How a stellar team of economists transformed India in the 1990s

In the early 1960s, then US President John F. Kennedy filled his administration with Harvard academics, in particular, and other luminaries. US Ambassador to India John Kenneth Galbraith and Robert McNamara, President of Ford Motor and then US Secretary of Defense, were among them. The American writer David Halberstam called them The Best and The Brightest but the epithet, also the title of his book, was tinged with irony because the administration was responsible for the catastrophe of the Vietnam War.

Reading by former chief economic adviser Shankar Acharya An economist at home and abroad, one cannot help but conclude that The Best and The Brightest is a more accurate description of the team that led India’s economic reforms in 1991. Manmohan Singh, Montek Singh Ahluwalia, Bimal Jalan, C. Rangarajan , YV Reddy and Acharya are the most capable economic administrators India has had.

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Ability aside, they were exceptionally tight-knit. Shortly after Acharya returned to India in 1993 and moved into government accommodation in Delhi, he and his family suffered a meteoric flight to their new home. Within minutes, Ahluwalia, then the Union’s finance secretary, had shown up to the Acharya gate with tools to fix it – he quickly cut a frangipani branch to plug the water supply pipe.

The two had not only worked together at the World Bank, but had also studied at Oxford. Acharya’s engaging and candid memoir indicates that he used Ahluwalia’s notes to study for his economics articles.

The play of conviviality, chance and circumstances is one of the many charms of this book. If we can blame the British for the debilitating Indian variant of Fabian socialism of the 1940s and 1950s and the depredations of colonial rule, we must also recognize that Manmohan Singh, Ahluwalia and Acharya all studied at Oxford and played a central role in the unlocking the economy. . Singh’s doctoral thesis at Oxford argued with foresight against the pessimism of exports to India and other parts of the developing world.

An economist at home and abroad less about the ups and downs of the reform process of the 1990s than one might expect. Jairam Ramesh’s book, At the edge of the abyss and back, has delicious details about the PV Narasimha Rao fire alarm during the first devaluation and tries to stop the second. By the time then Finance Minister Manmohan Singh called the Reserve Bank of India (RBI), however, the second devaluation had taken place.

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‘An Economist At Home And Abroad’, by Shankar Acharya, HarperCollins India, 316 pages, ??599.


The billboards captioned that the book of Acharya is “a personal journey”. And what a trip. At Jawaharlal Nehru’s suggestion, his father moved from civil service to the diplomatic corps after correctly predicting the Awami League’s election victory in the 1950s in what was then East Pakistan. Soon after, the family moved to Phnom Penh. Along the way, the young Acharya, already an economist at heart, who will then work on the first report on the world development of the World Bank, cannot help noticing that Bangkok appeared like a “poor and populated Asian city with to about the same standard of living… if not poorer ”than Calcutta (now Kolkata) of the 1950s, still the headquarters of many British management agencies.

Acharya is invariably in the right place at the right time. As a child in Phnom Penh, he gave the young prince Sihanouk a souvenir in the name of the Indian embassy. A few years later, when her father was posted to Ottawa, Acharya remembers serving a whiskey for the slightly tipsy Raj Kapoor. More importantly, for him and the country, as he prepared to return to the World Bank after taking time off to work in Delhi, Indira Gandhi was murdered on October 31, 1984. A reshuffle saw Ahluwalia appointed to the office the Prime Minister under Rajiv Gandhi; Acharya was persuaded to stay and work with the government. After another stint at the World Bank in Washington, DC, when he turned down an offer to be vice-governor of the RBI in 1992, he returned to India the following year to become Chief Economic Advisor (CEA) .

Acharya has the distinction of being both the oldest CEA and the one that has served three governments. Acharya, Ahluwalia and others, such as Vijay Kelkar and Rakesh Mohan, have provided the continuity and coherence essential to economic reforms for more than a decade. From Manmohan Singh, he writes, he “was often better informed on a subject than the senior officer briefing him … both in India and abroad, he was the embodiment of dignity, seriousness and soft-spoken wisdom ”.

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He is also laudatory about the government of Atal Bihari Vajpayee and Yashwant Sinha, saying that the removal of import restrictions on consumer goods, the phasing out of reserves for small manufacturers, the adoption of significant changes in interest rate structures and the bold defense of genuine privatization (instead of the more typical sleight of hand of hand-selling public sector shares to another public sector entity) has been added in many ways an achievement almost as remarkable as that of the Rao-Singh reform push. Labor reforms were prepared in the early 1990s, but the difficulties of managing coalitions meant that they never saw the light of day.

Acharya’s personal ethic that hard work must coexist with free time, and center-of-power assignments balanced with stays in research organizations and universities, shines through. It’s a life well lived. He is also not afraid to record the good times; “sneak” in the middle of the annual meeting of the International Monetary Fund and the World Bank in Madrid to “see my first (and last) bullfight” because he felt that the Indian delegation, including the finance minister and governor of the RBI, C. Rangarajan, was more than sufficiently represented. Over the weekend, the team toured Toledo and “agreed on the broad lines of bank interest rate liberalizations that were announced by the RBI shortly after our return to India.” This camaraderie arguably contributed to the deal, the same month, that New Delhi would no longer expect the RBI to finance its deficits.

It all feels like a different planet since the disorderly departures of the last two RBI governors, years apart, after reports of difficult relations between the RBI and the Department of Finance. The inability of the current government to retain economic decision-makers makes its sometimes erratic policies, such as demonetization, truly baffling. From the sudden reduction in the corporate tax rate, which, unsurprisingly, has done little to remedy a prolonged investment slump, to increasing tariffs while creating countless tax programs. import substitution to build an export base, the relative lack of income support in response to covid-19, idiosyncratic decision-making is uncomfortable with sane measures such as retrospective taxation cancellation and the establishment of a bankruptcy court.

Acharya’s concluding chapter is a meditation on how chance has been a guardian angel in her life, both professionally and personally. His self-mockery is moving. Yet it is also sobering that even though India faces much slower GDP growth, with already worrying implications for employment, female labor market participation and social stability, the country does not. most likely will be “the best and the brightest” in government. In the 1990s, fate created a stellar team just when India needed it most. These men navigated the intricacies of coalition politics and sidestepped a balance of payments crisis to turn the sick Asian man into an Olympian who could compete in global markets in certain industries, all without the therapy. shock often used in the developing world and in Russia. . It remains a phenomenal achievement.

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Rahul Jacob covered the economic reforms of the 1990s for Fortune and Time magazines.


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