I am truly delighted to be here in your midst to release this most impressive volume that my young friend, Kaushik Basu, has put together. I compliment Kaushik, his team of advisory editors and the Oxford University Press, they happen to be my publisher also for this worthwhile endeavour. I must also compliment them for drawing upon some of the best minds on the Indian economy. Indeed, this book is not only a “what’s what” on economics in India, but is also a “who’s who” of economists on India! Heartiest Congratulations!

The publication of this book is indeed very timely. There is today a heightened interest in the Indian economy once again, and that happens to be the case all over the world. I am sure this volume will be a useful reference book for students, for researchers, for teachers, for investors, for journalists and for policy makers and politicians across the world interested in India.

When I look at the interest that India’s economic progress is once again generating globally, I am reminded of the 1950s. Those were the heydays of global interest in India. Some of the best minds from the best Universities across the world came to India. They came here to study India and they came here to help India. Our national leadership ensured that we were an open house – an open society – open to the free flow of ideas and scholarship. Institutions like the Delhi School of Economics, the Indian Statistical Institute, the Planning Commission and many others became exciting battleground of ideas.

This period of great intellectual activity generated enormous scholarship. Some great classics were written on India in the 1950s and into the 1960s. Daniel and Alice Thorner’s Land and Labour in India, John P Lewis’s The Quiet Crisis in India, W B Reddaway’s The Development of the Indian Economy and Gunnar Myrdal’s classic The Asian Drama, were just a few of the many books written by some of the most eminent economists the world over on free India’s first two decades. More importantly, the Indian experiment generated great interest in the economics of development. It contributed to many new ideas in economics at the time. Walt Rostow’s Stages of Economic Growth was inspired by India’s experience. My teacher, Nicholas Kaldor’s work on public finance drew heavily on Indian experience.

But the slowing down of our economy in the 1960s and 1970s, and, more importantly, the multiple crises that took hold of our growth process deflected attention away from India. In the 1980s and even into the 1990s, China became the flavour of the times! However, while international academic focus on India weakened, there has been a robust tradition of high quality research at home. This volume offers a glimpse of the range of economic issues on which there has been considered thinking in India. Clearly, the economics profession is alive and active! What is making the difference today is that our economy today is alive and, once again, active!

The recent record of good performance on the economic front has generated great interest in India’s economic prospects. It has contributed to a renewed sense of optimism. As I have often said, there are today no binding external constraints which can hold us back. In the past it used to be said that India’s economic growth was being held back by a trinity of internal and external constraints – a foreign exchange constraint, a food and wage goods constraint and a savings constraint. Today we can say with confidence that we have broken each of these constraints.

The foreign exchange constraint was a manifestation of low global competitiveness, an inward looking model of industrialization and low global confidence in India. All this has changed. The easing of the external constraint, therefore, is a manifestation of both increased competitiveness of our economy and of greater global confidence in India. We have also been able to largely overcome the savings and the wage goods constraint. Who would have believed that our savings rate would rise to as high as 32 per cent as brought out by the latest publication of the Central Statistical Organisation. However, as growth accelerates, new constraints have come up. The shortage and poor quality of infrastructure is one such constraint. The shortage of educated and skilled manpower is another constraint. Together, the two contribute to low productivity, which in turn is another constraint. Inadequate investment in agriculture and the widening of rural urban disparities are also a cause for concern. So also is the quality of governance and inefficiencies in the provision of basic social services particularly education, health, sanitation and the provision of safe drinking water.

The challenge before us then is to ease these internal constraints to development. To be able to address the challenge at hand, we need greater domestic social and political consensus. We need more long-term thinking on policy issues, and less “short-termism” and expediency. We need more sharply focused research on factors contributing to the sluggishness of agricultural growth and ways and means of revitalizing our rural economy. I hope professional economists and the popular media will contribute to a more informed domestic debate on the policy choices available to us. We must get our act together so that we can make good use of the available and emerging opportunities.

I also hope that this volume will contribute to greater awareness abroad about the unique experiment underway in India and the global significance of the success of India’s development experiment. The world has a stake in the success of the Indian experiment. Nowhere else is such a diverse society, such a plural society, seeking its economic and social salvation in the framework of an open society and an open economy, committed to the respect of the rule of law and fundamental human freedoms.

Indeed, this is what inspired liberal social scientists to study India in the 1950s. But we lost our way and the world turned away from us. Today, once again we have found our feet and we stand taller. A new generation across the world watches us. I hope this volume will help them understand India better.

Finally, I also hope the good work being done by economists like Kaushik Basu, will help in developing new concepts in economics that can help explain the Indian experiment better. India’s unique experiment in economic development must contribute to the growth of the discipline of economics. We must be able to shape the way the discipline itself is going to evolve. I wish Kaushik, and all his associates and all the contributors to this volume many more years of productive intellectual activity.

 

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