<b>T C A Srinivasa-Raghavan:</b> Modi and economics

A few days ago, some friends were lamenting the ab-sence of economic gravitas in the Narendra Modi government. The talk somehow veered to the Indian Economic Service (IES). We wondered whether it could be resurrected and decided it was too late.

The Service had been conceived in 1961 by Jawaharlal Nehru to provide high-quality economic advice to the government. Its first members were all very accomplished economists, from Samar Sen, who was its first member, to I G Patel, Sharad Marathe et al.

The first direct recruitment took place in 1968. By 1985 the Indian Administrative Service (IAS) had gradually grabbed most of the senior economic posts in government. It thus reduced the IES to a mere hewer of economic wood and fetcher of statistical water.
 

The economists in the government, who had come from "outside", have not had much time for it. They have looked down on the members of the IES and preferred to hang around with the IAS crowd. It was a PLU thing, you see.

And thereby hangs a tale.

Off the turnpike
In 1988 the IES was brought under the secretary, economic affairs, via the chief economic advisor. It had been under the department of personnel till then. None of them took much interest in the troops that were serving under them. It was snobbery plain and simple.

Then Kaushik Basu came along. He became a tireless, if unsuccessful, advocate of hiring of more economists by the government.

One day in 2011 he called me to ask if I could suggest someone to write a history of the IES. "Their golden jubilee is next year," he said.

I said if the price was right I would do it. Name it, he said. I asked for the moon. He offered the government rate. I gladly accepted.

We went through the usual drill of seeking ideas at meetings and looking for documents. After a few weeks it became clear that the exercise wasn't going to yield much.

One day Basu went to invite a former professor from the Delhi School of Economics, who had taken to high-level politics, and told him about the book. The former professor asked who was writing it and when told, suggested it be turned into a brief history of Indian economic policy.

So that's what I did. I am proud of it. It is the only coffee-table book in the world on economic theory, history, policy, thought and politics. It was published in 2012 under the mysterious name given by Basu: On the Turnpike.

The reference is to the turnpike theory about capital accumulation. The idea is due to John von Neumann, who thought it up in the 1940s. It was popularised by Paul Samuelson, Robert Solow and Robert Dorfman in the 1960s. It says the fastest route between two points is always via the turnpike - the American name for a straight highway -and therefore sensible governments, no matter where they are starting, try to quickly find the turnpike. Intuitively, Modi is doing just that after Sonia Gandhi and her National Advisory Council got India off it.

Basu said economists would understand the title. But I wonder how many actually did. Most chief economic advisors didn't. They hadn't been trained as Basu had been (and Ashok Lahiri was) in hard-core economic theory.

Get some real economists
Over the years the IES has become a sort of a subordinate service. But because its incumbents made a song and dance, some posts have been reserved for it.

This means the lateral entry of non-UPSC (Union Public Service Commission)-recruited economists, with the suitable qualifications, has become almost impossible. When economists from universities or think tanks are recruited, it is on open-ended contracts. So they don't have the same career incentives as full-time employees do. The IAS, in any case, has no time for them. It monopolises policy and shapes it according to political, rather than economic, need.

It was largely to prevent this that Nehru had created the Service. But like so many other Nehruvian legacies, his descendants have shown scant regard for this one also.

Can Modi do anything about it? To the best of my knowledge, he couldn't care less. He has no time for either the subject or its practitioners. Indeed, he has no time for buddhijeevis of any kind.

But it may not be a bad idea for him to check with P K Mishra, his additional principal secretary, who would have been a brilliant economist had he not joined the IAS in 1972. Mishra may enlighten him about the importance of a good economic approach rather than a mere municipal one he seems to favour.