Reflections On Free Market: Economy, Capital Markets,

Banking, Forex Markets And Governance

by G. R. K. Murty

… The book in general deals with a wide variety of issues,

challenges, and opportunities that have confronted mankind for the
last few years. The articles offer a sustained and scholarly analysis of
significant developments of the day in the country and abroad over
the last few years.

Section one of the book consisting of 30 articles, discusses the

specialized contexts of the modern economy with reference to
globalisation. In the very first article, “Growth: The Other Side”, the
author says that with the advent of globalisation, India is
experiencing a boom in the service industry, mainly through the
deployment of human capital, which in turn has made India emerge
as a hub for Business Process Outsourcing (BPO) and Knowledge
Process Outsourcing (KPO). Turning to the vexed issue of
reservations, Murty contends that the current increase of
reservations in IITs and IIMs, in the backdrop of globalisation, would
surely undermine the national interests of the country. However, he
asserts that “it is time companies walked beyond resenting
reservations and exhibited a sense of social responsibility by
undertaking various skills development activities for people in areas
around their workplaces and made them employable”. It is not
‘reservations’ that the Government should aim at, “but develop
human capital in partnership with corporates”. Furthermore, the
author comes up with certain remedies that will reduce the gap
between the ‘haves’ and the ‘have-nots’. He suggests the creation
of community vocational centres that can retrain those who will or
are likely to lose jobs, and make them reemployable. Murty also
covers a variety of issues and topics ranging from an obituary of the
renowned economist Professor John Kenneth Galbraith to foreign
direct investment and the condition of life insurance corporations,
etc.
The theme of Section Two of the book is Capital Markets and it
comprises 15 articles. In the very first article “Sense and Sensex”,
the author observes that the stock markets are changing every day.
He warns the prospective investors to be ever ready to change their
investment plans with agility. He argues that volatility would haunt
the Indian market so long as it is in the growth phase. While
discussing the Indian aviation industry, the author claims that it has
at last come of age, through the opening up of Indian skies for
private carriers. While discussing the role of culture in the Indian
market, the author, in a separate article, pointed out that “It’s not
the economics that matters in making a country investment-worthy
but its very fabric of culture—values, ethics, and morals”(p. 160).
The author further says that in a globalised market no one can
afford to ignore the fact that money moves in and out of markets
with an exclusive concentration on ‘profit’ and nothing else.
Investors do not hesitate from shifting their savings from one locale
to another to earn more profit. Murty seeks to reconceptualise
economics from a growth orientation to that of stewardship.

The Third Section of the book dealt with the various features of
Banking. The article, “Recent Rise in Undesirable Consumerism:
‘Credit’ to Credit Cards” is particularly contemporary and worth
reading. He says that a new philosophy of life has emerged since the
launching of economic reforms by India in 1991 and believes this
trend may become dangerous sometimes. Murty warns that “living
today on tomorrow’s likely earnings is as suicidal as playing with a
tiger”, which is giving shape to a new theory of consumer choice.
But, at the same time, the credit card culture is blind to the
essentially relational aspects of human life. In another article the
author opines that in today’s globalised economy, the current ways
of doing business in the country are not good enough to stay
competitive in tomorrow’s market. Therefore, the organisations
have to invent new ways of competing. He has thus tried to
establish the importance of ‘synergy theory’, which states that
when two banks combine they should be able to produce a greater
effect together than what the two could do independently. But, the
author also cautions that if the mergers are not successful this may
end up with the proverbial farcical result! The underlying theme of
the different articles of this section is that wealth sometimes has a
negative utility beyond a middle point. At the same time it is obvious
from the author’s discussion that there are ample world recourses
to secure the three basic rights for all.

