Tuesday, April 14, 2009

Book Review: India Unbound - Gurcharan Das

I had the book titled "India Unbound" (by Gurcharan Das) for a long time. Finally I got time to read this book on the flight.

Gurcharan Das discusses the economic policies of indian government since independence. Narrated in first person, the book does an extremely good job of putting the economic policies of indian government in perspective and how that impacted the indian society. Gurcharan Das, born and brought in India, went to Harvard for his bachelor's degree in Philosphy and then came back to India for work. He started working in a small team of 12 people trying to market Vicks Vaporub.

He discusses the huge investment in public sector as planned by Nehru, then the license raj and rationing perpetuated by Indira Gandhi and finally economic liberalization brought in by Narasimha Rao. He blames Nehru not for the large public sector investment but for his poor management of his own vision. He believes the delay in implementing economic liberalization and perpetuation of stricter license raj had been the worst thing that happened to India, whose blame squarely falls on Indira Gandhi.

The book argues that the economic model of controlling production, distribution and consumption of good through license raj, rationing and higher import duties have been the main reason for India's economic backwardness. It argues that the economic freedom that was obtained from Britishers was unfortunately handled to Indian bureaucrats who had no idea about business. The balance of payment crises that came in 1991 was handled much better by Narasimha Rao and Manmohan Singh. Instead of increasing import duty and restricting money flow outside, the economy was liberalized by reducing import duties, reducing protection for domestic industries and removing the red tape of licensing raj. Definitely opening up the market turned out to be better than the bureaucratic control.

Beside an easy analysis of indian economic policies, what I found really interesting in the book is the large number of important people that Gurcharan Das met himself or read about. Understanding stories about these people, how they became successful or why they failed is one of the important contributions of this book. His experience as director of different companies and his work with venture capital firms shows more of his breadth and that makes the book more wholesome.

One common criticism of the book that I found on the Internet was that Gurcharan Das is a supporter of unfettered capitalism. However, I feel such boxing of him into a class is quite contradictory to large set of specific problems he points out in the licensing raj. I do not see why anyone should control the market in such a fashion as Indian government did till 1991. If the argument is for the protection to indian industry, I feel that 40 years is way long time for this. The government may have a role in regulating the market which the author agrees with in the book. However, the economic policies were not just regulating but also setting production, distribution and price of a large number of products.

I largely agree with his view of mis-handling of indian economy by the of politicians with very simplistic view of planned economy and little regard for human creativity for growth. However, I feel that there are some virtues of freedom and liberty which should not be sacrificed for any small term gain. Because in many situations, it is very hard to move forward once a person is stuck with a monopolistic product. Definitely most consumer goods do not fall under such category and he is right on that. I found his casual dismissing of the values of freedom and liberty quite disturbing. These values are important for future economic growth.

I would highly recommend this book and I have a copy of it if you are interested in loaning.

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