Books Explained | An expert’s perspective on the Indian economy


C Rangarajan was Governor of the Reserve Bank of India between 1992 and 1997, arguably one of the most difficult periods in the history of the Indian central bank. Rangarajan, a professional economist with a Ph.D. from the University of Pennsylvania, also served as Chairman of the Twelfth Finance Committee, Chairman of the Prime Minister’s Economic Advisory Council, Member of the Former Planning Commission, Governor of Andhra Pradesh and a member of the Rajya Sabha, and headed several influential committees. His entire adult life was devoted to contributing and witnessing the economic growth of independent India. This book tells the story of his thoughts and actions on a range of issues between 1982 (when he left academics to join the RBI) and 2014 (when he resigned as President of PMEAC).

The first of three parts of the book, which covers Rangarajan’s time at the RBI from 1982 to 1991, describes in detail the origins of the balance of payments crisis. Part 2, on his tenure as Governor of the RBI, details how the RBI adapted to the fundamentally changed paradigm of the Indian economy following the economic reforms of 1991. In Part 3, Rangarajan talks about his stay at Raj Bhavan and the finance commission.

While this is a particularly valuable book for students of Indian economic history, ordinary readers will likely find the last two chapters – “Advice to Government” (his time as head of Manmohan Singh’s PMEAC ) and “A few ruminations” – of great interest. In these chapters, Rangarajan discusses recent economic developments such as the post-2011 downturn, and reflects on the significant challenges and opportunities ahead of India.

Referring to the economic downturn since 2016-2017, he says, “Management’s shocking failure to demonetize…and continued GST start-up issues have negatively impacted the economy. Certainly, the data shows that investment has deteriorated.

He stresses that reforms can no longer be pushed “in the shadow of a crisis” (as in 1991), and that “we need more discussion and consensus” in all sectors. Highlighting the experience of the first decades after independence, he warns that “Atmanirbhar should not lead to pure import substitution…an open economy with certain limitations is always the best way forward”.

Rangarajan repeatedly stresses that while India needs to grow at 9% a year for at least five years to have a chance of becoming a $5 trillion economy, it is equally important that the fruits of rapid growth are equitably distributed. “We cannot sequence it, growth first and equity second. They have to go together. Growth and equity…must be woven together to give an acceptable development model…Therein lies the economic wisdom and economic statesmanship,” he says.

Title | Forks on the Road: My Days at RBI and Beyond
Author: C Rangarajan
Publisher: Penguin
Pages: 304
Price: Rs 699

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