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India after the global crisis
Shankar Acharya
Orient Blackswan

2012, pp 249
425

With the common man concerned about the prevailing economic conditions, Dr Shankar Acharya’s essays that have been compiled together in India: After the Global Crisis is a must read for economists, analysts, policy makers and researchers.

Based on 38 essays written between January 2009 and September 2011, it deals with major economic issues that confronted India during this period.

The essays deal primarily with the aftermath of the global crisis of 2008/2009. The author assesses India’s resilience in the face of the global financial crisis and shows how the crisis and our domestic policy have taken a toll on India’s economic performance.

Using his 40 years of experience in the World Bank, the Central Government, academia and corporate organisations, the author discusses the challenges facing India and also outlines what the government must focus on in order to overcome these challenges.

Acharya covers different aspects of the economy and divides the essays into seven sections. The essays in the section, Global Crisis Aftermath, highlight the financial excesses in western markets. Further, the author discusses the emerging need for a choice between G8 and G20 as the principal forum for summit level discussions and coordination of global economic issues.

In other essays, he discusses the Greek financial crisis, Keynes’s influence on macroeconomic theory, policy formulation and the challenge that the west has ahead of it if it wishes to hold its sway over world economic governance.

The next section, Economic Growth, compares and draws out the similarities in the Indian economic conditions of 2009 and 1997. Attention has been drawn to a possible deterioration in economic equity as some of the most direct negative consequences of global recession fell on labour intensive export sectors. In Growth Complacency?, Acharya is critical of the UPA government’s statement on a growth projection of 10 per cent a year.

The third section, titled Reform and Economic Policies, deals with hopes for economic reform and sensible economic policies. One of the essays here, written before the results of the 2009 General Election were known, outlined a set of priorities for the new government such as grappling with massive fiscal deficit, ensuring an early shift to GST, imparting a reform stimulus to the economy, etc.

Acharya discusses the broad policy stances of the RBI and debunks the 10 popular myths of Indian economic policy including that of “higher minimum support prices being good for farmers,” “labour laws protect labour,” “subsidies mainly help the poor,” “trader/middleman causes many of our economic problems,” “reducing fiscal deficits hurts growth,” “the exchange rate only matters to exporters,” and “foreign capital inflows are always good for our economy”.

The essays in Employment and Human Development note that a huge labour force, scarcity of jobs in the organised sector and UPA’s wrong approach under the slogan, “inclusive growth”, have been adding to our misery. The author states his views on India’s health sector as well: nearly 40% of all children under three years of age are stunted, over half of all married women are anaemic, and the incidence of communicable diseases is rampant. With a poor health system, the economic costs of ill health are huge.

The six essays in section five dwell on the Central Government’s budget and fiscal policies. The author notes that the budgets are timid on economic reforms and imprudent on fiscal management.

External Sector Policies is a contemporary commentary on the evolution of India’s external finances and currency policies over the past two years. The author is concerned with the sharp increase in the current account deficit in India’s balance of payments in recent years, the appreciation of the rupee and RBI’s reluctance to contain the appreciation.

Acharya then sums up with essays that touch upon  the significant events of September 2009. They also provide an assessment of Obama and the economic development of Africa.