This is a collection of essays in honour of Vijay L. Kelkar. Starting his career way back in 1977 as the economic adviser in the Ministry of Commerce, he rose to become Economic Secretary and also had a stint as Executive Director of the IMF. He was perhaps the first to predict India's shift to the near-double-digit growth path — that was in April 2004 when he delivered the “K.R. Narayanan Oration” at the Australian National University. The title of this book is borrowed from that Oration.

Kelkar's early work resulted in the passing of the Fiscal Responsibility and Budget Management Act (FRBM) in 2003. Fortunately for him, either by design or accident, the 13th Finance Commission (TFC), which he headed, was given a new term of reference: Issues of fiscal discipline. The report of the TFC is replete with a set of recommendations that are mutually consistent and integrated, alongside a time-table for action. The TFC may well be his ‘Last Symphony' setting forth growth notations. The message is that unless the fiscal base is strong and resilient, there is no hope for a higher rate of growth. In the area of tax reforms, his contribution on simplifying direct taxes brought forth a new code. While commending his contribution, Surjit Bhalla elaborates how the Laffer Curve, although abandoned elsewhere, continues to operate in India.

As for indirect taxes, the reform measure, the Goods and Services Tax, has had a chequered history. The TFC proposed a single GST to be implemented in phases till 2014 based on contractual arrangements between the Centre and the States, with a provision for safety net and incentives. Some analysts find these suggestions simplistic and unworkable. Sadly, there has been a setback on this with no agreement in sight.

Growth potential

Issues related to growth and potential for growth are examined in some chapters. When Kelkar took an optimistic view of India's ability to maintain double-digit growth, he was unaware of the magnitude of India's integration into global markets and the risks attached to shocks from abroad. In fairness, the entire community of economists was unprepared for any major shock at that point. With the experience of the crisis in mind, Arvind Subramanian suggests a relook at some of our policies. He feels that under the changed global conditions, India has to adopt a policy of self-insurance and calls for “counter-cyclical policy-dampening flows and keeping the currency competitive — so that reserves can be built up during good times.”

Nitin Desai provides a historical account of India's growth. He doubts whether India could maintain a growth rate of nine per cent, given the current constraints. The structural changes required are daunting, and he ends with a poser: Do we have a political system that is capable of propelling us in that direction?

Indira Rajaraman's piece on “transparency in macroeconomic policy” is short but scintillating. She questions the practicability of maintaining transparency in monetary policy with multiple objectives. In her view, the Reserve Bank of India's “Guidelines on Securitisation of Standard Assets” (February 2006) provide exemplary prudential arrangements, which can serve as a role model for the world.

While S. S. Tarapore takes a look at policies for sustained macroeconomic growth in a rather rambling fashion, Shubhashis Gangopadhyay examines an interesting area relating to land acquisition for infrastructure projects — an issue that has, of late, become contentious and triggered protests in several States. The idea promoted is that unless land becomes a liquid asset that is marketable, there would be roadblocks to growth. Unfortunately, land is too much rooted in geography, culture, economy, and ethnic identity and cannot be converted into a tradable commodity.

In his paper, Bibek Debroy provides a detailed account of the tardy progress of our elementary education programmes. He takes the disturbing view that “the buck has been passed on to the private sector, with the government abdicating its provisioning responsibility, though not its financial responsibility.” On the whole, the authors deal with growth-related issues in an open manner, not bound by any economic ideology, and the ideas are close to Kelkar's heart.

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