Book Review: Glimpses of Indian economic policy – An insider’s view by I.G, Patel

I just picked this book (out of stock on Flipkart and real expensive on Amazon) by late Dr IG Patel, the man who doffed many a policy hats in India.

The book was picked as one read through India’s demonetisation history in 1978 when IG (as popularly called) was the chief of Indian central bank. On the move he said:

Governor I.G. Patel was not in favor of this exercise. According to him, some people in the Janata coalition in the government saw demonetization as a measure specifically targeted against the allegedly ‘corrupt’ predecessor governments or government
leaders. Patel recalled in his book, Glimpses of Indian Economic Policy:  An Insider’s View, that when Finance Minister H.M. Patel informed him
about the decision to demonetize high denomination notes, he had pointed out that:

such an exercise seldom produces striking results. Most people who accept illegal gratification or are otherwise the recipients of black money do not keep their ill-gotten earnings in the form of currency for long. The idea that black money or wealth is held in the form of notes tucked away in suit cases or pillow cases is naïve. And in any case, even those who are caught napping— or waiting—will have the chance to convert the notes through paid agents as some provision has to be made to convert  at par notes tendered in small amounts for which explanations cannot be reasonably sought. But the gesture had to be made, and produced much work and little gain. (p. 159)

This is just a glimpse of what the book has to offer.

It not just takes you through his journey of economic policymaking but the various political and economic events that shaped Indian economy. Unlike most other economics books which get much into theory and grand ideas, this one is more about people and their decisions that make or break an economy. He takes you through several back of the room discussions between India and international agencies.

He candidly discusses his relations with various civil service officers and politicians which is quite candid given the senior positions held by him. This also is surprising and informative. You just don’t go through economic characters as rational beings but ones with their own quirks and differences.

What is also impressive is that he gives you broad ideas about a topic and then quickly moves to the next one. The book has a knack for knowing what is important to be mentioned and what is not. Thus it does not bore you at all. In just about 200 pages you get a good panorimic view of Indian economy and its key actors from 1954 to 1982 till he was into economic policy. Later he moved to IIMA and LSE as director, events which he keeps away from the book as it is about economic policy.

One also gets some sense of history of economic thought in the period. One especially gets some insight on IG Patel vs BR Shenoy which is really interesting. We now usually celebrate BR Shenoy but have little ideas on what went on then except that he was ignored as he dissented against the Second plan. Patel says a bolder Second plan meant larger budget deficits and inflation. Shenoy did not want any of them. Shenoy’s “crusade was not for private sector as much for fiscal virginity”. Wow. that is some strong words. Further, Patel says Shenoy “misread statistics” and “was too abrasive for times”. Thus, he was heard but not listened to and not even respected as others who were also overlooked.

Then he again refers to Shenoy who as per Patel spread misinformation regarding budget deficits and deficit financing in the late 1950s. This was due to the PL 480 supplies and drawing on IMF fund. As per Shenoy, PL 480  added to deficit financing & inflation and asked aid to be cut-off to India. Patel thought this logic was difficult to understand. Under PL 480, the government purchased wheat from US in rupees and later sold them to markets. So there was no case of deficit or deficit financing. Same was the case with IMF drawings which were purchased and not just given. However, Shenoy kept sending letters to WB President about his views. WB President told Patel that Shenoy was free to voice his opinion but former couldn’t understand how someone could do “propaganda against his own country in another country?”

He also discusses Peter Bauer joining Shenoy and asking to stop all aid to India. Patel wrote a rebuttal and a debate was organised between the two. But at the time, Bauer or his publisher backed out and the debate never happened.

Of course, this is author’s version. One needs to read more people to get an all round perspective.

As you read, you realise how elite and small the Indian economic policy circle has been and continues to be until today. The key actors are identified early and they keep moving from one position to another. The same actors keep coming in different positions as if it is a game of roulette.

Overall, a decent read. Tells you quite a bit and briefly at that…

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