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This two-volume book by former Central Banker is a welcome addition to the literature it addresses even though it sounds anti-financial liberalisation. This is because a perceptive reader would find that it advocates that 'guided market' which is rooted in India's socio-economic milieu should lead this liberalisation, rather than the ethos of the Western developed countries. Similar wisdom seems to have now dawned among the multilateral agencies which advocated most of the financial sector reforms as a part of the structural adjustment and liberalisation programme related conditionalities initiated in mid-1991.
The book assesses the impact of financial sector reforms on India's economic development and the nature of financial system that emerged during the 1990s. It is a collection of 95 articles and is organised around nine aspects; Volume 1 covers Reforms, Central Banking, and Interest Rate Policy, while the second volume deals with Monetary Management, Public Debt Management, Commercial Banking, Industrial Finance, Rural Credit, and Agricultural Growth and Food Policy.
Whereas the coverage is comprehensive, quite many articles are highly repetitive. To an extent the repetition is inevitable for the author has dealt with major pronouncements on financial sector reforms. Nonetheless, had the author edited these articles the reader would have benefited from not being taxed for his/her patience, shorter book, and also from the author not blowing hot/cold towards these reforms.
I would therefore review the book by considering Mujumdar's major contributions by developing an analytical framework around its three central themes rather than review each article. These three themes are: one, the contextualisation of the financial sector reforms; two, reforms related to the role of financial system; and three, the interest rate reforms. The review will also attempt to illustrate what according to the author are positive or weak reforms for each of these three themes.
On the first theme of contextualisation of the financial sector reforms, the author rightly contends that its two aspects have not been well considered. First is India's development imperatives for (a) high growth in employment, (b) shared economic growth and (c) food security in devising various reforms have been alienated through a tight monetary policy. Even for poverty alleviation Reserve Bank of India (RBI) considered that "there cannot be any better anti-poverty programme than inflation control". And...