Did Jagdish Bhagwati “originate”, “pioneer”, “intellectually father” India’s 1991 economic reform? Did Manmohan Singh? Or did I, through my encounter with Rajiv Gandhi, just as Siddhartha Shankar Ray told Manmohan & his aides in Sep 1993 in Washington? Judge the evidence for yourself. And why has Amartya Sen misdescribed his work? India’s right path forward today remains what I said in my 3 Dec 2012 Delhi lecture!

Did Jagdish Bhagwati “originate”, “pioneer”, “intellectually father” India’s 1991 economic reform?  Did Manmohan Singh? Or did I, through my encounter with Rajiv Gandhi, just as Siddhartha Shankar Ray told Manmohan & his aides in Sep 1993 in Washington?  Judge the evidence for yourself.  And why has Amartya Sen misdescribed his work? India’s right path forward today remains what I said in my 3 Dec 2012 Delhi lecture!




Part I:  Facts vs Fiction, Flattery, Falsification, etc


1. Problem

2.    Rajiv Gandhi, Siddhartha Shankar Ray, Milton Friedman & Myself

3.     Jagdish Bhagwati & Manmohan Singh?  That just don’t fly!

 4.    Amartya Sen’s Half-Baked Communism:  “To each according to his need”?


  Part II:    India’s Right Road Forward Now: Some Thoughtful Analysis for Grown Ups

5.   Transcending a Left-Right/Congress-BJP Divide in Indian Politics

6.   Budgeting Military & Foreign Policy

7.    Solving the Kashmir Problem & Relations with Pakistan

8.  Dealing with Communist China

9.   Towards Coherence in Public Accounting, Public Finance & Public Decision-Making

10.   India’s Money: Towards Currency Integrity at Home & Abroad



Part I:  Facts vs Fiction, Flattery, Falsification, etc


1. Problem

Arvind Panagariya says in the Times of India of 27 July 2013


 “…if in 1991 India embraced many of the Track-I reforms, writings by Sen played no role in it… The intellectual origins of the reforms are to be found instead in the writings of Bhagwati, both solely and jointly with Padma Desai and T N Srinivasan….”


Now Amartya Sen has not claimed involvement in the 1991 economic reforms so we are left with Panagariya claiming


“The intellectual origins of the reforms are to be found instead in the writings of Bhagwati…”


Should we suppose Professor Panagariya’s master and co-author Jagdish Bhagwati himself substantially believes and claims the same?  Three recent statements from Professor Bhagwati suffice by way of evidence:


(A)  Bhagwati said to parliamentarians in the Lok Sabha on 2 December 2010 about the pre-1991 situation:


“This policy framework had been questioned, and its total overhaul advocated, by me and Padma Desai in writings through the late 1960s which culminated in our book, India: Planning for Industrialization (Oxford University Press: 1970) with a huge blowback at the time from virtually all the other leading economists and policymakers who were unable to think outside the box. In the end, our views prevailed and the changes which would transform the economy began, after an external payments crisis in 1991, under the forceful leadership of Prime Minister Manmohan Singh who was the Finance Minister at the time….”


(B)  Bhagwati said to Economic Times on 28 July 2013:


“When finance minister Manmohan Singh was in New York in 1992, he had a lunch for many big CEOs whom he was trying to seduce to come to India. He also invited me and my wife, Padma Desai, to the lunch. As we came in, the FM introduced us to the invitees and said: ‘These friends of mine wrote almost a quarter century ago [India: Planning for Industrialisation was published in 1970 by Oxford] recommending all the reforms we are now undertaking. If we had accepted the advice then, we would not be having this lunch as you would already be in India’.”


(C)  And Bhagwati said in Business Standard of 9 August 2013:


“… I was among the intellectual pioneers of the Track I reforms that transformed our economy and reduced poverty, and witness to that is provided by the Prime Minister’s many pronouncements and by noted economists like Deena Khatkhate.. I believe no one has accused Mr. Sen of being the intellectual father of these reforms. So, the fact is that this huge event in the economic life of India passed him by…”


From these pronouncements it seems fair to conclude Professors Bhagwati and Panagariya are claiming Bhagwati has been the principal author of “the intellectual origins” of India’s 1991 reforms, has been their “intellectual father” or at the very least has been “among the intellectual pioneers” of the reform (“among” his own collaborators and friends, since none else is mentioned).  Bhagwati has said too his friend Manmohan Singh as Finance Minister participated in the process while quoting Manmohan as having said Bhagwati was the principal author. 


Bhagwati’s opponent in current debate,  Amartya Sen, has been in agreement with him that Manmohan, their common friend during college days at Cambridge in the 1950s, was a principal originating the 1991 reforms, saying to Forbes in 2006:


“When Manmohan Singh came to office in the early 1990s as the newly appointed finance minister, in a government led by the Congress Party, he knew these problems well enough, as someone who had been strongly involved in government administration for a long time.”


In my experience, such sorts of claims, even in their weakest form, have been, at best, scientifically sloppy and unscholarly,  at worst mendacious suppressio veri/suggestio falsi, and in between these best and worst interpretations, examples of academic self-delusion and mutual flattery.  We shall see Bhagwati’s opponent, Amartya Sen, has denied academic paternity of recent policies he has spawned while appearing to claim academic paternity of things he has not!  Everyone may have reasonably expected greater self-knowledge, wisdom and scholarly values of such eminent academics.  Their current spat has instead seemed to reveal something rather dismal and self-serving. 


You can decide for yourself where the truth, ever such an elusive and fragile thing, happens to be and what is best done about it.   Here is some evidence.



2.  Rajiv Gandhi, Siddhartha Shankar Ray,  Milton Friedman & Myself


Professor Arvind Panagariya is evidently an American economics professor of Indian national origin who holds the Jagdish Bhagwati Chair of Indian Political Economy at Columbia University.   I am afraid I had not known his name until he mentioned my name in Economic Times of  24 October 2001.   He said




In mentioning the volume “edited by Subroto Roy and William E  James”,  Professor Panagariya did not appear to find the normal scientific civility to identify our work by name, date or publisher.  So here that is now:





This was a book published in 1992 by the late Tejeshwar Singh for Sage.  It resulted from the University of Hawaii Manoa perestroika-for-India project, that I and Ted James created and led between 1986 and 1992/93.   (Yes, Hawaii — not Stanford, Harvard, Yale, Columbia or even Penn, whose India-policy programs were Johnny-come-latelies a decade or more later…)   There is a sister-volume too on Pakistan, created by a parallel project Ted and I had led at the same time:





In 2004 from Britain, I wrote to the 9/11 Commission saying if our plan to study Afghanistan after India and Pakistan had not been thwarted by malign local forces among our sponsors themselves, we, a decade before the September 11 2001 attacks on the USA, may  just have come up with a pre-emptive academic analysis.   It was not to be.


Milton Friedman’s chapter that we published for the first time was a memorandum he wrote in November 1955 for the Government of India which the GoI had effectively suppressed.  I came to know of it while a doctoral student at Cambridge under Frank Hahn, when at a conference at Oxford about 1979-1980, Peter Tamas Bauer sat me down beside him and told me the story.  Later in Blacksburg about 1981, N. Georgescu-Roegen on a visit from Vanderbilt University told me the same thing.  Specifically, Georgescu-Roegen told me that leading Indian academics had almost insulted Milton in public which Milton had borne gamely; that after Milton had given a talk in Delhi to VKRV Rao’s graduate-students,  a talk Georgescu-Roegen had been present at, VKRV Rao had addressed the students and told them in all seriousness “You have heard what Professor Friedman has to say, if you repeat what he has said in your exams, you will fail”.


In 1981-1982 my doctoral thesis emerged, titled “On liberty & economic growth: preface to a philosophy for India”,




My late great master in economic theory, Frank Hahn (1925-2013), found what I had written to be a “good thesis” bringing “a good knowledge of economics and of philosophy to bear on the literature on economic planning”, saying I had  shown “a good knowledge of economic theory” and my “critique of Development Economics was powerful not only on methodological but also on economic theory grounds”.  


I myself said about it decades later “My original doctoral topic in 1976  ‘A monetary theory for India’ had to be altered not only due to paucity of monetary data at the time but because the problems of India’s political economy and allocation of resources in the real economy were far more pressing. The thesis that emerged in 1982 … was a full frontal assault from the point of view of microeconomic theory on the “development planning” to which everyone routinely declared their fidelity, from New Delhi’s bureaucrats and Oxford’s “development” school to McNamara’s World Bank with its Indian staffers.  Frank Hahn protected my inchoate liberal arguments for India; and when no internal examiner could be found, Cambridge showed its greatness by appointing two externals, Bliss at Oxford and Hutchison at Birmingham, both Cambridge men. “Economic Theory and Development Economics” was presented to the American Economic Association in December 1982 in company of Solow, Chenery, Streeten, and other eminences…” How I landed on that eminent AEA panel in December 1982 was because its convener Professor George Rosen of the University of Illinois recruited me overnight — as a replacement for Jagdish Bhagwati, who had had to return to India suddenly because of a parental death.  The results were published in 1983 in World Development.


Soon afterwards, London’s Institute of Economic Affairs published Pricing, Planning and Politics: A Study of Economic Distortions in India.  This slim work was the first classical liberal critique of post-Mahalonobis Indian economic thought since BR Shenoy’s original criticism decades earlier.  It became the subject of The Times’ lead editorial on its day of publication 29 May 1984 — provoking the Indian High Commission in London to send copies to the Finance Ministry in Delhi where it apparently caused a stir, or so I was told years later by Amaresh Bagchi who was a recipient of it at the Ministry.



