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Analysing A Spectrum of Themes in Indian Economy


Praveen Jha

INDIA: MONETARY POLICY, FINANCIAL STABILITY AND OTHER ESSAYS
By C. Rangarajan
Academic Foundation, New Delhi, 2009, pp. 428, Rs. 995.00

STATES' FISCAL MANAGEMENT AND REGIONAL EQUITY: AN OVERVIEW
Edited by M. Govinda Rao and Anwar Shah
Oxford University Press, New Delhi, 2009, pp. xvi + 291, Rs. 695.00

VOLUME XXXIV NUMBER 6 June 2010

The two volumes reviewed here engage with a significant spectrum of themes relevant to contemporary Indian economy. The first of these, by Chakravarthi Rangarajan, covers a large canvass, and is a collection of essays written by the author during approximately the last half-decade. The second volume, edited by M. Govinda Rao and Anwar Shah, deals with some of the core issues relating to Centre-State fiscal relations in India, in particular the challenges of fiscal management faced by the states and the mandate of regional fiscal equity that a central government ought to take seriously in the context of fiscal federalism. Both the volumes are important contributions to the relevant literature and should be of interest to a large audience including students, researchers, teachers, policy makers and development agencies. In the following, I make a few brief remarks, in the nature of ‘curtain-raisers’ to these volumes. The collection, twenty-five essays in all, by Rangarajan is divided into four sections: Monetary Policy and Fiscal Issues; Growth and Development; Sectoral Issues—Industry, Power, Banking and Agriculture; and External Sector and Globalisation. Evidently these essays cover a very wide range and, as it happens, none of the pieces is in the nature of cryptic, journalistic account, as each article traverses a considerable ground. The first section has seven essays, opening with a substantive reflection on India’s monetary policy in the context of a liberalized and globalized environment, touching on several issues such as objectives, intermediate targets, role of interest rate, links with exchange rate management, etc. The next piece engages with different aspects of financial stability, the recent global financial crisis being the obvious backdrop. The two subsequent pieces focus on the governments’ (at the Centre as well as the States) ‘fiscal responsibility’, and issues of public debt accumulation and management. The author makes a fervent advocacy for the Fiscal Responsibility and Budget Management Act in particular and ‘prudent’ fiscal behaviour on the part of the governments in general. The next three essays in this section deal with issues connected with fiscal federalism. One of these is largely concerned with vertical and horizontal imbalances whereas the other two deal with the matters taken up by the Twelfth Finance Commission (of which the author was the Chairperson), and its recommendations. Part II of the book also consists of seven chapters, connected with diverse aspects of the country’s growth and development in recent years. ...


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