An Economist In The Real World
MUMBAI - 30 March 2016, Asia Society was proud to welcome Kaushik Basu and Tamal Bandyopadhyay for a panel discussion. Mr Basu, who had been former Chief Economic Advisor (CEA) from late 2009 to July 2012 to Dr Manmohan Singh, former Prime Minister of India, was here to discuss his latest book “An Economist in the Real World-The Art of Policymaking in India”, endorsed by Nobel Laureates Amartya Sen and Roger Myerson amongst others.
Bunty Chand, Director of the Asia Society kicked off the proceedings by introducing both personalities. Mr Basu revealed that he had not initially intended to publish a book when he first entered the government. He recounted getting a call from the Prime Minister’s Office in early August 2009, asking him if he would consider working as CEA for the then Prime Minister Manmohan Singh. The Prime Minister was keen to ‘bring back professional thinking into the government’. Ultimately, Mr Basu joined as CEA in December 2009, at a time when most of the world was still reeling from the impact of a global recession.
His initial experience working for the government was quite dramatic. The bureaucratic nature of the government was a source of much consternation, as well as occasional – if somewhat amusing- inconsistencies. Mr Basu recounted how he was told at one point that, being a minister, he wasn’t required to wear a seatbelt any longer!
He indicated that corruption and education were two spheres in which the Indian economy could improve most. In relation to widespread corruption, Mr Basu mentioned that according to the current India legal system, those who give bribes, as well as those who accept bribes, are held equally criminally guilty in the eyes of the government. This leads to both parties colluding to conceal the bribe. In such cases, Mr Basu reasoned, the authority demanding the bribe should be held doubly guilty, whereas the giver of the bribe should not be held guilty at all. This was received with much furore by the media and the general public, prompting him to remove this suggestion from the website of the Finance Ministry.
Education, too, was felt to be a hub that holds great potential in our economy. The 1960s and 1970s saw the creation of several IIMs and IITs, which nurtured several reputed academics and has now garnered international renown. Although the state of basic primary education is still in dire need of immediate amelioration, higher education can prove to be fertile ground for investment.
Mr Basu also spoke about inflation, fiscal and monetary policies, and touched briefly upon the economic reforms of 1991-1993. He mentioned that the one area in which the phenomenon of competition tends to backfire is in the ‘creation of money’, expressing the need for some coordination of fiscal and monetary policy on a worldwide scale. The 200 odd Central Banks in the world have widely differing policies, with Japan and the EU injecting liquidity into the economy and the USA doing the opposite.
The discussion was peppered with a myriad of anecdotes, including that of a maid who told guests that Basu was in charge of ‘raising prices’ in India and the fact that nobody knocked on doors in hallowed government offices. The evening proved eventful and informative, with a medley of humour and economic jargon that proved both thought-provoking and greatly insightful.
Video: Watch the complete program (1 hr., 27 min.)
Reported by Kamya Sankaranarayanan, Programme Assistant Intern, Asia Society India Centre.