The Times had said


“When Mr. Dennis Healey in the Commons recently stated that Hongkong, with one per cent of the population of India has twice India’s trade, he was making an important point about Hongkong but an equally important point about India. If Hongkong with one per cent of its population and less than 0.03 per cert of India’s land area (without even water as a natural resource) can so outpace India, there must be something terribly wrong with the way Indian governments have managed their affairs, and there is. A paper by an Indian economist published today (Pricing, Planning and Politics: A Study of Economic Distortions in India by Subroto Roy, IEA £1.80) shows how Asia’s largest democracy is gradually being stifled by the imposition of economic policies whose woeful effect and rhetorical unreality find their echo all over the Third World. As with many of Britain’s former imperial possessions, the rot set in long before independence. But as with most of the other former dependencies, the instrument of economic regulation and bureaucratic control set up by the British has been used decisively and expansively to consolidate a statist regime which inhibits free enterprise, minimizes economic success and consolidates the power of government in all spheres of the economy. We hear little of this side of things when India rattles the borrowing bowl or denigrates her creditors for want of further munificence. How could Indian officials explain their poor performance relative to Hongkong? Dr Roy has the answers for them. He lists the causes as a large and heavily subsidized public sector, labyrinthine control over private enterprise, forcibly depressed agricultural prices, massive import substitution, government monopoly of foreign exchange transactions, artificially overvalued currency and the extensive politicization of the labour market, not to mention the corruption which is an inevitable side effect of an economy which depends on the arbitrament of bureaucrats. The first Indian government under Nehru took its cue from Nehru’s admiration of the Soviet economy, which led him to believe that the only policy for India was socialism in which there would be “no private property except in a restricted sense and the replacement of the private profit system by a higher ideal of cooperative service.” Consequently, the Indian government has now either a full monopoly or is one of a few oligipolists in banking, insurance, railways, airlines, cement, steel, chemicals, fertilizers, ship-building, breweries, telephones and wrist-watches. No businessman can expand his operation while there is any surplus capacity anywhere in that sector. He needs government approval to modernize, alter his price-structure, or change his labour shift. It is not surprising that a recent study of those developing countries which account for most manufactured exports from the Third World shows that India’s share fell from 65 percent in 1953 to 10 per cent in 1973; nor, with the numerous restrictions on inter-state movement of grains, that India has over the years suffered more from an inability to cope with famine than during the Raj when famine drill was centrally organized and skillfully executed without restriction. Nehru’s attraction for the Soviet model has been inherited by his daughter, Mrs. Gandhi. Her policies have clearly positioned India more towards the Soviet Union than the West. The consequences of this, as Dr Roy states, is that a bias can be seen in “the antipathy and pessimism towards market institutions found among the urban public, and sympathy and optimism to be found for collectivist or statist ones.” All that India has to show for it is the delivery of thousands of tanks in exchange for bartered goods, and the erection of steel mills and other heavy industry which help to perpetuate the unfortunate obsession with industrial performance at the expense of agricultural growth and the relief of rural poverty.”…..


I felt there were inaccuracies in this and so replied  dated 4 June which The Times published on 16 June 1984:



Milton and I met for the first time in the Fall of 1984 at the Mont Pelerin Society meetings at Cambridge when I gave him a copy of the IEA monograph, which he came to think extremely well of.   I told him I had heard of his 1955 document and asked him for it; he sent me the original blue/purple version of this soon thereafter.


[That original document was, incidentally,  in my professorial office among all my books, papers, theses and other academic items including my gown when I was attacked in 2003 by a corrupt gang at IIT Kharagpur —  all yet to be returned to me by IIT despite a High Court order during my present ongoing battle against corruption there over a USD 1.9 million scam !… Without having ever wished to, I have had to battle India’s notorious corruption first hand for a decade!]


I published Milton’s document for the first time on 21 May 1989 at the conference of the Hawaii project over the loud objection of assorted leftists… 


Amartya Sen, Jagdish Bhagwati, Manmohan Singh or any of their acolytes will not be seen in this group photograph dated 21 May 1989 at the UH President’s House, because they were not there.  The Government of India was represented by the Ambassador to Washington, PK Kaul, as well as the Consul General in San Francisco, KS Rana (later Ambassador to Germany), besides the founding head of ICRIER who had invited himself.  


Manmohan Singh was not there as he precisely represented the Indian economic policy establishment I had been determined to reform!   In any case, he had left India about 1987 on his last assignment before retirement, with Julius Nyerere of Tanzania relating to the “South-South Commission”.  


I have said over more than a half dozen years now that there is no evidence whatsoever of Manmohan Singh having been a liberal economist in any sense of that word at any time before 1991, and scant evidence that he originated any liberal economic ideas since.  The widespread worldwide notion that he is to be credited for originating a sudden transformation of India from a path of pseudo-socialism to one of pseudo-liberalism has been without basis in evidence — almost entirely a political fiction, though an explicable one and one which has served, as such political fictions do, the purposes of those who invent them.


Jagdish Bhagwati and Amartya Sen were in their mid 50s and were two of the three senior-most Indians in US academic economics at the time.  I and Ted James, both in our 30s, decided to invite both Bhagwati and Sen to the Hawaii project-conference as distinguished guests but to do so somewhat insincerely late in the day, predicting they would decline, which is what they did, yet they had come to be formally informed of what we were doing.  We had a very serious attitude that was inspired a bit, I might say, by Oppenheimer’s secret “Manhattan project” and we wanted neither press-publicity nor anyone to become the star who ended up hogging the microphone or the limelight.


Besides, and most important of all, neither Bhagwati nor Sen had done work in the areas we were centrally interested in, namely, India’s macroeconomic and foreign trade framework and fiscal and monetary policies.   


Bhagwati, after his excellent 1970 work with Padma Desai for the OECD on Indian industry and trade, also co-authored with TN Srinivasan a fine 1975 volume for the NBER  Foreign Trade Regimes and Economic Development: India. 


TN Srinivasan was the third of the three senior-most Indian economists at the time in US academia; his work made us want to invite him as one of our main economic authors, and we charged him with writing the excellent chapter in Foundations that he came to do titled “Planning and Foreign Trade Reconsidered”.


The other main economist author we had hoped for was Sukhamoy Chakravarty from Delhi University and the Government of India’s Planning Commission, whom I had known since 1977 when I had been given his office at the Delhi School of Economics as a Visiting Assistant Professor while he was on sabbatical; despite my pleading he would not come due to ill health; he strongly recommended C Rangarajan, telling me Rangarajan had been the main author with him of the crucial 1985 RBI report on monetary policy; and he signed and gave me his last personal copy of that report dating it 14 July 1987.  Rangarajan said he could not come and recommended the head of the NIPFP, Amaresh Bagchi, promising to write jointly with him the chapter on monetary policy and public finance. 


Along with Milton Friedman’s suppressed 1955 memorandum which I was publishing for the first time in 1989, TN Srinivasan and Amaresh Bagchi authored the three main economic policy chapters that we felt we wanted. 


Other chapters we commissioned had to do with the state of governance (James Manor), federalism (Bhagwan Dua), Punjab and similar problems (PR Brass), agriculture (K Subbarao, as proposed by CH Hanumantha Rao), health (Anil Deolalikar, through open advertisement), and a historical assessment of the roots of economic policy (BR Tomlinson, as proposed by Anil Seal).  On the vital subject of education we failed to agree with the expert we wanted very much  (JBG Tilak, as proposed by George Psacharopolous) and so we had to cover the subject cursorily in our introduction mentioning his work.  And decades later, I apologised to Professor Dietmar Rothermund of Heidelberg University for having been so blinkered in the Anglo-American tradition at the time as to not having obtained his participation in the project.  


[The sister-volume we commissioned in parallel on Pakistan’s political economy had among its authors Francis Robinson, Akbar Ahmed, Shirin Tahir-Kehli, Robert La Porte, Shahid Javed Burki, Mohsin Khan, Mahmood Hasan Khan,  Naved Hamid, John Adams and Shahrukh Khan; this book came to be published in Pakistan in 1993 to good reviews but apparently was then lost by its publisher and is yet to be found; the military and religious clergy had been deliberately not invited by us though the name of Pervez Musharraf had I think arisen, and the military and religious clergy in fact came to rule the roost through the 1990s in Pakistan; the volume, two decades old, takes on fresh relevance with the new civilian governments of recent years.]


Milton himself said this about his experience with me in his memoirs:




And Milton wrote on my behalf when I came to be attacked, being Indian, at the very University that had sponsored us:



My obituary notice at his passing in 2006 said: “My association with Milton has been the zenith of my engagement with academic economics…. I was a doctoral student of his bitter enemy yet for over two decades he not only treated me with unfailing courtesy and affection, he supported me in lonely righteous battles: doing for me what he said he had never done before, which was to stand as an expert witness in a United States Federal Court. I will miss him much though I know that he, as a man of reason, would not have wished me to….”


In August 1990 in Delhi I came to tell Siddhartha Shankar Ray about the unpublished India-manuscript resulting from the Hawaii project that was in my possession as it headed to its publisher. 


Ray was a family-friend whose maternal grandfather CR Das led the Congress Party before MK Gandhi and had been a friend and colleague of my great grandfather SN Roy in Bengal’s politics in the 1920s;  Ray had also consented to stand on my behalf as Senior Counsel in a matter in the Supreme Court of India. 


Ray was involved in daily political parlays at his Delhi home with other Congress Party personages led by PV Narasimha Rao.  These senior regional figures seemed to me to be keeping their national leader, Rajiv Gandhi, aloof in splendid isolation at 10 Jan Path. 


Ray told me he and his wife had been in London in May 1984 on the day The Times had written its lead editorial on my work and they had seen it with excitement.  Upon hearing of the Hawaii project and the manuscript I had with me, Ray immediately insisted of his own accord that I must meet Rajiv Gandhi, and that he would be arranging a meeting. 


Hence it came to be a month later that a copy of the manuscript of the completed Hawaii project was be given by my hand on 18 September 1990 to Rajiv Gandhi, then Leader of the Opposition and Congress President, an encounter I have quite fully described elsewhere.  I offered to get a copy to the PM, VP Singh, too but a key aide of his showed no interest in receiving it.


