Fiscal policy is one of those unusual subjects on which there are more people who hold an opinion than know what it means. More worryingly, political leaders get to shape it often with the most rudimentary notion of what it implies for the economy. Yet the importance of fiscal policy is immense. Wrongly done, it can stall growth, increase bureaucratic costs, fuel inflation, and cause income distribution to deteriorate. And, by the obverse, it can contribute to enhancing our well-being on all those dimensions if it is designed right.
I am especially sensitive to the importance of this subject because I learnt what I did by fire, when I joined the Ministry of Finance in New Delhi, in 2009, as Chief Economic Adviser to the government. Fiscal policy was my major concern during those nearly-three years that I spent in government, by virtue of the fact that a large part of the work in the Ministry of Finance is related to the Union Budget. I had acutely felt the need for more research and better books that connect the tomes of work on the theory of fiscal policy done in universities and specialized research institutes to the challenges faced by India. And the challenges were, and are, many. India's tax revenue collection is too small compared to its GDP. If this can be enhanced by another 50%, which is entirely within the realm of the possible, the country can have vastly better infrastructure—ports, railway, roads, power—and it could do much more to promote health, nutrition, education, among the poor, thereby closing some of the earnings gap and also promoting overall growth. India has systems of distributing food grain, health services and education to the poor but the organization is complex and plagued by fiscal leakages.
I am delighted to have in my hand a book which begins to deliver on precisely this need. India's Fiscal Policy: Prescriptions, Pragmatics and Practice edited by Supriyo De stands out for its effort to bring together the best of theoretical knowledge and ground realities of India between the covers of one book. It is also surprisingly topical.