India in Transition: Freeing the Economy

117 Pages·1993·7.225 MB·English

by  Jagdish Bhagwati

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INDIIAN T RANSITION
Freeing The Economy
INDIIAN
TRANSITION
Freeing The Economy
JAGDISH BHAGWATI
CLARENDON PRESS · OXFORD
1993
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For
Abid and Karki Hussain
Preface
This volume has grown out of the three Radhakrishnan
Lectures that I gave at Oxford University in the first
week of June 1992. The lectures were delivered in the
Ashmolean Museum, an unlikely yet apt locale for
reflections on the current fortunes of a nation with an
ancient civilization.
I am grateful for the hospitality extended during my
stay by the Warden and Fellows of All Souls College,
and for the warmth with which I was treated, at the
Lectures and outside, by Sudhir Anand, Christopher
Bliss, Robert Cassen, Walter Eltis, Charles Feinstein,
Vijay Joshi, Sanjaya Lall, Ian Little, James Mirrlees,
Tapan Raychaudhuri, Maurice Scott, Peter Sinclair, and
Jonathan Vickers. I have also profited greatly from their
comments and from the suggestions of many others who
came to the Lectures, as also from the suggestions of
T. N. Srinivasan, Paul Streeten, Richard Eckaus, Gus
Ranis, Atul Kohli, and Ashutosh Varshney.
Over the years, I have learnt from the conversations
and writings of many, indeed too many to acknowledge
here adequately. I would be remiss however if I did not
record my intellectual indebtedness to the Indian econo­
mists Pranab Bardhan, Sukhamoy Chakravarty, Padma
Desai, Meghnad Desai, Suresh Tendulkar, K.
Sundaram, S. Guhan, D. T. Lakdawala, P. N. Dhar,
Deena Khatkhate, B. S. Minhas, Arvind Panagariya,
Kirit Parikh, Isher Ahluwalia, A. M. Khusro, K. L.
Krishna, Mrinal Datta Chaudhuri, Amartya Sen, Pravin
Visaria, A. Vaidyanathan, K. N. Raj, Manmohan Singh,
V. Dandekar, M. L. Dantwala, Deepak Lal, Sanjaya
v111 Preface
Lall, Vijay Joshi, and, above all, to Pitambar Pant,
V. K. Ramaswami, and T. N. Srinivasan.
I also recall with pleasure innumerable conversations
with foreign economists who have worked over the years
on, and often in, India: Ian Little, Paul Rosenstein­
Rodan, Richard Eckaus, Arnold Harberger, Trevor
Swan, Maurice Scott, Paul Streeten, Brian Reddaway,
James Mirrlees, George Rosen, Robert Cassen, Nick
Stern, and Stanislaw Wellisz. I hope that they will
detect, in the tapestry that I have woven in this work,
the invisible imprint of their ideas and the intellectual
stimulus they gave me.
I have drawn, in this work, on some of my earlier
writings, especially on the Vikram Sarabhai Memorial
Lecture and the Sir Purushottam Thakurdas Memorial
Lecture which I gave in the late 1980s in India, and on
recent work (with Padma Desai) on the sources of fric­
tion between the United States and India in the post-war
period (in Sulochana Glazer and Nathan Glazer, eds.,
Conflicting Images in India and the United States, pub­
lished by the Riverdale Company of Wellesl�y, Mass., in
1990). But the architecture I present now is new and
more substantial, and the nuances are different, changed
in light of further reflection and the dramatic changes
that have characterized the Indian scene since June 199 I.
The economic scene today is in flux, as a result of the
reforms begun in 1991, and politics remains complex
and volatile. It is a hazard to end this work with a com­
mentary on current events; new events will surely over­
take some of what I say. But I hope that, regardless, the
broader analysis here will remain of enduring value.
J.B.
Columbia University
New York
Table of Contents
List of Figures X
Introduction 1
1. The Model that Couldn't 5
2. What Went Wrong? 39
3. What is to be Done? 71
Statistical Appendix 101
Index 105
List of Figures
A comparoifGs DoPpn e cra piintI an dainaod t hdeerv eloping
count1r9i6e0----s8,8
2 Growrtahti enrs e GaNlP i nt hIen deicaonn o1m9y5,2 -86
3 Thefi nancoifgn rgo dsosm esctaipcifo tramla tbiyog nr oss
domessatviaicnn fodgr eisganv i(npgec ern otfG DPa tm arket
prices)
4 Growrtahti enrs e GaNlP i nt hSeo veiceotn o1m9y5,1 -80
5 Ratoefls i teorfpa ecoypa lgeeo dv e1r5i ns eleccotuendti rni es
c.1(9p9ce0er n t)
6 Indieax'psor ratt rieolsa ttowi ovreel xdp oarntdds e veloping
counetxrpyo1 r9t5s0----,9 0
7 Indieax'pso rtrsa/tG1iN9oP5, 0 -87
8 Thceo mponoefgn rtodsso sm essatviicin nIg nsd piear:ai voedr ­
age(spc eeron ftG DPa tm arkperti ces)
9 Indinaep'tus b dleibtcto G NPr at1i9o7s0,- 87
IOA comparoifcs oonns upmreiric nIe nsd ainaod t hdeerv eloping
count1r9i5e0(s-p,9ce 0er cn hta nogveep rr evyieoaurs)
AlA verlaigefeex pecattba inrcitynIh n d1i9a5,1 -91
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