A good book has three important components: idea, execution, and inference. Recalibrate – Changing Paradigms, by NK Singh (hereafter NK), and PK Mishra (hereafter PK) has all three in abundance. The idea (remember that one definition of genius is something that is obvious ex-post) is to present Indian economic and policy history over the 75 years from the vantage point of two very knowledgeable and experienced practitioners of policy. The two authors have been senior policymakers practising their craft for the better part of the last 45 years. We are in our 75th year of Independence, and there is likely to be (there already is!) a steady outpouring of reviews, books, and articles about our journey. Why not have an authoritative book on economic policies right at the beginning of the 75th year? Policies have two essential collaborative elements – the micro and the macro. With NK emphasising the macro and PK the micro, the book is the synthesis of the two. Recalibrate provides many insights into what happened in these 75 years – why it happened, and what the future might (and, in some instances, must!) hold. I will not hesitate to say that books on economic policy will have to be judged with reference to the execution benchmark set by Recalibrate. In a highly engaging and informative chapter, “People, Politicians and Bureaucrats”, PK narrates his initial experiences as an assistant collector. What PK correctly stresses is that his job provided for a two-way joint relationship of people and power. We all have been critics of the Indian Administrative Services (IAS), as of every institution in India – all being part of a healthy democracy. In his low-key impeccable style, PK provides, in 30 pages, an informed (even nostalgic) sense of India in those early days of development. The lack of electricity, the non-availability of clean water, the fair allotment of contracts for potato farming. The chapter also contains a gem of a definition of corruption: “managing the system with networking and connections”! There are many more insights, including a revealing one about single women teachers demanding equal rights in pay, promotion, and transfers – equal to married teachers. One single woman was bold enough to say that if there were single men in the audience (PK was one!) then they should come forward and marry the single women! Idea, Sirji, circa the mid-70s, Gujarat. Buy Now | Our best subscription plan now has a special price As PK himself confesses about his early experience: “I realise that today, I have more insight and a better understanding of the dynamics of development administration at district and subdistrict levels: the interplay of people, politicians and bureaucrats in real-life situations”. As does the reader. Let me confess – I wanted to take the IAS exam circa 1971, looked at the sample tests, and decided I would never make it. But PK brings alive as to why several of the best and brightest in India took the IAS path. While PK mentions the testing of the hypothesis of the determinants of development for Gujarat, his experience (and knowledge) is of universal applicability. He correctly notes that it is not easy to conclude on the basis of quantitative or empirical data – more long-lasting conclusions are reached through personal experiences and anecdotes. As a lifelong practitioner of hard data, I have to confess, and applaud, that many times (often?) it is the type of experience and interpretation that PK recounts that goes towards constructive policy making. NK, who started his career as an IFS officer but then moved to IAS, has been at the cutting edge of economic policy-making in India for the last 40-odd years, most recently as the chairperson of the 15th Finance Commission. His several chapters on fiscal issues are must read-and-learn chapters for all practitioners of policy – and economists. What “should” be the level of public debt, or the fiscal deficit? Constructive data are presented, with inference. Thankfully, no firm conclusions are drawn on the appropriate level of the fiscal deficit or public debt – prudent ranges are presented, and the ambiguity emphasised – all hallmarks of a mature thinker and excellent policy maker. When the evidence is ambiguous, let the ambiguity stand. (Not that NK is averse to making firm decisions and acting against odds – he was the bureaucrat responsible, as Revenue Secretary, for cutting tax rates in the Dream Budget of 1997.) Recalibrate contains a most learned discussion of fiscal federalism, including a detailed benchmarking of the decisions, and changes, made in the 15 Finance Commissions to date. Inferences are drawn about how India has constructively attempted to solve the “puzzle” about democratic federal development. Considerations of efficiency and equity and federalism are ever present in the many decisions about spending, taxation, and devolution of responsibilities to the center and states. What is a fair allocation of revenues to poor states, large population states, and states which show marked improvement in outcomes? The goodness of decisions on these questions influences and determines our democracy. This discussion of allocation to Centre and states is a must-read for every present and future practitioner. Especially the latter as India confronts the more challenging questions of future allocation of centrally-administered taxes – how good performance should be rewarded, and how should states “perfecting” freebies (“irresponsible populist action”) be penalised. Increased tax revenues (India tax/GDP ratio now close to 19 per cent, close to, if not higher than the US or Japan) leads NK to conclude that “rewarding tax effort in terms of improved compliance norms deserves recognition”. India has come a long way. A developed country by 2047 beckons, but it is important to recount how we got to where we are. The worth of this book is in an intelligent recounting of history, the early debates, and inferences about future debates as we go towards 100 and the target of being a developed nation. I don’t know if the authors planned it that way — most likely it must have been the decision to recount economic history as best they knew. But they have succeeded in presenting thoughts, ideas and evidence for policy thinkers to think about, plan for, and analyse developments over the next 25 years. (Surjit S Bhalla is executive director, IMF, representing India, Sri Lanka, Bangladesh and Bhutan)
