Reforms: the unfinished agenda

This book inspires some confidence about India's capacity to face the present worrisome phase

Growth and Finance:
Essays in Honour of
C. Rangarajan;
Edited by Sameer Kochhar
Academic Foundation
 Rs. 1095

India is now reckoned among the fastest growing economies in the world. The economic reforms initiated after the mid-1980s helped India to break through the ‘Hindu rate of growth' of about 3 per cent that prevailed in the earlier decades. Alongside the faster rate of growth, there has been diversification of the economy — from agriculture to industry and services — and growing and pervasive global linkages.

The emerging context has some notable features that are favourable to sustaining fast growth. Exports and mounting foreign exchange reserves are supportive of growth. The demographic dividend offered by the changing age-distribution profile of the population holds an exciting prospect. However, at the moment, there are dark clouds on the horizon raising serious concerns. The United States and Europe are going through a turbulent phase and it has its own impact on the Indian economy. Experts warn of a slowdown in growth as a consequence of India's global linkages. The common man is already struggling to cope with the persisting high inflation rate. A slowdown in growth could impose further burdens which may well prove to be the proverbial ‘last straw'.

Full report here Hindu

Crouching tiger, hidden dragon

Awakening Giants, Feet of Clay: Assessing the Economic Rise of China and India
Pranab Bardhan
Oxford University Press
 Pages: 168 Rs 495

Assessing the economic rise of China and India, also the subtitle of Pranab Bardhan’s new book, is without doubt the fashionable subject of our times, especially in the post-financial crisis period. There is plenty of conventional wisdom that celebrates these two emerging economies as the stars of the future. Bardhan’s book, on the other hand, challenges much of the celebratory literature on the two countries.

The book isn’t likely to please free-market enthusiasts. One of the “wisdoms” the Berkeley economist argues against early on is what he believes is disproportionate credit given to liberalisation and globalisation in explaining the success of these economies between 1980 and 2005. In India’s case, Bardhan argues, since economic reform has largely focused on liberalising trade and industrial policies, it is the corporate sector that has benefited by becoming more efficient. However, the formal corporate sector employs only about 5 per cent of the workforce and so the broader benefits of economic reform are questionable according to the author. Provocatively, Bardhan also argues that the rate of poverty decline in India in the post-reform period of 1993-2005 hasn’t be any higher than the rate of decline in the 1970s and 1980s. Of course, it is possible to counter both these propositions — poverty statistics are dodgy at best and Bardhan may be underestimating the spillover effects of economic liberalisation. But the author does manage to highlight the enormity of the task that lies ahead of India.

Full review here Indian Express

India's democracy makes growth strategy predictable: Sorman

India may soon catch up with China's pace of growth as the world economy shows signs of recovery after a year of downturn with the emerging markets at the forefront of the revival, says noted French economist Guy Sorman.

"The new Indian economic growth, an eight per cent trend, is based on private entrepreneurship, small businesses as much as large companies, on the domestic market as much as in the global market; and on a balance between industry, services and agriculture," Sorman says in his new book, Economics Does Not Lie: A Defence of Free Markets in a Time of Crisis.

The growth of Chinese markets seems to have hovered until recently at 10-11 per cent a year, says Sorman.

But "every country that is moving from an unproductive rural economy to rapid industrialisation attains that average", the economist contends.

Moreover, China has been lucky. "Since the global growth rate has been around five per cent since the beginning of the 21st century, Chinese industries have astutely tapped into the heightened worldwide demand," Sorman says.

Full report here Economic Times

REVIEW: Economic Discrimination In Modern India

REVIEW

Blocked By Caste, Economic Discrimination In Modern India:
Editor(s) : Sukhadeo Thorat, Katherine S. Newman
9780198060802, Hardback
OUP
Rs. 750
ISBN: 9780198060802
Hardback

Blurb
In recent years issues like caste discrimination and social exclusion have been discussed extensively in India. However, while the linkages between caste and society have been studied widely, the interface between caste and economy or economic development remains an under-researched terrain. Blocked by Caste explores contemporary patterns of economic discrimination faced by Dalits and religious minorities like Muslims and the underlying attitudinal orientations that contribute to inequality in various spheres of life.

This volume investigates empirical evidence of discrimination by focusing on the urban labour market as well as other markets in rural markets. It also analyses discrimination in non-market transactions like access to education, primary healthcare services, and fair price shops. Through detailed case studies, the essays examine the consequences of exclusion on unequal access to business, wage-earning, health status, and educational attainments and suggest possible remedies.

The introduction provides a conceptual framework and the foreword by Kaushik Basu underscores the importance of developing an interface between economics and social sciences in order to give greater visibility to research on discrimination.

Reviews
Caste & the labour market Hindu
This is an excellent volume — carefully-researched and eye-opening — on caste-based injustice in our society and economy. Now, while there is a literature that documents discrimination and the denial of civil liberties, there is very little understanding and research on the practice of caste discrimination in markets, notably in modern, urban and metropolitan settings, and in public institutions. This book takes up the challenge of understanding the latter by means of systematic research on the question.

A useful four-fold classification of the types of discrimination is proposed by Thorat and Newman: complete exclusion, selective inclusion, unfavourable inclusion, and selective exclusion. Complete exclusion would occur, for example, if Dalits were totally excluded from purchase of land in certain residential areas. Selective inclusion refers to differential treatment or inclusion in markets, such as disparity in payment of wages to Dalit workers and other workers. Unfavourable inclusion or forced inclusion refers to tasks in which Dalits are incorporated based on traditional caste practices, such as bonded labour. Lastly, selective exclusion refers to exclusion of those involved in “polluting occupations” (such as leather tanning or sanitary work) from certain jobs and services.

REVIEW: Freefall

REVIEW

Freefall: America, Free Markets, And The Sinking Of The World Economy
Joseph Stiglitz
Allen Lane
penguin
Rs 499
Pp 400

Blurb 
The current global financial crisis carries a "made-in-America" label. In this forthright and incisive book, Nobel Laureate Joseph Stiglitz explains how America exported bad economics, bad policies, and bad behaviour to the rest of the world, only to cobble together a haphazard and ineffective response when the markets finally seized up. Drawing on his academic expertise, his years spent shaping policy in the Clinton administration and at the World Bank, and his more recent role as head of a UN commission charged with reforming the global financial system, Stiglitz outlines a way forward building on ideas that he has championed his entire career: restoring the balance between markets and government, addressing the inequalities of the global financial system, and demanding more good ideas (and less ideology) from economists. Freefall is an instant classic, combining an enthralling whodunit account of the current crisis with a bracing discussion of the broader economic issues at stake

Reviews
A bland menu Financial Express
The three events of the past 20 years in the economic history of this globe are the rise of China to a $4.3-trillion economy, the halving of poverty in India changing the aggregate well being of a quarter of the world population and the meltdown of the year 2008, which brought USA to its knees, the richest nation the world has ever seen. While there have been others like the Asian crisis, the dotcom bubble and others, none have shaped global economic forces as big as these three have. Of these, the first two were clearly the product of the philosophy of economic liberalisation. The two countries in their own ways let a thousand flowers bloom and are still pretty much pushing ahead in the same direction.

The last one could have developed even in a relatively more closed economy, as it did in the savings and loan crisis of the 1980s in the USA, which is why the rest of the world did not notice it then. The difference this time was the open and massive global financial system that transmitted the virus, much like the Sars or the swine flu across the globe, and with far more vicious results.