Book Review: Backstage—The Story Behind India’s High Growth Years
Source details
- Canonical URL
- Book Review: Backstage—The Story Behind India’s High Growth Years
Other formats
Bibliographic details
- Authors: MARTIN WOLF
- Published: June 1, 2020
Overview
- Review by MARTIN WOLF, chief economics commentator at the Financial Times, published in F&D Magazine, June 2020.
- Subject: Montek Singh Ahluwalia’s Backstage: The Story Behind India’s High Growth Years (Rupa Publications, New Delhi, 2020, 464 pp., $35.99).
- Timeframe covered in the book: 1979 (Ahluwalia’s return to India) through 2014 (end of the period he served in government).
Author’s central narrative
- Ahluwalia provides an insider account of the making of India’s economic policy between 1979 and 2014.
- Core thesis: high economic growth was the essential goal for a poor country like India, achieved through economic liberalization supported by pragmatic institutional reform.
- The 1991 balance of payments crisis was pivotal in enabling reforms.
- The “M Document” (1990) presented an integrated strategy for reform—of fiscal policy, industrial policy, trade policy, and exchange rate policy.
Key factual findings and statistics
- Ahluwalia served as deputy chairman of the Planning Commission under Prime Minister Manmohan Singh between 2004 and 2014.
- As Ahluwalia states, “The first seven years [of the UPA government] recorded a growth rate of 8.5 percent. Indicators such as export growth, private investment, and reduction in poverty also showed excellent performance.”
- The book characterizes India’s post-reform decades as “a substantial success.”
Important questions and critiques raised by the reviewer
- Why were politicians, notably the Congress Party, never willing to make the success of these reforms and the need to take them further the center of their political platform? (Ahluwalia: combination of gradualism and “reform by stealth” in the 1990s.)
- Why has growth decelerated? Two complementary explanations from the book:
- Growth was in part the result of an unsustainable credit boom in the private sector, leaving a legacy of bankrupt companies and weakened financial institutions—the “twin-balance-sheet problem.”
- Initial liberalization (notably dismantling the “License Raj”) had by then done all it could do; India needed second-generation reforms, notably institutional reforms to promote good governance, which were not paid enough attention to.
- What happens next? The economic record of the six years of Narendra Modi’s National Democratic Alliance government is described as “beginning with a bang and ending with a whimper.” The government has achievements to its credit, but has also done undesirable things (notably demonetization) and not done desirable things (notably resolving the debt problem).
Outlook and judgment
- Ahluwalia remains an optimist: on returning to India in 1979 he was optimistic, remained so throughout his career, and concludes he is still “an unrelenting optimist that...the India story of high growth and development will...continue.”
- The reviewer notes India’s economic future was quite uncertain even before the COVID-19 pandemic.
Source: IMF F&D Magazine book review by MARTIN WOLF, June 2020.
Content in this bundle
- استعراض الكتب
- Book Review: Backstage—The Story Behind India’s High Growth Years – IMF F&D
- Country Report
- 幕后: 印度高速增长背后的故事 - 书 评 - 《金融与发展》 2020年6月号 - 国际货币基金组织季刊