WORDS WORTH, P4

Policy and priorities

An omnibus suggesting India's economic path in a volatile worldPolicy and priorities

An omnibus

suggesting India's

economic path in

a volatile world

MADAN SABNAVIS

WORLD IN Flux is a book of

essays written by various

experts in the economic

field and put together by

AK Bhattacharya and

Amita Batra. As the title suggests, these

essays are all about what should be

India's priorities in a world in a state of

flux, especially post-Covid where there

have been several political develop-

ments. The latest shock of tariffs, which

affects potentially all countries, is not

covered here as it is very recent, but

other issues such as the world moving

towards protectionism, climate change

and economic policies required to

move forward are included.

The book is also in honour of

Shankar Acharya, who was former chief

economic adviser with three finance

ministers and also worked with the

World Bank on the famous World

Development Report. All the authors

major reforms since 1991 till contempo-

rary times, but highlights the importance

of taking states along when it comes to

furthering them. This can be contrasted

with Patra's view on the government and

RBI being aligned which made policy for-

mulation successful. The initial reforms

are easier to implement, but when it

comes to ticklish issues like farm laws or

even land reforms, a majority government

at the Centre still has to work with states

to get them through. This is a majorles-

son learnt that has to be kept in

mind. He also talks of success

of the GST, attributing

it mainly to the collabo-

rather than

unilateral approach of

the government.

SHORN OF

JARGON AND

STRONG IN CONTENT,

THE AUTHORS PROVIDE

CLARITY ON THE

PATH THAT SHOULD

BE TAKEN BY

THE GOVT

rative

The book covers a variety of subjects such as trade, monetary policy, fiscal issues, agriculture & investment EXPRESS ARCHIVES

had either worked with Acharya, or

developed a long friendship with him

over the years. Acharya was also an inte-

gral part of designing and implement

ing the economic reforms package in

the country in the Nineties. Almost all

the views that have been put forward

are aligned with Acharya's thought

process in his time, reflecting some

remarkable foresight.

The book covers a variety of subjects

such as trade, monetary policy, fiscal

issues, agriculture, investment and so

on. The essays are very academic and

based on detailed data and research,

which makes each writing a delight to

read. Shorn of jargon and strong in con-

tent, the authors provide clarity on the

path that should be taken by the gov-

ernment, which will find acceptance

with the reader.

Sajjid Chinoy talks of the three imper-

atives for sustainable growth being the

quantity and quality of employment,

growth in exports and increasing public

revenue and containing fiscal deficits.

This is something that will resonate with

policy makers. These concerns are very

relevant as they succinctly capture the

conundrums for India. Jobs have been

created but the quality of jobs is not opti-

mum, and do not provide the kind of

income to generate demand required for

keeping growth ticking. Similarly, the

point on exports is also spoken of by Mar-

tin Wolf, who strongly puts forth the

argument that no country can grow

without exports being one of the

engines. Therefore, taking the stance that

India is a domestic economy that insu-

lates us from global disturbances works

to an extent but is not tenable if we are

talking of high sustained growth in the

years to come. In fact, this may be the

right time to leverage the China plus one

situation where India can step in and

seize the opportunity.

Michael Patra's essay on monetary

policy challenges is another excellent

piece written by someone who has been

part of the process of implementing

inflation targeting policy for many years.

He shows how different our approach

was compared with other countries in a

time of crisis. First, liquidity easing was

temporary which meant that rolling

back was never a challenge as it was gen-

tly brought to normal. This is unlike

other central banks which are still grap-

pling with the issue of rolling back on

quantitative easing used post-Lehman.

Second, he also points out that by not

lowering the policy rate to the levels

done in the West (we had stopped at 4%),

it was again easier to move up the ladder

to a normal level. More importantly, he

highlights how there is effective collab-

oration between the government and

the central bank, making policy imple-

mentation smoother.

AK Bhattacharya's essay is quite direct

in its critique of reforms. He captures all

In a similar vein,

Mahendra Dev writes

on priorities for agricul-

ture and argues for bet-

ter coordination between

the Centre and states, given

that this field in the purview of

the latter. While the nation has done well

in terms of output, we do need reforms to

improve total factor productivity with

aggressive reforms in marketing. Subsi-

dies can only help in the short run, but

agriculture cannot sustain in this man-

ner. Here he emphasises the greater use

of technology, as well as investment, to

elevate the overall quality of this sector.

He goes a step further and recommends

that MSP be replaced with direct benefit

transfers so that there is better align-

ment with the market forces.

There are interesting essays by Rad-

hika Kapoor on SMEs and their contribu-

tion to economic growth given the fact

that they are highly labour-intensive.

Rakesh Mohan writes on urbanisation

and the challenges that lie here, espe-

cially in the area of how cities have to

manage climate change. This is some-

thing that we can relate to as we see con-

stant flooding in some of the metro cities

as well as pollution in the capital.

At the global level, Ajay Chhibber dis-

cusses the relevance and role of multilat-

eral institutions that were set up under

Bretton Woods, while Shyam Saran picks

up the issue of participating in China-led

financial initiatives, given that it has

made progress, though limited, when it

comes to creating a parallel payments

system in the regional context. At a

broader level, Amita Batra talks of how

the WTO stands with limited progress

being made, as bilateral contracts have

caught on along with preferential trade

agreements among countries.

This book has an eclectic mix of both

global and domestic subjects and offers

the right blend of thoughts in a glob-

alised setting that have to be considered

when charting out the path of growth for

the Indian economy. This will surely be a

book on every policy maker's shelf.

Madan Sabnavis is chief economist,

Bank of Baroda