The misallocated economists of India

This is the silly season for economic policy, though some would say it’s been that for five years now. It is therefore a good time to take stock of the sort of economic advice that is tendered in our country.
 
This necessarily involves taking stock of the sort of economists we have. The result is dismaying.
 
The overall problem is that India has far too many macroeconomists and too few microeconomists. Thus, I had pointed out a few weeks ago specifically in the context of the closure of Jet Airways and the aviation business generally, India has around three transport economists. This is surely very odd for such a capital and labour intensive industry.

 

That’s not the only problem. Ever since the data bug bit the profession about 40 years ago, very few Indian economists know much of economic theory or economic history. Both are scoffed at with a sneering, “show me the data”.
 
What this has meant is no data, no economist to think beyond the immediate. Our economists are mere data crunchers which means robots will replace them soon.
 
What is truly worrisome is that the sort of analysis we saw in economics till about the mid-1970s is now virtually extinct. This despite the fact that an overwhelming proportion of ‘Nobel’ prizes in economics have gone to theorists.

 
Go deeper and you will find that among the macroeconomists, barely a handful have been trained in formal econometrics. The rest just wing it on software. Indeed, now even budding lawyers have started doing it. It will be doctors next, I suppose. Chartered accountants have already got in there.
 
This sad story doesn’t end here. We don’t have economists who have specialised in the high-impact field of law and economics. That area, too, has been left to chartered accountants who only study the finance bill and make pronouncements.
 
As to economics’ younger sister, sociology, perish the thought. India’s economists don’t allow themselves to be tainted by something as "flaky" as sociology.

 
More orphans
 
The mother of all shows, of course, is monetary economics. Ever since the FIIs flooded into India, monetary economists have blossomed like bananas in Kerala. The only thing they need to know is the term "yield" which makes it easy. The rest, yes, you guessed it, is data. It's extraordinary how much time is devoted to discussing the financial markets, as if we are major players on Wall Street.
 
Amazingly, given that fiscal matters loom so large on our economy’s horizon dominating everything, we have very few specialists in public finance. I doubt if it is even taught any longer in our universities. Everyone is content just tediously analysing the Budget.

 
Then there is industrial economics. Three decades ago, some Indian economists like Ashok Desai and TCA Anant tried to develop the field.
 
Nothing came of it because this time even though the data was there the effort was too much. Result: India’s industrial policy has always been made in an intellectual vacuum by politicians and bureaucrats who have degrees in biology, zoology and geology.
 
Oddly enough, we do have a lot of agricultural economists. But if you ask my colleague Surinder Sud, who is an absolute master of the game, they don’t know the difference between the various types of Indian soils, let alone anything else. But since the data is there they hold forth incessantly, mostly about MSP!

 
Ditto for international trade. The world collects the data, and our lads joyously piggy-back on it without the faintest clue of industrial economics which, I would think, is the minimum you need to know to be a good trade economist. I asked one of them the other day about the cost structure of India’s textile industry. He waved me away.
 
More of the same
 
And what about sustainability issues and environmental economics? These are taught only in a handful of places and there are too few economists who know anything much about the subject that can be of use at the local and regional levels. Go to any seminar and you will see the same faces talking about carbon emissions.

 
And how many universities teach urban economics? How many economists do you know of who specialise in it? This in a country that is haphazardly but rapidly urbanising and needs such economists like a pig needs a pool of mud.
 
These gaps are clearly reflected in the amount of published research in most of these areas. Why, we have only two or three Indian journals in which it is considered all right to publish. As a result, the Economic and Political Weekly has become the acceptable substitute for our universities.
 
The worst consequence of this debility is that we import NRI economists who, with one or two exceptions, are not quite the sharpest pencils in the box.

 
It is like buying Chinese products. Okay, but not really German engineering.