Rajiv made me a senior adviser, and I have claimed principal authorship of the 22 March 1991 draft of the Congress manifesto that actually shook and changed the political thinking of the Congress on economic matters in the direction Rajiv had desired and as I had advised him at our initial 18 September 1990 meeting. 


“… He began by talking about how important he felt panchayati raj was, and said he had been on the verge of passing major legislation on it but then lost the election. He asked me if I could spend some time thinking about it, and that he would get the papers sent to me. I said I would and remarked panchayati raj might be seen as decentralized provision of public goods, and gave the economist’s definition of public goods as those essential for the functioning of the market economy, like the Rule of Law, roads, fresh water, and sanitation, but which were unlikely to appear through competitive forces.


I distinguished between federal, state and local levels and said many of the most significant public goods were best provided locally. Rajiv had not heard the term “public goods” before, and he beamed a smile and his eyes lit up as he voiced the words slowly, seeming to like the concept immensely. It occurred to me he had been by choice a pilot of commercial aircraft. Now he seemed intrigued to find there could be systematic ways of thinking about navigating a country’s governance by common pursuit of reasonable judgement. I said the public sector’s wastefulness had drained scarce resources that should have gone instead to provide public goods. Since the public sector was owned by the public, it could be privatised by giving away its shares to the public, preferably to panchayats of the poorest villages. The shares would become tradable, drawing out black money, and inducing a historic redistribution of wealth while at the same time achieving greater efficiency by transferring the public sector to private hands. Rajiv seemed to like that idea too, and said he tried to follow a maxim of Indira Gandhi’s that every policy should be seen in terms of how it affected the common man. I wryly said the common man often spent away his money on alcohol, to which he said at once it might be better to think of the common woman instead. (This remark of Rajiv’s may have influenced the “aam admi” slogan of the 2004 election, as all Congress Lok Sabha MPs of the previous Parliament came to receive a previous version of the present narrative.)


Our project had identified the Congress’s lack of internal elections as a problem; when I raised it, Rajiv spoke of how he, as Congress President, had been trying to tackle the issue of bogus electoral rolls. I said the judiciary seemed to be in a mess due to the backlog of cases; many of which seemed related to land or rent control, and it may be risky to move towards a free economy without a properly functioning judicial system or at least a viable system of contractual enforcement. I said a lot of problems which should be handled by the law in the courts in India were instead getting politicised and decided on the streets. Rajiv had seen the problems of the judiciary and said he had good relations with the Chief Justice’s office, which could be put to use to improve the working of the judiciary.


The project had worked on Pakistan as well, and I went on to say we should solve the problem with Pakistan in a definitive manner. Rajiv spoke of how close his government had been in 1988 to a mutual withdrawal from Siachen. But Zia-ul-Haq was then killed and it became more difficult to implement the same thing with Benazir Bhutto, because, he said, as a democrat, she was playing to anti-Indian sentiments while he had found it somewhat easier to deal with the military. I pressed him on the long-term future relationship between the countries and he agreed a common market was the only real long-term solution. I wondered if he could find himself in a position to make a bold move like offering to go to Pakistan and addressing their Parliament to break the impasse. He did not say anything but seemed to think about the idea. Rajiv mentioned a recent Time magazine cover of Indian naval potential, which had caused an excessive stir in Delhi. He then talked about his visit to China, which seemed to him an important step towards normalization. He said he had not seen (or been shown) any absolute poverty in China of the sort we have in India. He talked about the Gulf situation, saying he did not disagree with the embargo of Iraq except he wished the ships enforcing the embargo had been under the U.N. flag. The meeting seemed to go on and on, and I was embarrassed at perhaps having taken too much time and that he was being too polite to get me to go. V. George had interrupted with news that Sheila Dixit (as I recall) had just been arrested by the U. P. Government, and there were evidently people waiting. Just before we finally stood up I expressed a hope that he was looking to the future of India with an eye to a modern political and economic agenda for the next election, rather than getting bogged down with domestic political events of the moment. That was the kind of hopefulness that had attracted many of my generation in 1985. I said I would happily work in any way to help define a long-term agenda. His eyes lit up and as we shook hands to say goodbye, he said he would be in touch with me again…. The next day I was called and asked to stay in Delhi for a few days, as Mr. Gandhi wanted me to meet some people…..


… That night Krishna Rao dropped me at Tughlak Road where I used to stay with friends. In the car I told him, as he was a military man with heavy security cover for himself as a former Governor of J&K, that it seemed to me Rajiv’s security was being unprofessionally handled, that he was vulnerable to a professional assassin. Krishna Rao asked me if I had seen anything specific by way of vulnerability. With John Kennedy and De Gaulle in mind, I said I feared Rajiv was open to a long-distance sniper, especially when he was on his campaign trips around the country.  This was one of several attempts I made since October 1990 to convey my clear impression to whomever I thought might have an effect that Rajiv seemed to me extremely vulnerable. Rajiv had been on sadhbhavana journeys, back and forth into and out of Delhi. I had heard he was fed up with his security apparatus, and I was not surprised given it seemed at the time rather bureaucratized. It would not have been appropriate for me to tell him directly that he seemed to me to be vulnerable, since I was a newcomer and a complete amateur about security issues, and besides if he agreed he might seem to himself to be cowardly or have to get even closer to his security apparatus. Instead I pressed the subject relentlessly with whomever I could. I suggested specifically two things: (a) that the system in place at Rajiv’s residence and on his itineraries be tested, preferably by some internationally recognized specialists in counter-terrorism; (b) that Rajiv be encouraged to announce a shadow-cabinet. The first would increase the cost of terrorism, the second would reduce the potential political benefit expected by terrorists out to kill him. On the former, it was pleaded that security was a matter being run by the V. P. Singh and then Chandrashekhar Governments at the time. On the latter, it was said that appointing a shadow cabinet might give the appointees the wrong idea, and lead to a challenge to Rajiv’s leadership. This seemed to me wrong, as there was nothing to fear from healthy internal contests for power so long as they were conducted in a structured democratic framework. I pressed to know how public Rajiv’s itinerary was when he travelled. I was told it was known to everyone and that was the only way it could be since Rajiv wanted to be close to the people waiting to see him and had been criticized for being too aloof. This seemed to me totally wrong and I suggested that if Rajiv wanted to be seen as meeting the crowds waiting for him then that should be done by planning to make random stops on the road that his entourage would take. This would at least add some confusion to the planning of potential terrorists out to kill him. When I pressed relentlessly, it was said I should probably speak to “Madame”, i.e. to Mrs. Rajiv Gandhi. That seemed to me highly inappropriate, as I could not be said to be known to her and I should not want to unduly concern her in the event it was I who was completely wrong in my assessment of the danger. The response that it was not in Congress’s hands, that it was the responsibility of the VP Singh and later the Chandrashekhar Governments, seemed to me completely irrelevant since Congress in its own interests had a grave responsibility to protect Rajiv Gandhi irrespective of what the Government’s security people were doing or not doing. Rajiv was at the apex of the power structure of the party, and a key symbol of secularism and progress for the entire country. Losing him would be quite irreparable to the party and the country. It shocked me that the assumption was not being made that there were almost certainly professional killers actively out to kill Rajiv Gandhi — this loving family man and hapless pilot of India’s ship of state who did not seem to have wished to make enemies among India’s terrorists but whom the fates had conspired to make a target. The most bizarre and frustrating response I got from several respondents was that I should not mention the matter at all as otherwise the threat would become enlarged and the prospect made more likely! This I later realized was a primitive superstitious response of the same sort as wearing amulets and believing in Ptolemaic astrological charts that assume the Sun goes around the Earth — centuries after Kepler and Copernicus. Perhaps the entry of scientific causality and rationality is where we must begin in the reform of India’s governance and economy. What was especially repugnant after Rajiv’s assassination was to hear it said by his enemies that it marked an end to “dynastic” politics in India. This struck me as being devoid of all sense because the unanswerable reason for protecting Rajiv Gandhi was that we in India, if we are to have any pretensions at all to being a civilized and open democratic society, cannot tolerate terrorism and assassination as means of political change. Either we are constitutional democrats willing to fight for the privileges of a liberal social order, or ours is truly a primitive and savage anarchy concealed beneath a veneer of fake Westernization….. Proceedings began when Rajiv arrived. This elite audience mobbed him just as the farmers had mobbed him earlier. He saw me and beamed a smile in recognition, and I smiled back but made no attempt to draw near him in the crush. He gave a short very apt speech on the role the United Nations might have in the new post-Gulf War world. Then he launched the book, and left for an investiture at Rashtrapati Bhavan. We waited for our meeting with him, which finally happened in the afternoon. Rajiv was plainly at the point of exhaustion and still hard-pressed for time. He seemed pleased to see me and apologized for not talking in the morning. Regarding the March 22 draft, he said he had not read it but that he would be doing so. He said he expected the central focus of the manifesto to be on economic reform, and an economic point of view in foreign policy, and in addition an emphasis on justice and the law courts. I remembered our September 18 conversation and had tried to put in justice and the courts into our draft but had been over-ruled by others. I now said the social returns of investment in the judiciary were high but was drowned out again. Rajiv was clearly agitated that day by the BJP and blurted out he did not really feel he understood what on earth they were on about. He said about his own family, “We’re not religious or anything like that, we don’t pray every day.” I felt again what I had felt before, that here was a tragic hero of India who had not really wished to be more than a happy family man until he reluctantly was made into a national leader against his will. We were with him for an hour or so. As we were leaving, he said quickly at the end of the meeting he wished to see me on my own and would be arranging a meeting. One of our group was staying back to ask him a favour. Just before we left, I managed to say to him what I felt was imperative: “The Iraq situation isn’t as it seems, it’s a lot deeper than it’s been made out to be.” He looked at me with a serious look and said “Yes I know, I know.” It was decided Pitroda would be in touch with each of us in the next 24 hours. During this time Narasimha Rao’s manifesto committee would read the draft and any questions they had would be sent to us. We were supposed to be on call for 24 hours. The call never came. Given the near total lack of system and organization I had seen over the months, I was not surprised. Krishna Rao and I waited another 48 hours, and then each of us left Delhi. Before going I dropped by to see Krishnamurty, and we talked at length. He talked especially about the lack of the idea of teamwork in India. Krishnamurty said he had read everything I had written for the group and learned a lot. I said that managing the economic reform would be a critical job and the difference between success and failure was thin….”




