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India in the limelight: A cogent argument of how country’s time is now to lead on economic front

Saurav Jha’s book on negotiating the new normal is a combination of taking a call on how the global economy is placed as well as positioning India on the world stage. The financial crisis combined with Covid were turning points in the past two decades, which have sort of changed the way in which the global economy is placed.

Today, the economic equations have changed. From domination of the western world to the emergence of China as the main driver of the global economy post-Lehman, the future looks different, with India probably having a very good chance of providing direction. The author’s premise is that the developed world is in a state of flux, which has been the case for over a decade now. This segment is not in a position to drive the world economy. The power of central banks to drive their economies through quantitative easing has withered. USA got into the financial crisis and then was getting out of it with impetus coming from Fed when Covid acted as a barrier.

Eurozone, too, had its run-ins with a crisis, and Covid had a similar role to play here. Japan has been in a phase of low growth for long and China is now deeply enmeshed with a credibility issue where there is a major pushback from the West.

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There was also the concept of BRIC nations which got extended to becoming BRICS. Today, the author believes the concept is less relevant with the decline in China, as well as Russia (the book is updated to cover the Ukraine crisis which virtually makes this country irrelevant in the global landscape where it has been cast as a pariah). In such a situation, India is definitely a frontrunner for growth, which has been seen in the past few years.

Blank vertical book template.

The author takes us through each of these experiences, country-wise, to explain the developments that have taken place with a semi-historical perspective so that the reader gets to know everything that matters about their stories. There are chapters dedicated to each country and region. Then there is a rather detailed study on the developments in India in the past few years where he tends to be critical of the establishment.

The book could have had titles for the chapters to make it easier to read. It is written more like a novel where chapters are numbered without titles, which would have worked if the narrative was continuous. However, the chapters are standalone descriptions and analyses.

There is quite a bit of detailing of the several reforms brought in by the Indian government and the focus is on demonetisation and GST, which the author thinks were not good for the people. Besides, he believes the economy was pushed back due to these reforms, with the SMEs bearing the brunt.

The author talks of the Covid action of the government through the atmanirbhar schemes and compares them with approaches taken by other countries that were definitely direct in the form of cash transfers, which helped in uplift of the masses. This was not the case in India and hence, in his view, the approach was flawed.

There are some facts that could have been checked. For instance, he mentions that Nachiket Mor was removed by the government from the MPC (monetary policy committee) in context of the sharp altercations between the government and the RBI during the Rajan-Patel regimes. But Mor was never part of the MPC and was only a director on one of the regional boards of RBI. Similarly, the author talks of Raghuram Rajan, then governor of RBI, leaving the bank because he reportedly felt his political bosses were not behind him. This is not correct since Rajan had completed his full term. This is a misconception often expressed by those who are antagonistic to the current government’s form of governance where it is assumed that Rajan should have gotten an extension given his pedigree. Not being given an extension of tenure, which is the government’s prerogative, is quite different from one leaving the office. These facts could have been validated, because by stating them incorrectly the reader gets an impression that the author has a one-sided view.

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The subtitle of the book makes the reader search for the author’s roadmap or game plan for the country to grow in the coming years. This is not clear as there has been considerable detailing on the policies of the government, both before and after Covid. There are several red flags raised on debt and deficits, both on external and internal accounts, that are relevant when we talk of the future.

The book overall is well-written and gives even the lay reader the state of the world economy with considerable detailing of what India has done in the past few years under the banner of reforms. It is refreshing as it also talks of geopolitical themes and how they fit into the economics of the world.

Madan Sabnavis is chief economist, Bank of Baroda

Negotiating the New Normal: How India Must Grow in a Pandemic-Ridden World

Saurav Jha

Hachette

Pp 424, Rs 699



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