If it is difficult to describe a spiral without waving one's finger in the air, it is equally difficult for an economist to survive if he does not have a say on the progress of “reforms programmes” or the impact of global crisis on the Indian economy.
There are academics who write about them without having the benefit of experience in government or the Reserve Bank of India. Then there are the ‘insiders' — those associated with policymaking or crisis management putting down their views after retirement. Finally, there is the ‘privileged' class of economists who have shared “revolving door” relations with the Washington-based Twins and the government. They are the blessed ones who carry sacerdotal authority and write for the pink papers. Shankar Acharya belongs to this class.
Acharya has the credentials. With degrees from Oxford and Harvard, he joined the World Bank in 1979 and worked on the preparation of World Development Reports. After a five-year stint in the Union Ministry of Finance, he got back to the World Bank, only to re-join the Government of India in 1993 to serve as the Chief Economic Adviser. After retirement, he was associated with, among others, a number of government-aided research agencies like the ICRIER and regulatory agencies like SEBI.
Familiar themes
Given this background, a reader would expect from Acharya a comprehensive coverage and an incisive analysis of inter-related economic issues that have a bearing on growth. At heart, he remains, as the Fund/Bank economists are described by critics, an “airport economist”, ready with pre-set views and prescriptions. The collected essays in this volume are replete with themes and lingo familiar to those who look into Fund/Bank exegeses.
There is the usual breast-beating over fiscal deficits; the lament over entitlement programmes, especially the NREGS; and an excessive concern over rigid labour laws which reduce employment, breed poverty, and even nurture terrorism. A new and surprising addition is the criticism of the RBI for its failure to intervene in the forex market and stabilise the rupee rate. Each chapter carries a telling message such as “Fiscal stimulus or fiscal ruin?”, “the Leviathan returns”, and “Ten myths of Indian economic policy”.
The book offers hardly anything that is marked by special insight or interpretation of lasting value. Some of the articles are in the nature of predictions about budget or comments on budget. Some — such as the assessment of Obama, or on Keynes (Retreat of the Master?), G8 vs. G20, Exit Policy and a Month to remember — are transient pieces and have lost their relevance at this date. At least some of them could have been qualified with “Afterwords.” There is the constant refrain that the “global crisis is behind us” and even Ben Bernanke will be shocked to hear this. Not all journalist columns are eternal verities; some are. The secret is in selecting them.
Acharya is an angry evangelist who is unhappy with the government's recent policies vis-à-vis reforms. He has joined the international chorus of economists who bemoan India's lack of higher growth due to its failure to continue with reforms.
Valid
Over the years, he has developed three broad themes: India's pattern of growth is skewed, service-oriented and unsustainable; the twin deficits (fiscal and current account) are life threatening; and the rupee rate cannot be left to the market forces and has to be managed. These are truly valid.
Critics on the Left may well say these are the perils of the reform process which he, along with Manmohan Singh and Montek Singh Ahluwalia, pioneered while abandoning public intervention. Global forces were benign perhaps up to 2007 and the process of liquidity and forex management could not stand the buffeting from abroad when the tide turned against emerging economies.
Acharya is obsessed with growth per se and he pays little attention to the nobler issues raised by other economists, especially Amartya Sen. As the Nobel laureate explained, growth alone does not matter; it matters only for the associated benefits that are realised in the process of growth. Also, it has to be adequately supplemented through public action. Sadly, Acharya is no respecter of public intervention.
Acharya's views on labour law reforms, which figure frequently, are retrograde. In a country like India and given the manner in which India Inc. operates, the absence of labour laws will breed sweat shops. In a democracy, the choice is not easy.
On the whole, this book is in the nature of economic pamphleteering and may not endure in the long run.
INDIA AFTER THE GLOBAL CRISIS: Shankar Acharya; Orient Blackswan, 3-6-752, Himayatnagar, Hyderabad-500029. Rs. 425 .