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“… I got the afternoon train to Calcutta and before long left for America to bring my son home for his summer holidays with me. In Singapore, the news suddenly said Rajiv Gandhi had been killed. All India wept. What killed him was not merely a singular act of criminal terrorism, but the system of humbug, incompetence and sycophancy that surrounds politics in India and elsewhere. I was numbed by rage and sorrow, and did not return to Delhi….”


In December 1991, I visited Rajiv’s widow at 10 Jan Path to express my condolences, the only time I have met her, and I gave her for her records a taped copy of Rajiv’s long-distance telephone conversations with me during the Gulf War earlier that year.   She seemed an extremely shy taciturn figure in deep mourning, and I do not think the little I said to her about her late husband’s relationship with me was comprehended.  Nor was it the time or place for more to be said.


In September 1993, at a special luncheon at the Indian Ambassador’s Residence in Washington, Siddhartha Shankar Ray, then the Ambassador to Washington, pointed at me and declared to Manmohan Singh, then Finance Minister, in presence of Manmohan’s key aides accompanying him including MS Ahluwalia, NK Singh, C Rangarajan and others,


“Congress manifesto was written on his computer”.


This was accurate enough to the extent that the 22 March 1991 draft as asked for by Rajiv and that came to explicitly affect policy had been and remains on my then-new NEC laptop.


At the Ambassador’s luncheon, I gave Manmohan Singh a copy of the Foundations book as a gift.  My father who knew him in the early 1970s through MG Kaul, ICS, had sent him a copy of my 1984 IEA monograph which Manmohan had acknowledged.  And back in 1973, he had visited our then-home at 14 Rue Eugene Manuel in Paris to advise me about economics at my father’s request, and he and I had ended up in a fierce private debate for about forty minutes over the demerits (as I saw them) and merits (as he saw them) of the Soviet influence on Indian economic policy-making.  But in 1993 we had both forgotten the 1973 meeting.  


In May 2002, the Congress passed an official party resolution moved by Digvijay Singh in presence of PV Narasimha Rao and Manmohan Singh that the 1991 reforms had originated with Rajiv Gandhi and not with either Narasimha Rao or Manmohan; no one dissented.  It was intended to flatter Sonia Gandhi as the Congress President,  but there was truth in it too which all Congress MPs of the 13th Lok Sabha had come to know in a publication of mine they had received from me at IIT Kharagpur where since 1996 I had become Professor.  


Manmohan Singh himself, to his credit, has not at any point, except once during his failed Lok Sabha bid, claimed the reforms as his own invention and has said always he had followed what his Prime Minister had told him. However, he has not been averse to being attributed with all the credit by his flatterers, by the media, by businessmen and many many others around the world, and certainly he did not respond to Ambassador Siddhartha Shankar Ray telling him and his key aides how the Congress-led reform had come about through my work except to tell me at the 1993 luncheon that when Arjun Singh criticised the reforms in Cabinet, he, Manmohan, would mention the manifesto. 


On 28 December 2009, Rajiv’s widow in an official Congress Party statement finally declared her late husband


left his personal imprint on the (Congress) party’s manifesto of 1991.″ 


How Sonia Gandhi, who has never had pretensions to knowledge of economics or political economy or political science or governance or history, came to place Manmohan Singh as her prime ministerial candidate and the font of economic and political wisdom along with Pranab Mukherjee, when both men hardly had been favourites of her late husband, would be a story in its own right.  And how Amartya Sen’s European-origin naturalised Indian co-author Jean Drèze later came to have policy influence from a different direction upon Sonia Gandhi, also a naturalised Indian of European origin, may be yet another story in its own right,  perhaps best told by themselves.


I would surmise the same elderly behind-the-scenes figure, now in his late 80s, had a hand in setting up both sets of influences — directly in the first case (from back in 1990-1991),  and indirectly in the second case (starting in 2004) .  This was a man who in a November 2007 newspaper article literally erased my name and inserted that of Manmohan Singh as part of the group that Rajiv created on 25 September following his 18 September meeting with me!   Reluctantly, I had to call this very elderly man a liar; he has not denied it and knows he has not been libeled.


One should never forget the two traditional powers interested in the subcontinent, Russia and Britain, have been never far from influence in Delhi.  In 1990-1991 what worried vested bureaucratic and business interests and foreign powers through their friends and agents was that they could see change was coming to India but they wanted to be able to control it themselves to their advantage, which they then broadly proceeded to do over the next two decades.  The foreign weapons’ contracts had to be preserved, as did other big-ticket imports that India ends up buying needlessly on credit it hardly has in world markets.  There are similarities to what happened in Russia and Eastern Europe where many apparatchiks and fellow-travellers became freedom-loving liberals overnight;  in the Indian case more than one badly compromised pro-USSR senior bureaucrat promptly exported his children and savings to America and wrapped themselves in the American flag.


The stubborn unalterable fact remains that Manmohan Singh was not physically present in India and was still with the Nyerere project on 18 September 1990 when I met Rajiv for the first time and gave him the unpublished results of the UH-Manoa project.  This simple straightforward fact is something the Congress Party, given its own myths and self-deception and disinformation, has not been able to cope with in its recently published history.   For myself, I have remained loyal to my memory of my encounter with Rajiv Gandhi, and my understanding of him.  The Rajiv Gandhi I knew had been enthused by me in 1990-1991 carrying the UH-Manoa perestroika-for-India project that I had led since 1986, and he had loved my advice to him on 18 September 1990 that he needed to modernise the party by preparing a coherent agenda (as other successful reformers had done) while still in Opposition waiting for elections, and to base that agenda on commitments to improving the judiciary and rule of law, stopping the debauching of money, and focusing on the provision of public goods instead.    Rajiv I am sure wanted a modern and modern-minded Congress — not one which depended on him let aside his family, but one which reduced that dependence and let him and his family alone.


As for Manmohan Singh being a liberal or liberalising economist, there is no evidence publicly available of that being so from his years before or during the Nyerere project, or after he returned and joined the Chandrashekhar PMO and the UGC  until becoming,  to his own surprise as he told Mark Tully,  PV Narasimha Rao’s Finance Minister.  Some of his actions qua Finance Minister were liberalising in nature but he did not originate any basic idea of a change in a liberal direction of economic policy, and he has, with utmost honesty honestly, not claimed otherwise.  Innumerable flatterers and other self-interested parties have made out differently, creating what they have found to be a politically useful fiction; he has yet to deny them.


Siddhartha Shankar Ray and I met last in July 2009, when I gave him a copy of this 2005 volume I had created, which pleased him much. 




I said to him Bengal’s public finances were in abysmal condition, calling for emergency measures financially, and that Mamata Banerjee seemed to me to be someone who knew how to and would dislodge the Communists from their entrenched misgovernance of decades but she did not seem quite aware that dislodging a bad government politically was not the same thing as knowing how to govern properly oneself.  He,  again of his own accord, said immediately, 


“I will call her and her people to a meeting here so you can meet them and tell them that directly”. 


It never transpired.  In our last phone conversation I mentioned to him my plans of creating a Public Policy Institute — an idea he immediately and fully endorsed as being essential though adding “I can’t be part of it,  I’m on my way out”.


“I’m on my way out”.   That was Siddhartha Shankar Ray — always intelligent, always good-humoured, always public-spirited, always a great Indian, my only friend among politicians other than the late Rajiv Gandhi himself.



In March February 2010, my father and I called upon the new Bengal Governor, MK Narayanan and gave him a copy of the Thatcher volume for the Raj Bhavan Library; I told him the story about my encounter with Rajiv Gandhi thanks to Siddhartha Shankar Ray and its result;  Narayanan within a few days made a visit to Ray’s hospital-bed, and when he emerged after several hours he made a statement, which in substance he repeated again when Ray died in November 2010:


“There are few people in post-Independence India who could equal his magnificent contribution to India’s growth and progress”.


To what facts did MK Narayanan, a former Intelligence Bureau chief, mean to refer with this extravagant praise of Ray?  Was Narayanan referring to Ray’s politics for Indira Gandhi?  To Ray’s Chief Ministership of Bengal?  To Ray’s Governorship of Punjab?  You will have to ask him but I doubt that was what he meant:  I surmise Narayanan’s eulogy could only have resulted after he confirmed with Ray on his hospital-bed the story I had told him, and that he was referring to the economic and political results that followed for the country once Ray had introduced me in September 1990 to Rajiv Gandhi. But I say again, you will have to ask MK Narayanan himself what he and Ray talked about in hospital and what was the factual basis of Narayanan’s precise words of praise. To what facts exactly was MK Narayanan, former intelligence chief, meaning to refer when he stated Siddhartha Shankar Ray had made a “magnificent contribution to India’s growth and progress”?



3.   Jagdish Bhagwati & Manmohan Singh?  That just don’t fly!


Now returning to the apparent desire of Professor Panagariya, the Jagdish Bhagwati Professor of Indian Political Economy at Columbia, to attribute to Jagdish Bhagwati momentous change for the better in India as of 1991, even if Panagariya had not the scientific curiosity to look into our 1992 book titled Foundations of India’s Political Economy: Towards an Agenda for the 1990s or into Milton Friedman’s own 1998 memoirs, we may have expected him to at least turn to his co-author and Columbia colleague, Jagdish Bhagwati himself, and ask, “Master, have you heard of this fellow Subroto Roy by any chance?”


