Foreign vs. Local – Part 2

I have already commented on TCA Srinivasa Raghavan’s article (first in a six-part series) here. The second part has been published a few days ago. There is merit in what he says. There is danger too in what he says.

I think the dichotomy between foreign-trained economists and indigenous economists is a false one. If economics had remained true to its tradition as a social science, this danger of blind application of concepts and precepts to different situations would not have arisen in most cases.

Social sciences do recognise path dependence. Much of what TCA had written would fall under that. One would give weightage to cultural and social contexts, their evolution and their influence on economic behaviour.

An open-minded economist (has that become an oxymoron?) would have no problems with that. Keynes’ quote on the ‘ideal economist’ would have taken care of the problem that TCA is writing about.

The problem is that, as things stand today, TCA or the GoI is rather unlikely to find in sufficient numbers (I wrote this just to pre-empt replies that throw up a name here and a name there), who have these qualities: sound economics with awareness of the Indian context. Mind you, these are not the only two attributes for India-centric or successful policymaking. There are several other attributes at the inter-personal level too that are required to make an impact in a meaningful and sustainable way.

What if we have an ‘economist’ who is ‘rooted’ as TCA argues but who has no idea of economics? So, which of the two is important?

If one looks at the important decisions that have, with the benefit of hindsight, turned out to be millstones around India’s economic neck, how many of those were inspired or engineered by so-called ‘unrooted’ economists?

Tragically, it was Nehru’s fascination with State-led industrialisation and Soviet Central Planning (among other things) that led to an autarkik and inward looking economic and industrial policy. Yes, yes, I am aware of many other reasons – some of them, compelling at that time – too.

Nationalisation of banks appeared appropriate at that time Mrs. Gandhi took because private sector banks were riddled with conflicts of interest and credit was simply an incestuous process. But, have the benefits outweighed the costs or is it the other way around? No ‘unrooted’ economist came up with that, however.

A Verghese Kurien who came back after training overseas helped achieve the white revolution through an accidental development that sent him to Anand. But, well, he was ‘unrooted’ in some sense.

Janardhan Poojary’s loan melas, Charan Singh’s budget, Mrs. Gandhi’s usurious tax regime, the Gold Control Act, Participatory Notes, Chidambaram’s farm loan waiver, Pranab Mukherjee’s GAAR and retrospective taxation – how many of them are traceable to ‘unrooted’ economists?

Generalising the problem facilitates conceptual and impersonal discussion but it can also potentially facilitate the wrong inference that makes the problem worse.

Perhaps, the Indian Economic Service Curriculum needs a closer look, in the first place.

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