Political impulses in economic policies

'India in Search of Glory' is an unbiased account of the interplay between politics and economics in independent India. This voluminous book needs to be savoured like a fine wine

India in Search of Glory: Political Calculus and Economy 

Author: Ashok Lahiri
Publisher: Penguin 

Pages: 712 

Price: Rs 1,499

The book by the veteran economist and former chief economic adviser is more a narrative of the historical progress (from Jawaharlal Nehru to Narendra Modi) and the “interplay between politics and economic policies in India since independence” than an evaluation, and is a valuable addition that sheds more light than heat unlike the current acrimonious public discourse.
 

From independence, the Indian administration has struggled to shake off inherited colonial attitudes of “controlling the natives” or the influences of wars, Partition and shortages at the time of the country’s birth. It did not learn the right lessons about the false virtues of nationalisation. It did not learn from the Haridas Mundhra’s scandal that occurred within one and half years of LIC’s birth through nationalisation. One wishes India had taken Milton Friedman’s sane advice on the virtues of the free market and arguments against overemphasis on investments and capital-output ratio.
 

The author explains the basic conflict between reforms for long-term benefits and immediate benefits thus: “Poverty leads to myopia and for the purpose of getting votes even large benefits in the future after discounting to the present may have been inferior to small gains in the more immediate future.” This aptly sums up the pitfalls in India’s electoral politics and our poor human development indicators. Education and health are casualties in this two-sided myopia.
 

Lal Bahadur Sastri’s  immense contribution through the White Revolution and agri-reforms and  government-industry cooperation has been brought out well and in the words of renowned economist I G Patel, as quoted in the book, the decision to devalue in exchange for IMF’s support was taken, “…in Sastriji’s life and with full knowledge. I have no doubt that if he had lived longer, devaluation would have come earlier and managed more smoothly, accompanied, or followed by far reaching reforms. It would have also been politically less divisive…” — a magic combo pack for which India is still searching. The author adds, “What he would have done had he lived longer as PM is a matter of speculation. An interregnum of hope was over”. 
  

Indira Gandhi’s economics evolved from the compulsions of getting votes and domestic and international political developments. The plethora of controls, nationalisation, and the disproportionate number of constitutional amendments were her legacy. Despite repeated predictions from within India and outside that the 1967, 1971 and 1977 elections would be the last one, and Sanjay Gandhi’s reported statement to journalist Kuldip Nayar that he had assumed Indira Gandhi would  not call elections for the next three or four decades, India did hold elections regularly except for a brief pause in the mid-1970s. Whether this was a product of the force of our Constitution, Indira Gandhi’s inherent democratic streak, or both, would remain debatable.  
 

The deft handling of the 1991 crisis by P V Narasimha Rao and Manmohan Singh has been handled well without dramatising the events of those years, bringing out clearly the sequence and the reasons for anyone to grasp the essentials for the future.  It is good that the author has separated the scams that ran right through Rao’s regime: Mixing the economy and scams in strict chronology would have sidelined and sullied Rao’s immense contribution to India’s economic destiny.
 

The coverage of Yashwant Sinha’s initiatives, the dream budget in H D Deve Gowda’s tenure and the first term of the United Progressive Alliance (UPA) is comprehensive. But UPA II reads like a litany of scams with a few positives, while Modi 1.0 is a quick summary of initiatives with frugal discussions around demonetisation and the Goods and Service Tax.
 

The author could have discussed the accountability of economists and courts. If the courts had concentrated on timely judgements, the economic losses due to corruption and delays would have been far less and crooks in politics rarer. 

Politicians without the craving or hope of winning the next elections seem to do far better at economic reforms; Rao, Deve Gowda, Chandra Shekhar being examples.
 

The author rightly observes, “Though subsequent history may have revealed its faults, the policies followed were in the light of received wisdom of the times. And notwithstanding its limitations, it did change Indians in terms of income, education and health…”. The statement made in Nehru’s defence applies equally to most leaders and decisions.
 

Some factual nuggets like these keeps the readers riveted: NABARD, one of the most enduring financial institutions being conceived during Charan Singh’s tenure as FM, Ambedkar embracing Buddhism only two months before his death, Jagjivan Ram’s scholarship and proficiency in Sanskrit, how the friction between the courts and the elected started in 1951 and necessitated the first amendment to the Constitution and doubts about questionable growth rates dates back to 1964.
 

India has come a long way since independence. Per capita income is up seven times, electricity consumption up 60 times, literacy levels are up from 16 to 65 per cent, and total fertility rates now below replacement level, life expectancy up from 41.4 to 69.4 years, and so on. Until 1991, India had to approach the IMF six times but not once in the next 32 years.
 

The intimidating size of the book and the time span it covers should not deter you. Given its fluid narration, it can be read like a novel and it is certainly a collector’s item: To be savoured more like fine French wine rather than gulped down like fast food.  It is as unbiased as it can get, without opinions masquerading as facts.

The reviewer is the author of Making Growth Happen in India (Sage)