Jagdish would have had to say yes, since not only had he received a copy of the proofs of my 1984 IEA work Pricing, Planning and Politics: A Study of Economic Distortions in India, he was kind enough to write in a letter dated 15 May 1984 that I had


“done an excellent job of setting out the problems afflicting our economic policies, unfortunately government-made problems!” 



Also Jagdish may or may not have remembered our only meeting, when he and I had had a long conversation on the sofas in the foyer of the IMF in Washington when I was a consultant there in 1993 and he had come to meet someone; he was surprisingly knowledgeable about my personal 1990 matter in the Supreme Court of India which astonished me until he told me his brother the Supreme Court judge had mentioned the case to him!


Now my 1984 work was amply scientific and scholarly in fully crediting a large number of works in the necessary bibliography, including Bhagwati’s important work with his co-authors.  Specifically, Footnote 1 listed the literature saying:


“The early studies notably include: B. R. Shenoy, `A note of dissent’, Papers relating to the formulation of the Second Five-Year Plan, Government of India Planning Commission, Delhi, 1955; Indian Planning and Economic Development, Asia Publishing, Bombay, 1963, especially pp. 17-53; P. T. Bauer, Indian Economic Policy and Development, George Allen & Unwin, London, 1961; M. Friedman, unpublished memorandum to the Government of India, November 1955 (referred to in Bauer, op. cit., p. 59 ff.); and, some years later, Sudha Shenoy, India : Progress or Poverty?, Research Monograph 27, Institute of Economic Affairs, London, 1971. Some of the most relevant contemporary studies are: B. Balassa, `Reforming the system of incentives in World Development, 3 (1975), pp. 365-82; `Export incentives and export performance in developing countries: a comparative analysis’, Weltwirtschaftliches Archiv, 114 (1978), pp. 24-61; The process of industrial development and alternative development strategies, Essays in International Finance No. 141, Princeton University, 1980; J. N. Bhagwati & P. Desai, India: Planning for Industrialisation, OECD, Paris : Oxford University Press, 1970; `Socialism and Indian Economic Policy’, World Development, 3 (1975), pp. 213-21; J. N. Bhagwati & T. N. Srinivasan, Foreign-trade Regimes and Economic Development: India, National Bureau of Economic Research, New York, 1975; Anne O. Krueger, `Indian planning experience’, in T. Morgan et al. (eds.), Readings in Economic Development, Wadsworth, California, 1963, pp. 403-20; `The political economy of the rent-seeking society, American Economic Review, 64 (June 1974); The Benefits and Costs of Import-Substitution in India: a Microeconomic Study, University of Minnesota Press, Minneapolis, 1975; Growth, distortions and patterns of trade among many countries, Studies in International Finance, Princeton University, 1977; Uma Lele, Food grain marketing in India : private performance and public policy, Cornell University Press, Ithaca, 1971; T. W. Schultz (ed.), Distortions in agricultural incentives, Indiana University Press, Bloomington, 1978; V. Sukhatme, “The utilization of high-yielding rice and wheat varieties in India: an economic assessment”, University of Chicago PhD thesis, 1977….”


There were two specific references to Bhagwati’s work with Srinivasan:


“Jagdish Bhagwati and T. N. Srinivasan put it as follows : `The allocation of foreign exchange among alternative claimants and users in a direct control system . . .would presumably be with reference to a well-defined set of principles and criteria based on a system of priorities. In point of fact, however, there seem to have been few such criteria, if any, followed in practice.’”




“But as Bhagwati and Srinivasan report, `. . . the sheer weight of numbers made any meaningful listing of priorities extremely difficult. The problem was Orwellian: all industries had priority and how was each sponsoring authority to argue that some industries had more priority than others? It is not surprising, therefore, that the agencies involved in determining allocations by industry fell back on vague notions of “fairness”, implying pro rata allocations with reference to capacity installed or employment, or shares defined by past import allocations or similar rules of thumb’”


and one to Bhagwati and Desai:


“The best descriptions of Indian industrial policy are still to be found in Bhagwati and Desai (1970)…”


Professors Bhagwati and Panagriya have not apparently referred to anything beyond these joint works of Bhagwati’s dated 1970 with Padma Desai and 1975 with TN Srinivasan.  They have not claimed Bhagwati did anything by way of either publication or political activity in relation to India’s economic policy between May 1984, when he read my soon-to-be-published-work and found I had


done an excellent job of setting out the problems afflicting our economic policies, unfortunately government-made problems”,


and September 1990 when I gave Rajiv the University of Hawaii perestroika-for-India project results developed since 1986, which came to politically spark the 1991 reform in the Congress’s highest echelons from months before Rajiv’s assassination.   


There may have been no such claim made by Bhagwati and Panagariya because there may be no such evidence.  Between 1984 and 1990,  Professor Bhagwati’s research interests were away from Indian economic policy while his work on India through 1970 and 1975 had been fully and reasonably accounted for as of 1984 by myself.


What is left remaining is Bhagwati’s statement :


“When finance minister Manmohan Singh was in New York in 1992, he had a lunch for many big CEOs whom he was trying to seduce to come to India. He also invited me and my wife, Padma Desai, to the lunch. As we came in, the FM introduced us to the invitees and said: ‘These friends of mine wrote almost a quarter century ago [India: Planning for Industrialisation was published in 1970 by Oxford] recommending all the reforms we are now undertaking. If we had accepted the advice then, we would not be having this lunch as you would already be in India’


Now this light self-deprecating reference by Manmohan at an investors’ lunch in New York “for many big CEOs” was an evident attempt at political humour written by his speech-writer.   It was clearly, on its face, not serious history.   If we test it as serious history, it falls flat so we may only hope Manmohan Singh, unlike Jagdish Bhagwati, has not himself come to believe his own reported joke as anything more than that.  


The Bhagwati-Desai volume being referred to was developed from 1966-1970.  India saw critical economic and political events  in 1969, in 1970, in 1971, in 1972, in 1975, in 1977, etc.


Those were precisely years during which Manmohan Singh himself moved from being an academic to becoming a Government of India official, working first for MG Kaul, ICS, and then in 1971 coming to the attention of  PN Haksar, Indira Gandhi’s most powerful bureaucrat between 1967 and 1974: Haksar himself was Manmohan Singh’s acknowledged mentor in the Government, as Manmohan told Mark Tully in an interview.  


After Manmohan visited our Paris home in 1973 to talk to me about economics, my father — who had been himself sent to the Paris Embassy by Haksar in preparation for Indira Gandhi’s visit in November 1971 before the Bangladesh war —



had told me Manmohan was very highly regarded in government circles with economics degrees from both Cambridge and Oxford, and my father had added, to my surprise, what was probably a Haksarian governmental view that Manmohan was expected to be India’s Prime Minister some day.  That was 1973.


PN Haksar had been the archetypal Nehruvian Delhi intellectual of a certain era, being both a fierce nationalist and a fierce pro-USSR leftist from long before Independence.  I met him once on 23 March 1991, on the lawns of 10 Jan Path at the launch of General V Krishna Rao’s book on Indian defence which Rajiv was releasing, and Haksar gave a speech to introduce Rajiv (as if Rajiv needed introduction on the lawns of his own residence);  Haksar was in poor health but he seemed completely delighted to be back in favour with Rajiv,  after years of having been treated badly by Indira and her younger son.  


 Had Manmohan Singh in the early 1970s gone to Haksar — the architect of the nationalisation of India’s banking going on right then — and said “Sir, this OECD study by my friend Bhagwati and his wife says we should be liberalising foreign trade and domestic industry”, Haksar would have been astonished and sent him packing.  


There was a war on, plus a massive problem of 10 million refugees, a new country to support called Bangladesh, a railway strike, a bad crop, repressed inflation, shortages, and heaven knows what more, besides Nixon having backed Yahya Khan, Tikka Khan et al. 




Then after Bangladesh and the railway strike etc, came the rise of the politically odious younger son of Indira Gandhi and his friends (at least one of whom is today Sonia Gandhi’s gatekeeper) followed by the internal political Emergency, the grave foreign-fueled problem of Sikh separatism and its control, the assassination of Indira Gandhi by her own Sikh bodyguards, and the Rajiv Gandhi years as Prime Minister. 


Certainly it was Rajiv’s arrival in office and Benazir’s initial return to Pakistan, along with the rise of Michael Gorbachev in the changing USSR, that inspired me in far away Hawaii in 1986 to design with Ted James the perestroika-projects for India and Pakistan which led to our two volumes, and which, thanks to Siddhartha Shankar Ray, came to reach Rajiv Gandhi in Opposition in September 1990 as he sat somewhat forlornly at 10 Jan Path after losing office. “There is a tide in the affairs of men, Which taken at the flood, leads on to fortune….


My friend and collaborator Ted James died of cancer in Manila in May 2010; earlier that year he came to say publicly


“Seldom are significant reforms imposed successfully by international bureaucracies. Most often they are the result of indigenous actors motivated by domestic imperatives. I believe this was the case in India in 1991. It may have been fortuitous that Dr. Roy gained an audience with a receptive Rajiv Gandhi in 1990 but it was not luck that he was prepared with a well-thought out program; this arose from years of careful thought and debate on the matter.”


