POLI­CIES FOR IM­PROVED PRO­DUC­TIV­ITY

India Today - - LEISURE -

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

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