FOUNDATIONS OF INDIA'S POLITICAL ECONOMY: TOWARDS AN AGENDA FOR THE 1990S Edited by Subroto Roy and William James . Publisher: Sage Publications, New Delhi . Price: Rs 275
THE PAPERS on political themes in this compilation are based on the proceedings of a seminar in Honolulu organised by the University of Hawaii and the East-West Centre. The seminar ambitiously sought to assess independent India's political and economic development to chart out an action path for the 1990s. It traced the decay in the autonomy and integrity of many of our public institutions in the past two decades to the growing erosion of internal democracy within political parties, especially the Congress.
The increasing criminalisation of electoral politics, and, in recent years, a disturbing growth of communal issues that have dictated the political agenda could not have been foreseen by the authors. That conflicts result when people of different social and cultural categories compete for limited economic opportunities is pointed out, but there is little on how to resolve such tensions.
Of the papers on economic themes, particularly interesting was Yale economics professor T N Srinivasan's review of planning and foreign trade. He argues the inward looking administrative allocation system based on quantitative restrictions should be abandoned in favour of an outward-oriented strategy based on market forces. To smoothen reforms, additional external resource commitment and effecting a large exchange-rate adjustment is advocated.
Interestingly, Milton Friedman, the Right-wing monetarist of the Chicago school, had argued in a memorandum written at the invitation of the Government of India in 1955 (included in this volume) against expanding the public sector and controlling private investment in too rigid and detailed a fashion. He was against exchange controls and had recommended auctioning foreign exchange to the highest bidder.
All these measures have been pursued fairly energetically recently, but so far there is little to show in terms of achievement. With a substantially higher rate of inflation for essentials as compared to the officially declared inflation rate, growing unemployment and sharpening inequities, the process of adjustment has thus far proved to be particularly harsh on the lower one-third of the population. Industrial growth rate has been sluggish and, contrary to the rosy scenario painted by policy makers about the inflow of foreign capital, the actual amount that has come in is a mere pittance.
There are interesting papers by eminent social scientists on themes ranging from the state of governance to the historical roots of economic policy. It is clear we are in a period of flux in which retrogressive political and economic alliances appear to be gaining the upper hand. Some of the writers are too fascinated by market forces to address the larger question of social good. Only a correct understanding of the past will help prevent serious errors in policy making.
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