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On Familiar Ground

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Shankar Acharya has held several key positions, such as chief economic advisor to the finance ministry (1993-2001). He has been a prolific writer, unlike many who start writing once they retire. That said, India After The Global Crisis, a collection of Acharya's columns, offers little that is new.

The 38 essays have been classified under seven heads — global crisis aftermath, economic growth, reform and economic policies, employment and human development, budget and fiscal policies, external sector policies and general. The general head is really a residual category and could have been excised without adversely affecting the thrust. This classification into heads is standard practice when one is stringing columns into a book. But one wonders if it is a better idea to simply have them arranged chronologically. Having said that, there is an excellent introduction and if you read that, you have essentially read the book.

At the tail end of the tome, writes Acharya: "However, at the very least, the last 15 years or so have yielded a strong, positive and hopeful development story." Well, wait before you celebrate. That story is not about India, but Africa.

Acharya feels the India story is much more dismal. This despite those screaming blurbs of praise from Planning Commission deputy head Montek Singh Ahluwalia, and other titans such as Bimal Jalan, Vijay Kelkar and Y.V. Reddy. Says Ahluwalia, "Strongly recommended, both to those who don't know India and want to find out, and to those who think they do, but would benefit from the many insights Shankar provides." In fact, this is what essay 19 (on Approach Paper to 12th Plan) states: "The operational relevance of the Planning Commission (PC) has declined over several decades. Certainly, in my 15 years in the finance ministry up to 2001, we did not pay much attention to the PC, except to squabble over the scale of "gross budget support to the plan" in each year's budget… I trust these comments on the Approach will not arouse grave reproach from friends in the PC." Clearly, there is recognition, rather than reproach.

Essays on economic growth, reform and economic policies are a must read, while those on employment and human development are good, but Acharya has written about these issues in earlier books as well. The ones on budget and fiscal policies and external sector policies are linked to a great extent to immediate topicality, while the head of global crisis aftermath talks about familiar stuff.

For the benefit of those who think they know about India (but actually do not), there is one essay on the 10 myths of economic policy, including higher minimum support prices for foodgrain being good for farmers, moving to a goods and services tax will reduce the burden of taxation, that there is no role for monetary policy when inflation is driven by supply shortfalls, reducing fiscal deficit hurts growth, and others.

The essay based on the President's address to Parliament in 2009 is almost a prescient on the return of the Leviathan, interpreted as heavy-handed state intervention. Had it been written today, there would have been many more instances. The bottomline is spelt out in the introduction. There has been "clear worsening of our macroeconomic performance according to each and every significant indicator", including retreat from fiscal consolidation. Therefore, there is no reason to buy optimistic rates of growth of 7.5 per cent, accelerating to 8.5 per cent and more, particularly if the external environment is relatively more malign.

Should you read the book? If you have read his columns, read the introduction. If you have not, grab a copy. It is useful.
Debroy teaches at Centre For Policy Research

(This story was published in Businessworld Issue Dated 23-04-2012)