POLICIES FOR IMPROVED PRODUCTIVITY
Higher growth requires higher productivity in all sectors of the economy, and the various chapters list many specific policies that will raise productivity. For example, markets in agriculture should be freed from the restraints imposed by the APMC Act; labour laws should be changed to allow more flexibility in laying off labour with appropriate compensation and closing down units which are not viable; public sector units should be privatised to give their managements both the freedom and the incentive to increase productivity; public sector banks should be freed from government control; land markets should be made much more transparent, etc. And of course, the push to improve the ease of doing business should be pursued vigorously. Joshi also recommends a more positive approach to international engagement, with a change in our traditionally negative attitude to various international trade agreements.
These are good suggestions, but they are not new, nor does the author claim they are. In fact, the book ranges effortlessly over the extensive literature to present the reader with a large number of policy options which would accelerate reforms. This raises the question— why have they not been implemented? The answer must be that our politics has not created an environment in which politicians are put under pressure to indicate exactly how they will achieve the many desirable outcomes they all hold forth as targets. Everybody agrees on the nature of the problems, but not on how they can be credibly addressed. Atal Behari Vajpayee summarised the political dilemma sometime in 1999, when, after seeing a particularly slick presentation by a team from McKinsey and Co. on how India’s growth could go up to between 10 and 14 per cent, he wistfully asked, “Lekin yeh sab kaise hoga (but how will all this happen)?”
Towards the end of the book, Joshi provides his assessment of the performance of the Modi government thus far. He says it is “good on macro stability” but he finds it “generally underwhelming on investment revival, investment climate, and reform of markets and regulation”. He rates it “quite poor in addressing the fundamental problems involved in deep fiscal adjustment, international trade, education and healthcare, and reform of state institutions”. Perhaps the 15-year vision document that NITI Aayog is working on will provide clarity on the longer term targets the government is aiming at, and also the specific policies that are proposed to achieve them. Readers of this book can then compare Joshi’s wish list with the government’s specific policy agenda and judge for themselves whether we are on the path to reach $28,000 per capita by 2040. The author was the deputy chairman of the Planning Commission from 2004 to 2014