Changing the direction of a ship of state is very hard, knowing in which direction it should change and to what degree is even harder; it has rarely been something that can be done without random shocks arising let aside the power of vested interests. Had Rajiv Gandhi lived to form a new Government, I have little doubt I would have led the reform that I had chalked out for him and that he had approved of;  Sonia Gandhi would have remained the housewife, mother and grandmother that she had preferred to be and not been made into the Queen of India by the Congress Party; Manmohan Singh had left India in 1987 for the Nyerere project and it had been rumoured at the time that had been slightly to do with him protesting, to the extent that he ever has protested anything, the anti-Sikh pogrom that some of Rajiv’s friends had apparently unleashed after Indira’s killing; he returned in November 1990, joined Chandrashekhar in December 1990, left Chandrashekhar in March 1991 when elections were announced and was biding his time as head of the UGC; had Rajiv Gandhi lived, Manmohan Singh would have had a governor’s career path, becoming the governor of one state after another; he would not have been brought into the economic reform process which he had had nothing to do with originating; and finally Pranab Mukherjee, who left the Congress Party and formed his own when Rajiv took over, would have been likely rehabilitated slowly but would not have come to control the working of the party as he did. I said in my Lok Sabha TV interview on 5 9 December 2012 that there have been many microeconomic improvements arising from technological progress in the last 22 years but the macroeconomic and monetary situation is grim, because at root the fiscal situation remains incoherent and confused. I do not see anyone in Manmohan Singh’s entourage among all his many acolytes and flatterers and apologists who is able to get to these root problems.  We shall address these issues in Part II.


What Manmohan Singh said in self-deprecating humour at an investors’ lunch in New York in 1992 is hardly serious history as Jagdish Bhagwati has seemed to wish it to be.  Besides, it would have been unlike Manmohan,  being the devoted student of Joan Robinson and Nicholas Kaldor as he told Mark Tully,  to have taken such a liberalising initiative at all.  Furthermore, the 1969 American Economic Review published asurvey of Indian economic policy authored by his Delhi University colleagues Jagdish Bhagwati and Sukhamoy Chakravarty which made little mention of his work, and it would have been unreasonable to expect him to have been won over greatly by theirs. Perhaps there is a generous review from the 1970s by Manmohan Singh of the Bhagwati-Desai volume hidden somewhere but if so we should be told where it is.  A list of Manmohan Singh’s publications as an economist do not seem easily available anywhere.  


Lastly and perhaps most decisively, the 1970 Bhagwati-Desai volume, excellent study that it was, was hardly the first of its genre by way of liberal criticism of modern Indian economic policy!   Bhagwati declared in his 2010 speech to the Lok Sabha


“This policy framework had been questioned, and its total overhaul advocated, by me and Padma Desai in writings through the late 1960s…”


But why has Bhagwati been forever silent about the equally if not more forceful and fundamental criticism of “the policy framework”, and advocacy of its “total overhaul”, by scholars in the 1950s, a decade and more earlier than him, when he and Manmohan and Amartya were still students?  Specifically, by BR Shenoy, Milton Friedman, and Peter Bauer?   The relevant bibliography from the mid 1950s is given in Footnote 1 of my 1984 work. 





Peter Tamas Bauer (1915-2002) played a vital role in all this as had he himself not brought the Friedman 1955 document to my attention I would not have known of it.




As undergraduates at the LSE, we had been petrified of him and I never spoke to him while there, having believed the propaganda that floated around about him; then while a Research Student at Cambridge, I happened to be a speaker with him at a conference at Oxford; he made me sit next to him at a meal and told me for the first time about Milton Friedman’s 1955 memorandum to the Government of India which had been suppressed.  I am privileged to say Peter from then on became a friend, and wrote, at my request, what became I am sure the kiss of death for me at the World Bank of 1982:



Later he may have been responsible for the London Times writing its lead editorial of 29 May 1984 on my work.


Now Milton had sent me in 1984, besides the original of his November 1955 memorandum to the Government of India, a confidential 1956 document also which seemed to have been written for US Government consumption.  I did not publish this in Hawaii in 1989 as I was having difficulty enough publishing the 1955 memorandum.  I gave it to be published on the Internet some years ago, and after Milton’s passing, I had it published in The Statesman  on the same day as my obituary of him. 


It makes fascinating reading, especially about Mahalanobis and Shenoy, of how what Bhagwati wishes to call “the policy framework” that, he claims, he and Desai called for a “total overhaul” of, came to be what it was in the decade earlier when he and Amartya and Manmohan were still students. 


Friedman’s 1956 document said


“I met PC Mahalanobis in 1946 and again at a meeting of the International Statistical Institute in September 1947, and I know him well by reputation. He was absent during most of my stay in New Delhi, but I met him at a meeting of the Indian Planning Commission, of which he is one of the strongest and most able members.   Mahalanobis began as a mathematician and is a very able one. Able mathematicians are usually recognized for their ability at a relatively early age. Realizing their own ability as they do and working in a field of absolutes, tends, in my opinion, to make them dangerous when they apply themselves to economic planning. They produce specific and detailed plans in which they have confidence, without perhaps realizing that economic planning is not the absolute science that mathematics is. This general characteristic of mathematicians is true of Mahalanobis but in spite of the tendency he is willing to discuss a problem and listen to a different point of view. Once his decision is reached, however, he has great confidence in it. Mahalanobis was unquestionably extremely influential in drafting the Indian five-year plan. There were four key steps in the plan. The first was the so-called “Plan Frame” drafted by Mahalanobis himself. The second was a tentative plan based on the “Plan Frame”. The third step was a report by a committee of economists on the first two steps, and the fourth was a minority report by BR Shenoy on the economists’ report. The economists had no intention of drafting a definitive proposal but merely meant to comment on certain aspects of the first two steps. Shenoy’s minority report, however, had the effect of making the economists’ report official. The scheme of the Five Year Plan attributed to Mahalanobis faces two problems; one, that India needs heavy industry for economic development; and two, that development of heavy industry uses up large amounts of capital while providing only small employment.  Based on these facts, Mahalanobis proposed to concentrate on heavy industry development on the one hand and to subsidize the hand production cottage industries on the other. The latter course would discriminate against the smaller manufacturers. In my opinion, the plan wastes both capital and labour and the Indians get only the worst of both efforts. If left to their own devices under a free enterprise system I believe the Indians would gravitate naturally towards the production of such items as bicycles, sewing machines, and radios. This trend is already apparent without any subsidy. The Indian cottage industry is already cloaked in the same popular sort of mist as is rural life in the US. There is an idea in both places that this life is typical and the backbone of their respective countries. Politically, the Indian cottage industry problem is akin to the American farm problem. Mohandas Gandhi was a proponent of strengthening the cottage industry as a weapon against the British. This reason is now gone but the emotions engendered by Gandhi remain. Any move to strengthen the cottage industry has great political appeal and thus, Mahalanobis’ plan and its pseudo-scientific support for the industry also has great political appeal.  I found many supporters for the heavy industry phase of the Plan but almost no one (among the technical Civil Servants) who really believes in the cottage industry aspects, aside from their political appeal. In its initial form, the plan was very large and ambitious with optimistic estimates. My impression is that there is a substantial trend away from this approach, however, and an attempt to cut down. The development of heavy industry has slowed except for steel and iron. I believe that the proposed development of a synthetic petroleum plant has been dropped and probably wisely so. In addition, I believe that the proposed five year plan may be extended to six years. Other than his work on the plan, I am uncertain of Mahalanobis’ influence. The gossip is that he has Nehru’s ear and potentially he could be very influential, simply because of his intellectual ability and powers of persuasion. The question that occurs to me is how much difference Mahalanobis’ plan makes. The plan does not seem the important thing to me. I believe that the new drive and enthusiasm of the Indian nation will surmount any plan, good or bad. Then too, I feel a wide diversity in what is said and what is done. I believe that much of Nehru’s socialistic talk is simply that, just talk. Nehru has been trying to undermine the Socialist Party by this means and apparently the Congress Party’s adoption of a socialistic idea for industry has been successful in this respect.  One gets the impression, depending on whom one talks with, either that the Government runs business, or that two or three large businesses run the government. All that appears publicly indicates that the first is true, but a case can also be made for the latter interpretation. Favour and harassment are counterparts in the Indian economic scheme. There is no significant impairment of the willingness of Indian capitalists to invest in their industries, except in the specific industries where nationalization has been announced, but they are not always willing to invest and take the risks inherent in the free enterprise system. They want the Government to support their investment and when it refuses they back out and cry “Socialism”..”


I look forward to seeing a fundamental classical liberal critique from India’s distinguished American friends at Columbia University, Professors Jagdish Bhagwati and Padma Desai and Arvind Panagariya, if and when such a critique arises,  of the  “policy framework” in India as that evolved from the mid 1950s to become what exists across India in 2013 today.  Specifically:  Where is the criticism from Bhagwati of Mahalanobis and friends?  And where is Bhagwati’s defence of Shenoy, leave aside of Milton Friedman or Peter Bauer?   They seem not to exist. The most we get is a footnote again without the civility of any references, in the otherwise cogent 1975 Desai-Bhagwati paper “Socialism and Indian Economic Policy” alleging 


” Of these three types of impact of the Soviet example, the Plan-formulation approach was to be enthusiastically received by most commentators and, indeed, to lead to demands on the part of aid agencies for similar efforts by other developing countries. However, the shift to heavy industry was seen as a definite mistake by economic opinion of the Chicago school variety, reflecting their basic unfamiliarity with the structural models of growth and development planning of the Feldman-Mahalanobis variety-an ignorance which probably still persists. The detailed regulation was not quite noticed at the time, except by conservative commentators whose position however was extreme and precluded governmental planning of industrial investments on any scale.”


Desai and Bhagwati naturally found no apparent desire to locate any possible scientific truth or reasonableness among


“conservative commentators”


nor among the unnamed and undescribed


“economic opinion of the Chicago school variety”.   


Could Desai and Bhagwati have done anything different after all, even when talking about India to an American audience, without being at risk of losing their East Coast Limousine Liberal credentials?  Bhagwati used to routinely declare his “socialist” credentials, and even the other day on Indian TV emphatically declared he was not a “conservative” and scornfully dismissed “Thatcher and Reagan” for their “trickle down economics”…


Jagdish Bhagwati has evidently wanted to have his cake and eat it too…



4.    Amartya Sen’s Half-Baked Communism: “To each according to his need”? 


If I have been candid or harsh in my assessments of Jagdish Bhagwati and Manmohan Singh as they relate to my personal experience with the change of direction in Indian economic policy originating in 1990-1991, I am afraid I must be equally so with Bhagwati’s current opponent in debate, Amartya Sen. Certainly I have found the current spat between Bhagwati and Sen over India’s political economy to be dismal, unscholarly, unscientific and misleading (or off-base) except for it having allowed a burst of domestic policy-discussion in circumstances when India needs it especially much.  


