truly the lament of all the advocates of ‘reform’ even as they fail to reckon that the East Asian miracle in Japan, Korea and China was steered by state intervention.
Jalan’s ire is concentrated on politics and governance (read, government servants!) Time and again, he blames the government or politicians in charge for lacking in ‘political will’ even though they got the best advice from economists! He has full faith in the economic potential of India and adds that the failure is in drawing on it. His view is, “There are primarily three factors that are likely to impede India’s progress: the deadweight of the past, the power of distributional coalitions and the growing disjuncture of economics and politics.”
These are platitudes which are better said than attained in any democratic polity. One may even aver that they are the neo-liberal elite’s prejudices.
The author’s contempt for ‘distributional coalitions’ is inexplicable. It fails to accept that it is embedded in the democratic process; and those who feel excluded from the benefits will form coalitions and fight for them. It cannot be denied that the reform process, as it is sought to be brought about, is pro-capitalist and there is growing resistance to it. Political leaders have to take into account the claims of these groups and make the process ‘inclusive’. When governments fail to achieve this equilibrium, they lose power.
No wonder, even the IMF economists have acknowledged that reform process should have a ‘human’ face.
Mandalisation of politics, which Jalan loathes, is reconfiguration of groups in India which seek a share in government jobs and resources. It is noteworthy that it became more strident in the post-reform years and the reasons are not far to seek. During the much ‘derided’ Nehru era, we did not hear of them as they had full faith in the inclusive welfare policy of the government.
Misreading the law
Jalan lays the blame on ‘disruptive’ politics promoted by anti-defection laws. This is to misread the law. The law per se does not encourage defection; it restrains splits or mergers within certain thresholds. It is true that smaller parties have greater leeway under the system. But how and why did the group/s arise in the first instance?
He is dissatisfied with the separation of powers and the delays in judiciary. He argues that Parliament has lost its power and is being led by the ruling government and that even budgets are passed without debate. He frowns on the passing of bills by voice vote. Our administration is corrupt and has failed to serve the people — all of this has been expressed repeatedly in his earlier books and speeches.
It is surprising that while Jalan has said so much against politicians, civil servants and the government, he has spared our private sector companies and their promoters. Hasn’t he heard of the phenomenon of ‘crony capitalism?’ And scandals they perpetrated?
India: Priorities for Future ; Bimal Jalan, Penguin Random House, ₹499.
