Lessons from a life

Learning from the illustrious career of T N Srinivasan

The sad news that T N Srinivasan, who was for long one of the pillars of the economics department at Yale University, passed away in Chennai on Saturday should cause a stock-taking not just of his illustrious career but also of the state of thinking about economic policy in India today. Srinivasan, who was 85, was in the forefront of his field for more than six decades; his first major work on the “choice of techniques” problem — what technological choices are appropriate for developing countries — was published in 1961, at around the same time that Amartya Sen was also working on the same problem. As with many others of his generation, Srinivasan moved back and forth effortlessly between the institutions of the Indian state — universities and the Planning Commission — and economics departments in the West. This is worth thinking about at a time when “foreign-educated” economists are being attacked as providing recommendations that are considered unsuitable for India. Few could argue that Srinivasan’s policy advice was relevant and important, however. 

Together with Jagdish Bhagwati and Padma Desai, he was crucial in advocating market-friendly macroeconomic reforms from the early 1970s onwards. This argument remained a dissenting opinion for more than a decade until the contradictions inherent in India’s centrally planned and licence-ridden development path eventually led to the 1991 reforms. Naturally, the underlying facts about macroeconomic imbalances were the main driver of this change. However, the power of argumentation of the reform advocates should not be discounted, either. They created the consensus and laid the framework for the academic work and the white papers that were essential to the quick actions taken between 1991 and 1993. Srinivasan himself focused particularly on the problems with India’s external sector. Through his work in the 1970s, he showed that Indira Gandhi’s controversial rupee devaluation helped address an unsustainable trade deficit. In some sense, the 1991 reforms — in which the external sector was addressed first, alongside industrial licensing — reflected Srinivasan’s policy priorities. 

Yet, it could be argued that those reforms were incomplete, as fiscal reform was not taken on board; factor markets were left largely unchanged aside from some liberalisation of finance, and the question of how to manage the building of infrastructure was largely set aside. Srinivasan himself began to take on the first of these, fiscal reform, as an issue in the early 2000s, once again making pithy and accessible arguments against those who argued that quick enough growth meant that public deficits and debt were rendered unimportant. The product of these efforts to put public spending on the intellectual map of the time was the Fiscal Responsibility and Budget Management Act. 

The careers of Srinivasan and the other giants of his generation — Dr Sen and Dr Bhagwati above all — are a reminder that successful policy must be informed by the work and arguments of academic-practitioners trained to world-class standards. Meanwhile, economists themselves must also seek to intervene in the policy debates that are relevant — and should, ideally, seek to develop the clarity, precision and rhetorical flair that were characteristic of Srinivasan’s writing.