None of this criticism is personal but based on objective experience and the record.  My criticism of Professor Bhagwati and Dr Manmohan Singh does not diminish in the slightest my high personal regard for both of them.


Similarly, Amartya Sen and I go back, momentarily, to Hindustan Park in 1964 when there was a faint connection as family friends from World War II  (as Naren Deb and Manindranath Roy were friends and neighbours, and we still have the signed copy of a book gifted by the former to the latter), and then he later knew me cursorily when I was an undergraduate at LSE and he was already a famous professor, and I greatly enjoyed his excellent lectures at the LSE on his fine book On Economic Inequality, and a few years later he wrote in tangential support of me at Cambridge for which he was thanked in the preface to my 1989 Philosophy of Economics — even though that book of mine also contained in its Chapter 10 the decisive criticism of his main contribution until that time to what used to be called “social choice theory”. Amartya Sen had also written some splendid handwritten letters, a few pages of which remain with me, which puzzled me at the time due to his expressing his aversion to what is normally called ‘price theory’, namely the Marshallian and/or Walrasian theory of value. 


Professor Sen and I met briefly in 1978, and then again in 2006 when I was asked to talk to him in our philosophical conversation which came to be published nicely.  In 2006 I told him of my experience with Rajiv Gandhi in initiating what became the 1991 reform on the basis of my giving Rajiv the results of the Hawaii project,  and Amartya was kind enough to say that he knew I had been arguing all this “very early on”, referring presumably to the 1984 London Times editorial which he would have seen in his Oxford days before coming to Harvard.


This personal regard on my part or personal affection on his part aside, I have been appalled to find Professor Sen not taking moral and intellectual responsibility for and instead disclaiming paternity of the whole so-called “Food Security” policy which Sonia Gandhi has been prevailed upon over the years by him and his acolytes and friends and admirers to adopt, and she in her ignorance of all political economy and governance has now wished to impose upon the Congress Party and India as a whole:


“Questioner: You are being called the creator of the Food Security Bill.

Amartya Sen: Yes, I don’t know why. That is indeed a paternity suit I’m currently fighting. People are accusing me of being the father”.


Amartya Sen has repeatedly over the years gone on Indian prime-time television and declared things like


If you don’t agree there’s hunger in the world, there’s something morally wrong with you”


besides over the decades publishing titles like Poverty and Famines: An Essay on Entitlement and Deprivation, Hunger and Public Action, The Political Economy of Hunger etc and ceaselessly using his immense power with the media, with book publishing houses, with US academic departments and the world development economics business,  to promote his own and his acolytes’ opinions around the world, no matter how ill-considered or incoherent these may be.   A passage from his latest book with Jean Drèze reportedly reads


“If development is about the expansion of freedom, it has to embrace the removal of poverty as well as paying attention to ecology as integral parts of a unified concern, aimed ultimately at the security and advancement of human freedom. Indeed, important components of human freedoms — and crucial ingredients of our quality of life — are thoroughly dependent on the integrity of the environment, involving the air we breathe, the water we drink, and the epidemiological surroundings in which we live….”


Had such a passage reached me in an undergraduate essay, I would have considered it incoherent waffle, and I am afraid I cannot see why merely because it is authored  by an eminence at Harvard and his co-author, the evaluation should be any different.   I am reminded of my encounter in 1976 with Joan Robinson, the great tutor in 1950s Cambridge of Amartya and Manmohan:  “Joan Robinson cornered me once and took me into the office she shared with EAG… She came at me for an hour or so wishing to supervise me, I kept declining politely… saying I was with Frank Hahn and wished to work on money… “What does Frankie know about India?” she said… I said I did not know but he did know about monetary theory and that was what I needed for India;  I also said I did not think much about the Indian Marxists she had supervised… and mentioned a prominent name… she said about him, “Yes most of what he does can go straight into the dustbin”…”  The Indian Marxist whom I had referred to in this conversation with Joan was not Amartya but someone else much younger, yet her candid “can go straight into the dustbin” still applies to all incoherent waffle, whomsoever may produce it.


Indeed, Amartya Sen, if anyone, really should get down to writing his memoirs, and candidly so in order to explain his own thinking and deeds over the decades to himself and to the world in order that needless confusions do not arise.  


Else it becomes impossible to explain how someone who was said to be proud to have been a Communist student on the run from the police in West Bengal, who was Joan Robinson’s star pupil at a time she was extolling Maoist China and who has seemingly nurtured a deep lifelong fascination and affection for Communist China despite all its misdeeds, who was feted by the Communist regime of West Bengal after winning the Bank of Sweden Prize (on the same day that same regime had tossed into jail one unfortunate young Mr Khemkha merely for having been rude to its leaders on the Internet), and who seemed to share some of those winnings on social causes like primary education at the behest of the Communist regime’s ministers, etc, how someone with that noble comradely leftist personal history as an economist allows a flattering interviewer with a Harvard connection to describe him in Business Standard of 25 July 2013  as having been all along really a


“neoclassical economist”


who also happens to be


“the greatest living scholar of the original philosopher of the free market, Adam Smith”


Amartya Sen a neoclassical economist and a great scholar of Adam Smith?  It is hilarious to suppose so. The question arises, Does Sen, having published about Adam Smith recently in a few newspapers and leftist periodicals, agree with such a description by his flattering admirer from Harvard at Business Standard?  “Neoclassical” economics originated with men like Jevons, Menger, Walras, Pareto, Marshall, Wicksell, and was marked by the theory of value being explained by a demand-side too, and not, like classical economics, merely by the cost of production alone on the supply side.  Indeed a striking thing about the list below published by the Scandinavian Journal of Economics of Amartya’s books following his 1998 Bank of Sweden Prize


1467-9442.00152_p1is how consistently these works display his avoidance of all neoclassical economics, and the absence of all of what is normally called ‘price theory’, namely the Marshallian and/or Walrasian theory of value.   No “neoclassical economics” anywhere here  for sure!  


It would be fair enough if Professor Sen says he is hardly responsible for an admirer’s ignorant misdescription of his work — except the question still arises why he has himself also evidently misdescribed his own work!  For example, in his 13 July 2013 letter to The Economist in response to the criticism of Jagdish Bhagwati and Arvind Panagariya, he says he had always been keenly interested in


“the importance of economic growth as a means— not an end”


and that this


“has been one of the themes even in my earliest writings (including “Choice of Techniques” in 1960 and “Growth Economics” in 1970)”.


This is a very peculiar opinion indeed to have been expressed by Professor Sen about his own work because the 1970 volume Growth Economics listed above among his books hardly can be said at all to be one of his own “earliest writings” as he now describes it to have been!


What had happened back then was that Sen, as someone considered a brilliant or promising young Indian economist at the time, had been asked by the editors of the famous Penguin Modern Economics Readings series to edit the specific issue  devoted to growth-theory — a compendium of classic already-published essays including those of Roy Harrod, Evsey Domar, Robert Solow and many others, to which young Amartya was given a chance to write an editorial Introduction.   Every economist familiar with that literature knows too that the growth-theory contained in that volume and others was considered highly abstract and notoriously divorced from actual historical processes of economic growth in different countries.  Everyone also knew that the individual editors in that famous Penguin Modern Economics Series were of relative unimportance as they did not commission new papers but merely collected classics already published and wrote an introduction.


This is significant presently because neither Professor Sen nor Professor Bhagwati may be objectively considered on the evidence of his life’s work as an economist to have been a major scholar of economic growth, either in theory or in historical practice.  As of December 1989,  Amartya Sen himself described his own interests to the American Economic Association as


“social choice theory, welfare economics, economic development”


and Jagdish Bhagwati described his interests as


“theory of international trade and policy, economic development”. 


Neither Sen nor Bhagwati mentioned growth economics or economic history or even general economic theory, microeconomics, macroeconomics, monetary economics, public finance, etc.  Furthermore, Sen saying in his letter to The Economist  that he has been always interested in economic growth seems to be baseless in light of the list of his books above, other than the Penguin compendium already discussed.


Incidentally in the same American Economic Association volume of 1989, Padma Desai had described her interests as


“Soviet economy and comparative economic systems”; 


Arvind Panagariya had described his interests as


“economies of scale and trade; smuggling; parallel markets in planned economies”;


and one Suby Roy described his interests as


“foundations of monetary economics”.


Reflecting on Amartya Sen’s works over the 40 year period that I have known them


[and again, my personal copies of his books and those of Bhagwati and Desai, were all in my professorial office at IIT Kharagpur when I was attacked by a corrupt gang there in 2003; and IIT have been under a High Court order to return them but have not done so],


I wonder in fact if it might be fairly said that Sen has been on his own subjective journey over the decades around the world seeking to reinvent economics and political economy from scratch, and inventing his own terminology like “capabilities”, “functionings” and yes “entitlements” etc. to help him do so, while trying to assiduously avoid mention of canonical works of  modern world economics like Marshall’s Principles, Hicks’s Value and Capital, Debreu’s Theory of Value, or Arrow and Hahn’s General Competitive Analysis, all defining the central neoclassical tradition of the modern theory of value.  


But no contemporary science, economics and political economy included, is open to be re-invented from scratch, and what Amartya Sen has ended up doing instead is seeming to be continually trying to reinvent the wheel, possibly without having had the self-knowledge to realise this.  Wittgenstein once made a paradoxical statement that one may know another’s mind better than one knows one’s own…  

Here is a current example.  Professor Sen says


“First, unlike the process of development in Japan, China, Korea and other countries, which pursued what Jean Drèze and I have called “Asian economic development” in our book, India has not had enough focus on public spending on school education and basic healthcare, which these other countries have had….”


