Industry is central to a country's economic prosperity. Independent India inherited a fledgling industry and widespread social disparity. With a view to nation building the new government at that time adopted a mixed economic model, and took upon itself the responsibility of planning industrial growth and regulating the economy. In time, with successive governments the regulation became controls. The huge public sector enterprises initially set up to give a boost to the core industries, proliferated and became unprofitable and unwieldy. Together with bad governance, restrictive industrial and trade policies, poor financial management, the industrial growth was slow and development distorted. The economic model did not achieve its well meaning social objectives, and in the early nineties the country found itself in a financial and economic crisis. Economic reforms on advise of the World Bank and the International Monetary Fund was introduced in a phased manner. These aimed to stabilise the economy in the short term, and in the long term create conditions for a sustainable growth, through better financial management and policy changes. The New Economic Policy sought to reduce government interference in economic matters, and in essence, intended to make the industry and trade breathe freely. Restrictive policies gave way to liberalisation, both from within and from without. Dr. Palande having thus educated the reader, in the introductory chapters of his book on liberalisation, makes an honest attempt to follow what happened thereafter.

On macro-economic level the first task was to bridge the gap between the demand and supply, and control the spiralling inflation rates. Huge budgetary deficits, internal and external debts had to be lowered and the dwindling foreign exchange reserves stocked up. The stabilization measures introduced did meet their short-term objectives. For long-term reforms, the Structural Adjustment Programme, a World Bank reforms package model was adopted. Fundamentally it aimed to deregulate the Indian economy and merge it with the world economy. Changes were broadly introduced in the areas of industrial licensing, MRTP Act, small scale industries, public sector, taxation, banking, insurance, corporate laws, government expenditure export-import policies, foreign investments and technology agreements. The book engages each of the topics effectively across several chapters.

The main focus of the book lies in the four chapters devoted to how the industry actually responded to liberalisation.

It was feared that liberalisation, with the entry of big players would hit the small scale industries most, as they, with their low technology base, inadequate flow of credit and restricted reach to the market were the least competitive. Dr.Palande devotes several sections to these problems. He suggests that the apprehension of the small scale industries that they would be wiped out in face of competition, is unfounded as their product lines are usually different from the large industries. Moreover, the small scale industries could thrive in a symbiotic relationship with large industries as ancillaries. Unfortunately not much is presented on the present situation of the old and the new small scale industries.

The medium and large scale industries according to Dr. Palande have broadly reacted to liberalisation in two ways. Those industries which were into business just because they could get a government licence, and thrived on subsidies with no emphasis on the quality of product and services find themselves in a spot and face closures or takeovers. They are the most vociferous opponents of liberalisation. In contrast, quality manufacturers or service providers who were willing to change their policies according to the marketability of their product or services, in face of compition were not only able to survive but showed a sharp growth. The industrial houses which had diversified into various sectors are presently trying to consolidate into areas in which they are most competent. Changes in management style, increased inputs in R&D, better quality control and investment in employee welfare are some of the strategies adopted by them. Large industrial houses consider competition from the external sources to be more potent that from internal competition. They feel that the process of liberalisation should be slowed down so that they have more time to adjust to competition. This issue has political overtones as the entry of MNCs have revived in some quarters the, 'swadeshi' sentiments of the pre-independence era.

Dr. Palande points out that the Indian industry has been giving the country a raw deal, a take it or leave it attitude. The MNCs entry provide the consumer with an 'alternative'. They are bringing with them improved technology, funds and most importantly new management techniques making the Indian industry more dynamic.

Several public sector undertakings are presently under the axe of disinvestment. Dr. Palande devotes a full chapter and discusses at length the whole issue of the public sector, their competitiveness in the new regime and most importantly their very existence. Since the public sector contributes significantly to the entire supply chain in India any disinvestment has to be with caution.

There are several areas like the labour policy that are yet to be reformed. Dr. Palande identifies and highlights those in his concluding chapters. The government could well benefit from his suggestions.

The book reflects Dr.Palande's varied and rich experience in the government and outside. Though he chooses to convey his ideas in many words, nevertheless the book makes an interesting reading. It is recommended as a background reading in management courses, to senior executives in the industry and senior government functionaries.

Reprinted from Journal of Scientific and Industrial Research, vol.60, April 2001, pp 349-353]