Soon after the new chief economic advisor (CEA) was appointed in 2014, a senior finance ministry bureaucrat told me that when Narendra Modi saw the file he asked two questions. One, why did the same names keep cropping up over the years? Two, are there no economists in India?
In the end, Modi imported two economists. One is now the head of NITI Aayog and the other is the CEA. A third will soon join the Reserve Bank of India as deputy governor. Everyone assumes they will play a positive role merely because they have a foreign degree.
Had Modi been a reading type like Manmohan Singh, I would have sent him a book by J Krishnamurti, a former professor of economic history at the Delhi School of Economics. In 2009, he wrote a book about the forgotten economists of India, all from before 1947, of course.
Jawaharlal Nehru had seen no use for them and turned wholesale to imports. At first they came from England. The 1970s onwards, the balance tilted towards the US.
The result is that today the way we think about India’s economic problems is through a Western method, which is not necessarily wrong. But it is inadequate because it is not rooted in the sociology of our country.
The economists trained in the West, who have served in government so far, have been lacking in a sense of what was called political economy. They are all fine technicians but what use is that if they are playing with the wrong Lego set?
Western Marxists, American evangelists
Until the mid-1950s the top economic advice came from ICS officers, all of whom had been trained in Oxford and Cambridge. But they were managers, not economists. They were jugaadus.
Then the West-trained economists started coming. The ICS managers had little use for them.
Then in 1964, Nehru created a new service called the Indian Economic Service (IES). The economists who opted to join this service eventually did well, relatively speaking. The rest didn’t because the IAS inherited the ICS tradition of pooh-poohing economists. So did the West-trained economists, who squashed the home-grown ones.
A new caste system was created. It persists to date. Within the new caste system, Indira Gandhi created a fresh doctrinaire schism — Leftists and not-Leftists.
A selection bias quickly became visible in favour of the Leftists. So many not-Leftists pretended to be Leftists. One of them even went on to become prime minister.
A new phase started in the late 1970s and 1980s. American evangelists trained in the International Monetary Fund and the World Bank started joining the government.
But many of them trimmed their sails to the Left-oriented political wind that Indira Gandhi liked to blow. They also thrived.
In the mid-1980s, under Rajiv Gandhi the evangelists gradually became more influential. They acquired huge clout after the 1991 crisis was resolved to America’s satisfaction.
This bunch ruled the roost for almost 25 years. Its intellectual legacy is still strong. The brotherhood, however, has begun to droop a bit.
Made in India, Modiji
Modi was expected to encourage home-grown economists, but he has not. Maybe he thinks he doesn’t need economic advice. Maybe he thinks what he gets from accountants in the Rashtriya Swayamsevak Sangh is adequate. This adventure with demonetisation is certainly suggestive of that.
But now the time has come for him to buckle down to some serious policy work. And for this, he needs to consult persons trained in economics — in India.
This is not to say that those with foreign PhDs should be disqualified. But there are hundreds of economists with Indian PhDs, who should not be rejected ab initio as they have been so far.
The point is this: The success of Western economics is rooted in their societies. Our borrowed economics has failed because it was not rooted in India. Also, the West now turns out mere technicians. They are necessary for number crunching but not sufficient for socially-rooted economic policy.
In conclusion — and at the risk of being labelled a chaddiwala, saffronite, and bhakt — I must ask whether the time has not come to at least look back to Krishnamurti’s work.
It will show us how lacking we are in useful economic intellect.
(This is the first in a six-part series)
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
