How diverse stakeholders can come together for success

(Urjit R Patel is former governor, Reserve Bank of India)

Even as 'Recalibrate: Changing Paradigms' - the new book by 15th Finance Commission chairman NK Singh, with 'select insights' by PK Mishra, principal secretary to the Prime Minister - presents the progress and the unfinished tasks of proximate developmental goals that are essential in the life of India, these are contextualized in landmark international agreements, namely, the Sendai Framework for Disaster Risk Reduction, the United Nations' Sustainable Development Goals (SDGs) and the Paris Agreement.

Singh and Mishra have spent a lifetime as administrators, but in select fields. The in-depth domain knowledge and reflective experience comes through with each essay written by a single author, so responsibility for views expressed is unambiguous. The book, with its scaffolding around concepts and practice, is highly readable, informative and thought-provoking. Seemingly arcane subjects at the heart of our national well-being, like crop insurance and disaster management, are dealt with in language that is shorn of unnecessary jargon so that non-specialists can understand them.

As it is written by practitioners, there are some inevitable autobiographical anecdotes. But it is no hagiography. Long stints in specific areas have meant that expertise comes through simple explanation of hypotheses, balanced assessments and personal candour. It is not a book of the kind that "I did this" when an outcome is positive, and "someone did that" when the upshot is undesirable.

If anything, 'Recalibrate: Changing Paradigms' is fundamentally about how diverse stakeholders came together for success in particular spheres. The evolution in respect to sophistication in governance, empowerment and coordination between Centre, states and the third tier is described in detail in the area of disaster management - a truly multidisciplinary subject encompassing science, technology, engineering, mathematics (for, among other things, prediction, and resilience-inducing building codes and reconstruction and the social sciences (for financing and quick rebuilding of livelihood networks).

The people-centric approach to early warning and self-help tips, for example, links science to society and a granulated multi-tiered task management protocol backed by dedicated legislation helps the clear, effective and efficient execution of instruments to intent. As a result, overall, the public's confidence in governments' capability for managing natural disasters with foresight has increased.

Better Infra Intake

The Kutch earthquake in January, 2001 and establishment of the Gujarat State Disaster Management Authority ushered a paradigmatic shift, including owner-driven reconstruction of homes, involvement of the community for rebuilding public goods such as schools, transparency in decision-making and equitable outcomes. The chapter on Covid-19 and future of disaster risk management provides a clear agenda for more dynamic risk assessment tools as the country (and the world) confronts more frequent instances of coinciding multiple disasters. The author is not shy of admitting current limitations and that much work remains to be done.

The wide-ranging interlinked discussion in the chapters on fiscal issues concludes that this glass has been decidedly half-empty for much of the last three decades, and needs to be addressed if progressive objectives (SDGs and climate-related) are to be attained over a reasonable timeline.

The author breaks up the future agenda in this critical area under two broad heads: Attaining the formal commitments post the Fiscal Responsibility and Budget Management (FRBM) Act in 2003 and the FRBM Review Committee Report of 2017, and institutional adjustments.

On the quantitative side, the central challenge is that of a credible pathway from "fiscal forbearance to fiscal rectitude" for the sake of macroeconomic stability. In other words, economic growth cannot be bought by higher expenditures.

In the 75th year of Independence, Mahatma Gandhi is invoked: Economics that hurts the moral well-being of an individual or a nation are immoral and therefore sinful. The author adds, "Rising expenditure financed through unsustainable borrowings and high public indebtedness hurts the moral well-being of a nation". It follows that loose money and inflation are the other side of the same coin. The author is a practical macroeconomist who is not ideology-driven. We should heed his plea.

In addition to fiscal responsibility legislations, India has two constitutional bodies for fiscal federalism operational matters: the Finance Commission and the Goods and Services Tax (GST) Council. The latter's remit, on a standing basis, covers GST rates, while the former recommends, once in five years, distribution of revenues between the Central and state governments, as also between the states and the third tier: A coordinating mechanism between the Centre and states, the author argues persuasively, is now a necessity for a more effective fiscal federalism.

Look Back to Look Ahead

The chapter on the Finance Commission will be a great boon to students of the subject. It provides a lucid historical account of the institution's evolution since the 1919 Government of India Act, and a highly coherent running summary of the main recommendations of all the Finance Commissions since 1951. It is noteworthy that the last two commissions have given explicit weight to forest cover in the revenue devolution -placing credence rather than mere platitudes to mitigating climate change and preserving biodiversity

An additional chapter, that the authors could have written jointly to provide insight on why we end up with an 'avalanche' of legislation, especially in the social sector, would have been helpful. Recalibration of governance must surely address this national predilection.