Institutions, incentives and economic reforms in India / edited by Satu Kahkonen and Anthony Lanyi

India embarked on the process of economic reforms in 1991. After an initial spurt, there has been a distinct slowing down as evidenced by relatively low industrial growth and per capita incomes. The contributors to this important Volume maintain that a country cannot achieve economic growth and development simply by having the government not interfere in the economy. To the contrary, they argue that without the appropriate institutional and political underpinnings, economic reforms will be only partially successful. Not only could they fail but they may even lead to outcomes that are worse than the original situation.

The discussions are set in the framework of the 'new institutional economics' which encompasses the fundamental legal, political and social rules that establish the basis for production, exchange and distribution. Understanding these factors implies a reform effort which is broad-based and multi-pronged and which takes into account incentives for the stakeholders in both the private and public sectors.

The original essays in this volume illustrate the efficacy of this new institutional approach with reference to a number of crucial policy areas-privatisation, fiscal policy, agricultural reform, labour policy, and financial sector development. In each of these sectors, the contributors demonstrate the need for a reform effort based not only on known policy prescriptions, but also on n devising means sof overcoming those institutional factors and Incentives which impede reform. Among the issues discussed are the interplay of centre state relations and their impact on policy, the poor incentive structures faced by both tax payers and government officials; inadequate coordination among different levels of government which results in the poor delivery of services; outdated marketing strategies that impede agricultural growth; and strategies to improve the operations of the financial and labour markets.

With its fresh insights into the understanding of successful economic reform and its unusual interdisciplinary approach, this timely and fascinating book will be of considerable interest to economists, political scientists, planners and sociologists, as well as to the general reader with an interest in public affairs.