Interviewing India’s chief economic advisor

Apr 19, 2013 – He’s the man on Raisinia Hill who isn’t actually part of government: India’s chief economic advisor is independent, and posted to North Block for what’s usually a two-year term. It’s a significant position as they are in charge of preparing India’s annual economic survey and with the potential to have a direct influence on policy decisions.

The previous chief economic advisor to India was Cornell professor of economics, Dr Kaushik Basu. I interviewed him for Monocle’s November 2011 issue. It was the first time I had the chance to trawl the stately, red sandstone corridors of North Block. Here, the interiors are a study in contrasts: efficient, puritan, Gandhian simplicity meets the plush symbols of new money. In the waiting room there are plastic chairs atop woven silk carpets, and on the front desk, next to the electronic pad where I signed in was a functioning dot matrix printer. Somewhere in there is a metaphor for India as a whole.

The interview took place in August 2011, which was a somewhat bleak time for India’s economy. Scams involving enormous amounts of money and senior politicians had been in the headlines throughout 2010, and it seemed that years of building optimism and enthusiasm for India’s economy had ruptured. Growth had fallen dramatically, and inflation was so high that some low-income earners were reporting severely restricted diets. But Basu was still positive in his long-term outlook, going so far as to declare that India’s growth would outpace China’s, within five years.

Only a tiny portion of the interview made it to print, so here are some bits that didn’t make it – albeit still heavily edited. Basu is a talker.

Q: You have ideas about how to tackle small-scale corruption, what does this involve?

B: I put up a paper to go after one kind of corruption, which I called harrassment bribery, which is a bribe for something you’re supposed to get, like an income tax refund cheque, or export clearance for your goods. I suggested that we amend India’s anti-corruption laws so that giving a bribe is fully legal but taking a bribe is illegal. So the bribe taker knows the giver will not be punished if they reveal the crime.

Q: What are the greatest challenges that lie ahead for India, and where do you predict India’s economic growth will be in the next few years?

B: We need to make it a more vibrant market economy, and for that we need a huge amount of infrastructural investment. We need to improve our governance in a big way. I feel pretty confident that there is a very good 15 to 30 year run ahead for India. I also truly believe that within the next four or five years India will overtake China in terms of growth rate. One worrying, big challenge is the distribution of the spoils of growth. Poverty is not coming down fast enough. To me that is the biggest challenge for India.

Q: What are the main impediments, if any, to India’s growth?

B: There are short term impediments, I am very optimistic for the medium to the long term, and in that I don’t think I’m alone. We were talking about corruption just now. When there are scams and inquiries, the government machinery tends to slow down a little bit, and this is a natural thing to do with the psychology of people taking decisions. When policy makers get too worried about too may inquiries and scams going on they tend to delay decisions, and there is a bit of a slowdown in the decision making that is happening.

If the government manages to push through a couple of key market-oriented reforms over the next few months, I believe that as early as next year we should see the economy once again buoyant and doing well as we have been seeing over the last 15 years or so.

Q: How do you find the cut and thrust of politics and bureaucracy compared with the relatively sedate life of academia?

B: In the beginning it was disorienting, I had no experience in government. The first two months was like going to another planet. I kept telling myself the only way to go forward is to think of myself as an anthropologist, the way [Bronislaw] Malinowski went to the Trobriand Islands and stayed for nine months or a year. I said, surely I can survive two years in the Ministry of Finance, and think of myself as an anthropologist observing government from the belly of the beast. But then, much to my alarm I’m beginning to enjoy the rough and tumble of policy making and political jostling.

That doesn’t mean I approve of everything I see in government, but I enjoy the learning process and understanding that this is the way the world is. I have to say that there are individuals whom I respect greatly, something that is always a saving grace, to know that these people are well meaning and struggling to keep government as clean and straight as possible. They make you feel it’s all worth it.

Q: Outside of your professional life you’re also a writer and an artist, you’ve written books, a play, and I understand you have a charcoal drawing of Marx.

B: I would love to call myself an artist, I do paint and draw a lot. I’ve done a lot of portraits. I find people who have interesting faces make for good subjects for portraits. I have done a Woody Allen portrait that I like very much, I have done a Bertrand Russell portrait that I like very much. I have done a whole host of economists, I’ve got one of Amartya Sen in charcoal. Philosophers I’ve done pencil drawings of, Martha Nussbaum, so yes it’s a whole slew of people. And some subjects are more interesting than others.

Q: So you choose them according to their facial features and not whether you follow their economic philosophies?

B: Well yes I, choose my subjects by the facial features, I should say at the same time since you raised this about Marx, I greatly respect Marx, he was a staggering intellectual. He put together an understanding of history, which I think is a flawed understanding, but nevertheless it’s a majestic effort in pulling together strands of history. I also liked his idealism, that he was struggling to create a better world, but I do believe his understandings were flawed. I like the idealism of Karl Marx and I like the philosophy of Woody Allen greatly. Through all the humour I think there is an undertone, an undercurrent of philosophy in Woody Allen which I admire. So these are people I have indeed some fascination.

Q: What are the greatest challenges that lie ahead for India, and where do you predict India’s economic growth will be in the next few years?

B: There are two challenges. One challenge I think we will overcome. We need to make it a more vibrant market economy, and the infrastructural investment for that we need a huge amount. We need to improve our governance in a big way. The infrastructural investment, I do believe you will see very big improvements over the next five years, it will be visible.

Governance, I don’t know. We are trying. It is a tougher challenge than the brick and mortar challenge of infrastructure to change governance. But in terms of economic, broad economic growth, I feel pretty confident that it’s a very,15-to-30 year run ahead for India.

I also truly believe that within the next four or five years  India will overtake China in terms of growth rate. Not per capita income, China’s much ahead of us. And I don’t say this in a competitive spirit, I don’t want China to slow down at all.

One worrying, big challenge is the distribution of the spoils of growth. What we are seeing in India is with this very vibrant growth is that poverty is coming down, but inequality is increasing in a very big way. To me that is the biggest challenge for India. Here we need very intelligent design, we need civil society activism, we need good professional policy to attend to problems of poverty and inequality. The challenge that we will have to meet this challenge as quickly as possible. The suffering of poverty is too big a suffering for us to say, let us wait and it will get solved over the next 15 years as growth picks up. We can’t allow that to happen. So indeed there’s a lot of work to be done on that.

Click here to read the story on the page. Monocle, issue 48, November 2011.

Image: Jocelyn Baun