Murty with his characteristic aplomb claims that it is not only human
beings that have character but also the corporates. It matters most
in corporates because they thrive on the capital of many (p. 226).
Section Four deals with the Forex Markets, especially convertibility
of currency. He discusses the impact of Asian Crisis of late 1990s in
the Southeast Asian nations. He surmises that a platform for the
free flow of capital should be developed, especially on the fiscal and
monetary fronts before opening up for free flow of capital across
borders. In a very interesting article, “Who is Great: God or the
Economist?” the author pointed out that “history testifies to the
fact that prior to the world wars, growth in world economy was
abysmally low, since it remained essentially provincial. The cross-
border flow of goods was minimal and the capital investments were
mostly within sovereign boundaries.” Obviously, this resulted in
orderliness in the management of money. But, this inflicted silent
suffering on those “who were not endowed with natural
resources?” (pp.252-253). Murty asserts that it is time for the
Government to take bold initiatives for improving infrastructure and
thereby give a boost to economic growth which in turn can
generate more employment and arrest ills of poverty to a tolerable
level of a civilised society. “Are we not entitled to leverage on the
current strengths of the economy?”(p.261) only time could reveal
the extent of our success.
In the Final Section the articles converge on the theme of
Governance. In this section at least two articles analysed the recent
Indo-US nuclear deal. The author shows how national interests are
integral to good governance and humorously concludes: “In today’s
context ‘national interest’ is the only guiding post and everything
else becomes secondary to it and the sooner we practice it, the
better it would be. God alone save us, if we do not know what is in
our interest!”(p.305).

The book offers a practical agenda for beginning the fundamental

reorientation of the new global order. The book evolves in the form
of commentaries analysing everything under the sun—from
governance to public affairs, from banking to the economy, from
capital markets to the forex markets, and from insurance to the
latest US-India nuclear deal. The range and sweep of topics and
issues covered is extensive indeed. As B. Ramesh Babu puts it in his
Foreword to the book: “In this age of specialisation (i.e., to know
more and more about less and less till you know everything about
nothing!) and knowledge revolution to find such generalists, as GRK
Murty is rather refreshing”(p.11). Undoubtedly, the author is
pushing for the welfare of the teeming millions of our countrymen
and pleading for common sense in public affairs on a wide variety of
issues, challenges and opportunities that threatened the nation
over the last few years. The book is thus a valuable addition to the
accumulating literature on the study of Economics, Management,
International Relations as well as History. However, understanding
this book is not every one’s cup of tea. The language is lucid, the
sentences are meticulously framed, and every word Murty used has
its own metaphorical meaning. The ultimate essence of the book is
that in the age of globalisation, it is important to recognise,
understand and discuss Indian culture and cultural differences. This
canvas is very wide and his brief sketches elucidate almost every
subject on earth. Even the titles of the article are very well chosen.
The book in general recognises the importance of understanding
contemporary India against the global backdrop. Globalisation in
the 21st century is a compelling process and no nation, including
India can negate. But, the developing nations must adopt to the
process in their own positive ways: “One thing that is certain in a
globalised economy is that we need to be doubly right in picking up
the sounds of flapping wings and be instantaneous in our policy
responses to those global sounds (changes); else we may risk being
left far behind in the race.” The book conveys two broad ideas. First,
a sense of balanced civic nationalism, which is bereft of ethnic or
communal overtones. Second, a sense of rationality that warns the
nation with characteristic panache bordering on pun.
Reviewing this kind of book is a Herculean task since the range of
themes addressed is so very wide and varied; and not directly linked
with one another. However, the Management Schools, at the same
time the financial institutions and universities will find this book
worth reading. Students and teachers alike are recommended to
read this book to get an idea about the current economic scenario
of the country. The scope of the book is contemporary and its
language trendy. The cover of the book is well designed and every
care has been taken to avoid errors and omissions, as it is evident
from a careful reading of the book. Students of literature will also
like to adopt this book as a rapid reader for its lucid prose!

Dr. Tridib Chakraborti,

Head and Professor,
Department of International Relations,
Jadavpur University, Kolkata.
E-mail: Tridibc2001@yahoo.com