BOOK REVIEW

A Valuable Collection on the Indian Economy

Arvind Subramanian

there was a lot of variation within India, geographically and temporally, in terms of development outcomes. On Healthcare One of the very best contributions in the handbook is that by Jishnu Das and Jeffrey Hammer on healthcare and health policy. The authors begin by citing the striking data about Indias poor showing on health indicators, even allowing for Indias level of development, and then describe stories of two preventable deaths. They then go on to present compelling evidence to make the case that the healthcare debate has focused too much on access to healthcare and too little on its quality. In the process, they debunk three myths: that the poor do not have access to care; that private sector doctors are crooks and quacks; and that creating the infrastructure and providing training are the solution. The depressing conclusion is that the attitudes of those who receive healthcare patients and those who provide it may need to be changed if serious improvements in health outcomes are to be achieved in India. This is not the rst time or the only place where the authors have made these arguments but the handbook is elevated and made relevant by contributions such as these.
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ndia has turned from being a development failure to a place of development possibilities (it is still far from being a development success). To mark this transition, Chetan Ghate, of the Indian Statistical Institute, Delhi, collaborating with Oxford University Press, has painstakingly and impressively put together a collection of 31 academic and policy essays on Indias economic development. The Oxford Handbook that contains them will adorn many a bookshelf and library. Ghate deserves kudos for providing what is really an intellectual public good (which is always undersupplied) for scholarship on Indian economic development. This reader neither has the breadth of expertise nor is the audience captive enough for this review to discuss all the contributions in this handbook; and comprehensiveness is one of its virtues. The essays are organised under seven broad headings: history, poverty, industrialisation, social infrastructure, politics,
EPW

The Oxford Handbook of the Indian Economy edited by Chetan Ghate (New Delhi: Oxford University Press), 2012; pp 984, Rs 4,995 (hardback).

macroeconomics, and the external sector. Unsurprisingly, there is some repetition and the essays are of varying quality, length, focus and analytical sophistication. For sure, not all essays will have the same shelf life. Before getting to the charges of omission and commission I want to discuss, albeit selectively, some of the contributions to the handbook. The handbook begins with great promise with the essay on Indias economy in the 200 years preceding Independence. With remarkable succinctness, the author describes broad economic trends during this period. The still-persistent effects of colonial rule are well known by now. But the essay concludes with the important observation somewhat objectionable to hardcore nationalists that colonalism could not have been uniformly negative because
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BOOK REVIEW

Another thoughtful essay is by Willem Buiter and Urjit Patel on scal rules in India. This essay seems particularly topical given the state of Indias scal nances, characterised by large and rising decits despite rapid growth. It outlines very lucidly why debt and decits matter and then examines scal performance in India. The sobering message of this essay is that scal rules cannot succeed unless they are designed in a way that is incentive-compatible, that is unless there are in-built incentives for the central and state governments to adhere to the rules. But that is not easy to do. The essay could have probed to a greater extent the political economy of scal policy. For example, what are the political interests and coalitions supporting subsidies? Can exogenous developments help break them down? Alternatively, is there hope for more prudent policies if cash-based transfers can substitute for subsidies? Dated Treatment The essay on the globalisation debate in India covers the ground well but seems a bit dated. To this reader, one really interesting fact was the lack of a protectionist or dirigiste response in India in the wake of the global nancial crises. Around the world, there is increasing scepticism about nancial globalisation but in India capital account liberalisation has been accelerated after the crisis. Even in China there is a move back towards state capitalism whereas in India the objective if not the practice is one of reduced state involvement in the economy. A fuller discussion of these contrasting responses would have been welcome. The essay on caste and mobility by Vegard and Iversen struck this reader as more pessimistic than warranted by the recent research of Kapur et al (2010) who show dramatic improvements not just in the economic situation of dalits but in their social status. Indeed Kapur et al (2010) and some ongoing research by them portray the achievements of the dalits in the reform era as truly radical and comparable to the breakdown of feudalism in Europe several centuries before. This sort of dissonance between Vegard and Iversen versus Kapur et al
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(2010) is to some extent unavoidable because diversity is if anything the stuff of academic inquiry. Nevertheless one does wonder: would any reader of this Handbook come away with the correct impressions about Indias economic and social development? Perhaps that is not a fair question to ask but there is an interesting question as to the responsibilities that come with creating a handbook as opposed to compiling any run-of-the-mill collection of essays and papers. Some essays suffer unduly from taking the approach of covering all bases at the expense of providing sharp insights/ perspectives and/or drawing sharp conclusions. The essays on primary education, on higher education and on the dynamics of Indias economic reforms fall into this category. For example, in the latter, there is a listing of all the challenges faced by India from taxes to governance to public service delivery to land markets to competition policy, and all spelt out in less than a page: this is useful but whether our understanding of any of the challenges is deepened is an open question. The discussion of higher education seemed to overlook the key challenge posed by the globalisation of talent for creating an effective system of higher education. Serious Omissions There are also some serious omissions. For example, ination which has, over the last few years, become a rst-order macroeconomic problem for India does not get serious, if any, attention in this handbook. That omission can be explained perhaps by timing and the life cycle of a project such as this. When the papers were commissioned presumably towards the end of the last decade ination had not reared its head at least as a persistent phenomenon and one that has proven unamenable to policy action. More puzzling is the neglect of what is Indias biggest development challenge, namely, the decline of public institutions and state capacity. There is a chapter on corruption and references littered throughout the volume on institutions and politics but no serious grappling with the quality of basic institutions such as the bureaucracy, police, judiciary, and military which seem to be in serious
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decline. One could argue that the difference between the performance of China and India is not their reliance on markets but in the basic capacity of their respective governments to deliver basic services and build infrastructure. This issue deser ved a lot more attention than the handbook has devoted. In terms of inequality, while the handbook has covered all the basic ground, it might have been more interesting and forward-looking to have paid particular attention to the Maoists and the Muslims. Caste is arguably becoming the less important axis of cleavage and inequality compared to others. The tribals in the forested parts of India have been excluded not just by the reform process but from participation in the market economy. Why and how might this be rectied? Similarly, can the insufcient advancement of Muslims be explained by discrimination against them or are other factors at play? The more basic, even philosophical, questions that crossed this readers mind when going through this volume related to the purpose of a handbook: should it be to assemble research conducted at a point in time or should it be a guide to the essential, even canonical, readings on the various topics, some of which take the form of sharp analytical surveys or reviews? Oxford University Press and Ghate have opted for the former. It is an open question whether the latter approach adopted for example in the early Handbooks of Development and International Economics might have assured a longer shelf life. Regardless, this handbook will be a valuable contribution.
Arvind Subramanian (ASubramanian@ piie.com) is at the Peterson Institute for International Economics and Center for Global Development, Washington DC.

Reference
Devesh Kapur, Chandra Bhan Prasad, Lant Pritchett, D Shyam Babu (2010): Rethinking Inequality: Dalits in Uttar Pradesh in the Market Reform Era, Economic & Political Weekly, 28 August, Vol XLV, No 35.

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