The year 2020 has not been kind to India thus far. Slowing economic growth and a strained social fabric are now capped by a pandemic which is putting many lives, and even more livelihoods, in peril. For anyone wondering how we can deal with the economic doom and gloom, Arvind Panagariya’s new book, India Unlimited: Reclaiming the Lost Glory could not have come at a better time. While the title feels appropriate for these times, the ‘lost glory’ actually harkens back to the first 1,800 years AD, for most of which India made up roughly a quarter of the world’s economy, as opposed to the paltry 5 or so per cent at present. India Unlimited presents the author’s case, backed extensively with data, evidence, and coherent arguments, on how we can grow faster and regain our spot as one of the world’s more successful economies.
But first, why should we at all care about this issue now? By tracing India’s inward looking, ‘command and control’ economic policies, and contrasting their results with the experience of similarly poor but more export and market-oriented nations like Japan, South Korea and China, Panagariya shows clearly how we scored several own goals in the first 45 years after Independence. And while laying out the data on the 1991 reforms and the subsequent sharp reductions in poverty, he writes, “No matter how we dissect the data, there is unequivocal evidence of significantly faster poverty reduction alongside faster growth.” His message is implicit, but obvious—if you care about the poor, you must concern yourself with economic growth. Panagariya’s point stands on its own, but the writings of numerous other development economists like Lant Pritchett for instance, corroborates it. So, to avoid any more self-goals now, it is important we learn from our past.
Panagariya proceeds to examine the economy’s main sectors—agriculture, manufacturing and services, to try and establish where growth might come from, and how. With rigorous analysis of the many aspects of employment and productivity, this section is among the book’s strongest. Spoiler alert: what will transform Indian’s economy is not agriculture or small firms.
The rest is about what it would take to make that transformation happen. The labour reforms to support the creation of attractive jobs in labour-intensive manufacturing, the need for planned urbanisation, the changes needed in the financial sector, including a competitive banking sector and finally reforms in governance that would allow these changes to take place. While his policy prescriptions all flow naturally from the analysis and evidence presented, the author recognises that we have a tough task ahead--“For a country that has spent many decades pursuing counter-productive economic policies, there is no escaping a long list of reforms.”
India Unlimited is an excellent resource for anyone interested in the direction that India needs to go if it is to reverse weakening growth in recent times and sustain that reversal over the medium term. The book walks, with aplomb, the tightrope of presenting enough analysis to make a compelling case for any reader, while at the same time not so much as to overwhelm them.