September 12, 2014
I’ve finished reading Prof. PV Indiresan’s 2003 book, Vision 2020 and commend it to everyone. I’d rate it 7 out of 10, i.e. definitely worth reading. (Btw, you can read most of the book on google books.)
My earlier impression of PV Indiresan’s work has changed – for the better.
Overall I find that he has a broadly anti-socialist, anti-Keynesian perspective. That did not make him, however, into a classical liberal, for virtually at no place in his book does he base his ideas on liberty, and often settles into planning/ technocratic approaches. A lack of ideological foundation means that his ideas – often creative – are not always consistent, being also not tested on any fundamental policy framework. He was definitely one of the better policy thinkers India has produced, but I’d argue that his work left much to be desired. Had he incorporated elements of Chanakya’s Arthashatra and FA Hayek, he would have produced the best possible ideas.
This does not mean I have changed my mind about his proposal New Paradigm of Rural Development – to micro-manage rural development (refer to my blog post of 19 March 2014). While this paradigm doesn’t involve too much dabbling by the government, it cannot work without government subsidies. Having said that, there is much good in this proposal that needs to be used by urban/rural planners.
I’d argue that Vision 2020 displays a superior understanding of urbanisation than his (other) proposal on rural development. In the book, he notes that agriculture can’t drive India’s future prosperity, that cities need planning, and that capital-intensive heavy duty infrastructure is critical to kick-start growth. On these issues he makes a lot of sense.
As I showed earlier, he had arrived at state funding of elections as a way to reduce political corruption. And he was ambassador of CCS’s school choice program (although in Vision 2020 he has written almost nothing about the use of markets for procurement of government services).
Overall, PV Indiresan was 80 per cent of the way towards classical liberalism. I wish he had spent time to form a better understanding of the price system, spontaneous order, self-regulation and competition. But he was an engineer (a brilliant one at that), and expecting engineers to understand economics is a bit of a stretch – the mindset needed for these two disciplines is entirely different. That said, he would definitely have supported the SKC reform agenda and distanced himself from most policies of AAP/Congress/BJP.
Most of his good ideas already form part of the SKC agenda. I’ll polish up a few areas (e.g. infrastructure) to reflect his thoughts.
With this, I’ve now published six blog posts on PV Indiresan, with the previous five of them being:
- PV Indiresan was firmly against Keynesian ‘pump-priming’
- Prof. PV Indiresan had arrived at one of the two key solutions to governance reforms in India
- Prof. Indiresan’s excellent promotion of capital intensity for creation of public infrastructure
- Why India must move from agriculture to manufacturing and services: Indiresan was very pro-business
- Critique of P.V. Indiresan’s “New Paradigm of Rural Development” (Mar 19, 2014)
Below is my summary of his thoughts in Vision 2020. Do refer to the original work to understand better. My copy is fully ‘scratched’, as I have made notes all over the place, often in a moving bus.
- Democracy is not an end in itself (p.106)
- Income inequality is the natural state of society (p.8)
- Supply, demand, marginal effects
- Price discrimination (p.31)
- Anti-Keynes (p.94-94, 132-133)
- Infrastructure charities – that build public infrastructure (p.62);
- How capital intensity creates jobs (p.20-21);
- capital intensive public goods are better (p.26);
- against appropriate technology (p.89)
- How big infrastructure is needed to kickstart an economy (p22);
- infrastructure to eliminate poverty and create jobs (p.27, 33);
- how housing and construction can play a big role (p.81)
- opposition to agriculture-led growth (p.84)
- Need to shift from agriculture to industry and services (p.85)
- Need for urbanisation (p.42)
- urban density saves petrol;
- Need for intense urban planning: (107,108)
- Planned – Mauritius example (p.45);
- Housing sector– will create jobs (p.17)
- Reduce red tape (p.55) and become more business friendly (p.77);
- simplification of property transactions (p.76);
- For small sector: no reservations (p.60) but liberalise credit including micro-credit (p.81)
- Globalisation has benefits (p.58)
- Labour market flexibility (p.81,82)
- Distorted incentives of the bureaucracy (p.136-137, 140)
- Need to focus on administrative reforms (p.86)
- Judicial reform (p.87)
- Need for local governments to raise own taxes (p.147)
- Need to simplify property transactions (p.76)
- Administration must take a whole of Government perspective (p.50, 113)
- Why subsidy is bad (and why cost recovery is important) (p.27, 28, 30); against unemployment benefits (p.61)
- Why government doling out schemes will destroy wealth (97)
NOT AS GOOD
Misunderstanding about the effects of competition (p.58)
Insufficient understanding of economic liberalisation (p.69-71)
PURA/ ring road model: Satellite cities should definitely be supported by infrastructure, though.
Limited vision for India’s ultimate economic status: Believes the maximum India can achieve is equal to the per capita income of the world average in 2002. (p.106)
Theory of the state entirely unrelated to freedom (intellectuals/ politicians/ planners/ administrators) (p.5)
Poor understanding of costs: states that the cost of water/ waste disposal/ cooking gas connectivity, etc. is 10 times cheaper in rural areas than in urban areas. It is quite the reverse.
Poor understanding of salary structure and incentives of bureaucrats (p.80, 148)
Considers Sweden the best socio-economic system (p.6)
Has a communist/ universal subsidy model for 100 sq m land for each family, school, dispensary (p.13) [This contradicts his anti-subsidy stance elsewhere]
Asks the state to direct credit into consumer goods (p.95)
Thinks that the Planning Commission’s plans mean something (they don’t ) (p.113)