Book Review: The Lost Decade 2008-18

Last week I finished reading Puja Mehra’s book The Lost Decade 2008-18. The book is about the twists and turns Indian economy went through between 2008 and 2018. It is a very crucial period to understand why our economy is in such a mess today. The great thing about the book is that it shows how politically wise decisions may not always be good; they might even prove to be detrimental. Thus, Mehra shows that economics and politics are inseparable. There is simply no economics without politics. This will be explained further in this blog, but first let’s understand the writing structure of the book.

Mehra has divided the book in four chapters which talks about the global crisis of 2008 and India’s cautious response to it, the recovery destroyed from 2009, a slow recovery again from 2012, and another recovery destroyed from 2016 respectively. Of course, each chapter contains many subheadings. She has done a lot of research, talked to many of the high – level bureaucrats, interviewed the ministers of the time, and has written some amazing insights. Besides that, the cover page of the book was what I found attractive.

The book may be slightly technical for those who do not have any background in economics, but those are some basic terms which can easily be understood, if one is willing to.(For example ‘bottleneck inflation’ could be an alien word for some, but a simple Google search can tell you that it is inflation caused by constraints in production. So when the production of a good falls, and the demand for that product remains as it is, it pushes the prices upwards because same amount of money is now chasing less number of goods.) However, Mehra has tried her best to write it as simply as she can. Now, let’s come to the content of the book.

Basically, the book argues that bad politics (by any party) wrecks the economy of the country and it is a huge toll on the common people. As Mehra writes, “This book is not a study in contrasts between the two regimes that occupied office in this decade (UPA and NDA). Nor is it about politics per se. it is about the impact of politics on policies and the economy.” In the aftermath of the 2008 global crisis, India responded with a calculated move of increasing the liquidity, or to put it simply, increasing the flow of money into the financial system. It was done by ignoring the ongoing target of controlling inflation, for some time. It had positive impact on the economy. People didn’t lose trust in the Indian markets at a time when the market of the biggest economy in the world, the US, was going through its worst phase since the great depression. One could say that we had safely ducked a deadly bouncer by the Caribbean pace bowler of the 80’s. Soon India faced horrifying terrorist attacks. At this time, Manmohan Singh, the then prime minister, puts his best man P. Chidambaram in the Home Ministry. Chidambaram, who had nearly succeeded in fighting the global crisis as the Finance Minister, was replaced by Singh himself as the FM. After some months, Singh had to go through his coronary bypass surgery and would be away for 4 weeks. Pranab Mukherjee was given the finance ministry (maybe by UPA chairperson Sonia Gandhi) in place of him. Mukherjee with a mindset of the 70’s went on to take the decisions which proved to be a disaster for the country’s economy. Even when Singh was back to work, he remained in – charge of the ministry. Mukherjee, trapped in his socialistic ideology, remained stubborn to the experts and his decisions ultimately resulted into ‘policy paralysis’. In the year 2012, he was persuaded to become the President (and leave the finance ministry, as intended by Singh). Chidambaram again took the charge and tried to put the economy back on track. It was too late. Although, he did take some good steps, but public anger and pressure from the opposition cost UPA the 2014 elections.

This led to the rise of the charismatic leader, Narendra Modi. Modi, previously the Chief Minister of Gujarat, was “able to convert the tremendous pessimism in the country into a near – irrational exuberance.” He had a strong dislike towards intellectual inputs, but wanted ground results. A consequence of this was that unlike UPA government where advices were ignored, experts faced huge backlash in NDA’s term. Ila Patnaik, Arvind Panagariya, Arvind Subramanian, Raghuram Rajan, Urjit Patel, Viral Acharya, P.C. Mohanan, and J.V. Meenakshi were some of them who left the ministry or the RBI directly or indirectly because of the government. It was the first time this had happened. Hence, the Modi-government refused to act on the issues like the burgeoning NPAs of the banks. Although, many welfare schemes like Ayushman Bharat, or Direct Benefit Transfer schemes were launched, but these are not the reforms which will end poverty. The growth rate from 2014-18 was quite high (which by the way slowed down after 2018) but as Mehra’s cover page says, it was a growth without a story. There was no reflection of the growth rate on the ground. Hence, the whole decade got wasted.

To conclude, I would definitely recommend you to buy this book. It gives us the inside story of what really happened during moments like the sudden declaration of Demonetisation. It gives answers to questions like why ajatashatru (man with no enemies) Pranab Mukherjee couldn’t persuade the opposition to implement GST. Overall, it is an insightful book.

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