Montek is, undoubtedly, a leading member of a small pantheon of talented and dedicated “econocrats” who have laboured long and hard to impart a modicum of economic rationality to the conduct of economic policy in India since Independence; often against overwhelming odds posed by politics, bureaucracy, mindsets and widespread economics illiteracy. This distinguished group includes, among others, L K Jha, I G Patel, Manmohan Singh, C Rangarajan, Vijay Kelkar, Bimal Jalan and Y V Reddy. The successful conception and execution of the 1990s reforms and their follow through owe much to the critical mass provided by the simultaneous presence of some of these stalwarts in key governmental positions in the 1990s. Parenthetically, the absence of econocrats of this caliber and experience from policy-making echelons in recent years may partly explain our current economic predicament.
Illustration: Ajay Mohanty
This book provides an absorbing account of India’s economic policies in the last 40 years, written from the perspective of a key national policy-maker, who played an exceptionally long and productive innings. The subjects covered range from macro dimensions of growth, finance and trade to all the key sectors such as agriculture, industry, infrastructure, telecom, digital and social services. The unifying theme throughout is the endeavour to reform, or at least improve, economic policies in the real-world context of an ever-changing political landscape, long-held ideas and ideologies and powerful vested interests. The story is told with verve, clarity and conviction, sprinkled with delicious touches of humour and irony. There is no bombast, malice or anger. What comes through is the author’s brilliance, his mastery of the issues addressed and an abiding commitment to increasing growth and economic welfare, especially through liberalising dysfunctional economic controls and enhancing India’s productive engagement with the world economy.
As an example of the many telling, humorous anecdotes in the book, I cannot resist citing one about civil servants (including econocrats). When V P Singh assumed office as prime minister in December 1989, B G Deshmukh and Montek were asked to continue as principal secretary and special secretary, respectively. In response to Montek’s puzzlement, Deshmukh explained “Montek, Dilli aisa shehar hai jahan cup badalte hain, lekin chamche nahin.”
The tale begins with the early, though modest, efforts at decontrol and modernisation in the 1980s under Indira Gandhi and her son Rajiv (Montek was his economic adviser in PMO in the second half of the decade) and moves soon to the 1991 balance of payments crisis and the ensuing, paradigm-shifting, economic reforms
of the Narasimha Rao / Manmohan Singh
years. It was then that Montek played a central and indispensable role in articulating, orchestrating and executing far-reaching policy initiatives from his position as secretary of the Economic Affairs Department in the Ministry of Finance for a record seven years. After the two-year interregnum of the United Front government, Atal Bihari Vajpayee’s National Democratic Alliance (NDA) government took charge and again pushed the reform train forward with important achievements in policies for infrastructure, telecom, privatisation, insurance, indirect taxes and fiscal responsibility legislation.
Then came the United Progressive Alliance (UPA) decade of Manmohan Singh
and Sonia Gandhi, when Montek presided over the Planning Commission. His account of economic policy-making during this period is perhaps unduly laudatory in some respects. In particular, he seems to give all the credit for India’s 8 per cent plus economic growth of 2003-11 (and the associated major reduction in poverty) to the government of the day. This may be a little unfair, especially given the UPA’s disappointing track record on productivity-enhancing reforms. More plausibly, as others have written, the remarkable growth spurt (which started at least a year before the UPA assumed power) may have resulted from the cumulative effect of economic reforms
undertaken during 1991-2004, combined with the strong global economic boom of 2002-2007, which also lifted the fortunes of many other developing countries1. T N Ninan has also emphasised this correlation between global and Indian economic performance (“Weekend Ruminations”, February 22 and 29 in Business Standard). India’s high economic growth persisted for a couple of years beyond the global financial crisis, thanks to the huge pre-election fiscal blow-out of 2008-9 and beyond, but at the cost of five years of double-digit consumer inflation and record external sector deficits.
Let me end with a personal, anecdotal tribute to this master craftsman of economic policy-making. Early in 1993 I returned to Delhi with my family, from a brief overseas deputation, to take up the position of chief economic adviser. Within days of our being allotted government housing, one evening after dinner, the mains water pipe leading into our verandah dining area sprang a massive leak. New to government housing and the services provided by the Central Public Works Department “after hours”, I called Montek on the RAX phone for advice on how to urgently mobilise a plumber. Within 15 minutes, the Union finance secretary was at our home to do the job. He quickly cut a small sturdy branch from a frangipani tree in our garden, sharpened one end to a spear-point and hammered it into the hole in the pipe, thus plugging the jet of water flooding our home. Two things became crystal clear: My department head knew his job — and he was going to back me to the hilt! The rest was going to be fun…and it was.
The writer is honorary professor at ICRIER and former chief economic adviser to the Government of India. Views are personal
1. See, for example, my Towards Economic Crisis (2012-2014) and Beyond (Academic Foundation, 2015), especially the essay on the UPA’s Economic Legacy.