Does Sen really believes believe he and Drèze  have now in 2013 discovered and christened an economic phenomenon named “Asian economic development”?  Everyone, from Japan and Bangkok and Manila, to Hawaii and Stanford to the World Bank’s East Asia department, including  especially my Hawaii colleague Ted James, and many many others including especially Gerald M Meier at Stanford, were publishing about all that every month — in the mid 1980s!  In fact, our project on India and Pakistan arose in the 1980s from precisely such a Hawaiian wave!  Everyone knows all that from back then or even earlier when the Japanese were talking about the “flying geese” model.  (And, incidentally,  Communist China did not at the time belong in the list.)  Where was Amartya Sen in the mid 1980s when all that was happening?  Jean Drèze was still a student perhaps. Is Professor Sen seeking to reinvent the wheel again with “Asian Economic Development” being claimed to be invented in 2013 by him and Drèze now? Oh please!  That just won’t fly either!


A second example may be taken from the year before Professor Sen was awarded the Bank of Sweden Prize when he gave a lecture on “human capital” theory which was published as a survey titled “Human Capital and Human Capability” in World Development 1997 Vol. 25, No. 12, 


Can you see any reference in this 1997 survey to TW Schultz’s 1960 American Economic Association Presidential Address or to Schultz’s classic 1964 book Transforming Traditional Agriculture or to his 1979 Bank of Sweden Prize address?  I could not.   If one did not know better, one might have thought from Professor Sen’s 1997 survey that there was nothing done worth talking about on the subject of “human capital” from the time of Adam Smith and David Hume until Amartya Sen finally came to the subject himself. 


Thirdly,  one is told by Sen’s admirer and collaborator, Professor James Foster of George Washington University, that what  Sen means by his notion of


“effective freedom”


is that this is something


“enhanced when a marginally nourished family now has the capability to be sufficiently nourished due to public action”…


Are Amartya and his acolytes claiming he has invented or reinvented welfare economics ab initio?   That before Amartya Sen, we did not know the importance of the able-bodied members of a community assisting those who are not able-bodied? 


Where have they been? Amartya needed merely to have read Marshall’s Principles evenslightly to find Marshall himself, the master of Maynard Keynes and all of Cambridge and modern world economics, declaring without any equivocation at the very start 


“….the study of the causes of poverty is the study of the causes of the degradation of a large part of mankind…”


But Marshall was interested in study, serious study, of poverty and its causes and amelioration, which is not something as easy or trivial as pontification on modern television.  My 1984 article “Considerations on Utility, Benevolence and Taxation” which also became a chapter of my 1989 Philosophy of Economics surveyed some of Marshall’s opinion.


“From each according to his ability, to each according to his need” was a utopian slogan around 1875 from Karl Marx, which generations of passionate undergraduates have found impressive. Amartya Sen deserves to tell us squarely about his engagement with Marx or Marxist thought from his earliest days until now.  His commitment in recent decades to democracy and the open and free society is clear;  but has he also at the same time all along been committed to a kind of half-baked communist utopia as represented by Marx’s 1875 slogan? 


“To each according to his need” sounds to be the underlying premise that is seeing practical manifestation in the Sonia Congress’s imposition of a so-called “right to food”; “from each according to his ability” is its flip side in the so-called “rural employment guarantee”.  Leave aside the limitless resource-allocation and incentive and public finance problems created by such naive ideas being made into government policy, there is a grave and fundamental issue that Amartya and other leftists have been too blinkered to see:


Do they suppose the organised business classes have been weakly cooperative and will just allow such massive redistribution to occur without getting the Indian political system to pay them off as well?   And how do the organised business classes get paid off?  By their getting to take the land of the inhabitants of rural India.   And land in an environment of a debauching of money and other paper assets is as good as gold.


So the peasants will lose their land to the government’s businessman friends on the one hand while purportedly getting “guaranteed” employment and food from the government’s bureaucrats on the other!  A landless, asset-less slave population, free to join the industrial proletariat! Is that what Amartya wants to see in India?  It may become what results within a few decades from his and his acolytes’ words and deeds. 


Rajiv Gandhi once gave me his private phone numbers at 10 Jan Path.  I used them back in January 1991 during the Gulf war.  But I cannot do so now as Rajiv is gone.  Amartya can.  Let him phone Sonia and prevail upon her to put the brakes on the wild food and employment schemes he and his friends have persuaded her about until he reads and reflects upon what I said in January 2007 in “On Land-Grabbing” and in my July 2007 open letter to him, reproduced below:


“At a business meet on 12 January 2005, Dr Manmohan Singh showered fulsome praise on Buddhadeb Bhattacharjee as “dynamic”, “the Nation’s Best Chief Minister”, whose “wit and wisdom”, “qualities of head and heart”, “courage of conviction and passionate commitment to the cause of the working people of India” he admired, saying “with Buddhadeb Babu at the helm of affairs it appears Bengal is once again forging ahead… If today there is a meeting of minds between Delhi and Kolkata, it is because the ideas that I and Buddhadebji represent have captured the minds of the people of India. This is the idea of growth with equity and social justice, the idea that economic liberalization and modernization have to be mindful of the needs of the poor and the marginalized.”…. Dr Singh returned to the “needs of the poor and the marginalized” at another business meet on 8 January 2007 promising to “unveil a new Rehabilitation Policy in three months to increase the pace of industrialisation” which would be “more progressive, humane and conducive to the long-term welfare of all stakeholders”, while his businessman host pointedly stated about Singur “land for industry must be made available to move the Indian manufacturing sector ahead”. The “meeting of minds between Delhi and Kolkata” seems to be that agriculture allegedly has become a relatively backward slow-growing sector deserving to yield in the purported larger national interest to industry and services: what the PM means by “long-term welfare of all stakeholders” is the same as the new CPI-M party-line that the sons of farmers should not remain farmers (but become automobile technicians or IT workers or restaurant waiters instead).   It is a political viewpoint coinciding with interests of organised capital and industrial labour in India today, as represented by business lobbies like CII, FICCI and Assocham on one hand, and unions like CITU and INTUC on the other. Business Standard succinctly (and ominously) advocated this point of view in its lead editorial of 9 January as follows: “it has to be recognised that the world over capitalism has progressed only with the landed becoming landless and getting absorbed in the industrial/service sector labour force ~ indeed it is obvious that if people don’t get off the land, their incomes will rise only slowly”.  Land is the first and ultimate means of production, and the attack of the powerful on land-holdings or land-rights of the unorganised or powerless has been a worldwide phenomenon ~ across both capitalism and communism.  In the mid-19th Century, white North America decimated hundreds of thousands of natives in the most gargantuan land-grab of history. Defeated, Chief Red Cloud of the Sioux spoke in 1868 for the Apache, Navajo, Comanche, Cheyenne, Iroquois and hundreds of other tribes: “They made us many promises, more than I can remember, but they never kept any except one: they promised to take our land, and they took it.”  Half a century later, while the collapse of grain prices contributed to the Great Depression and pauperisation of thousands of small farmers in capitalist America in the same lands that had been taken from the native tribes, Stalin’s Russia embarked on the most infamous state-sponsored land-grab in modern history: “The mass collectivisation of Soviet agriculture (was) probably the most warlike operation ever conducted by a state against its own citizens…. Hundreds of thousands and finally millions of peasants… were deported… desperate revolts in the villages were bloodily suppressed by the army and police, and the country sank into chaos, starvation and misery… The object of destroying the peasants’ independence…was to create a population of slaves, the benefit of whose labour would accrue to industry. The immediate effect was to reduce Soviet agriculture to a state of decline from which it has not yet recovered… The destruction of the Soviet peasantry, who formed three quarters of the population, was not only an economic but a moral disaster for the entire country. Tens of millions were driven into semi-servitude, and millions more were employed as executants…” (Kolakowski, Main Currents of Marxism).   Why did Stalin destroy the peasants? Lenin’s wishful “alliance between the proletariat and the peasantry” in reality could lead only to the peasants being pauperised into proletarians. At least five million peasants died and (Stalin told Churchill at Yalta) another ten million in the resultant famine of 1932-1933. “Certainly it involved a struggle ~ but chiefly one between urban Communists and villagers… it enabled the regime to obtain much of the capital desired for industrialization from the defeated village… it was the decisive step in the building of Soviet totalitarianism, for it imposed on the majority of the people a subjection which only force could maintain” (Treadgold, 20th Century Russia).  Mr Bhattacharjee’s CPI-M is fond of extolling Chinese communism, and the current New Delhi establishment have made Beijing and Shanghai holiday destinations of choice. Dr Singh’s Government has been eager to create hundreds of “Special Economic Zones” run by organised capital and unionised labour, and economically privileged by the State. In fact, the Singur and Nandigram experiences of police sealing off villages where protests occur are modelled on creation of “Special Economic Zones” in China in recent years.  For example, Chinese police on 6 December 2005 cracked down on farmers and fishermen in the seaside village of Dongzhou, 125 miles North East of Hong Kong. Thousands of Dongzhou villagers clashed with troops and armed police protesting confiscation of their lands and corruption among officials. The police immediately sealed off the village and arrested protesters. China’s Public Security Ministry admitted the number of riots over land had risen sharply, reaching more than seventy thousand across China in 2004; police usually suppressed peasant riots without resort to firing but in Dongzhou, police firing killed 20 protesters. Such is the reality of the “emergence” of China, a totalitarian police-state since the Communist takeover in 1949, from its period of mad tyranny until Mao’s death in 1976, followed by its ideological confusion ever since.  Modern India’s political economy today remains in the tight grip of metropolitan “Big Business” and “Big Labour”. Ordinary anonymous individual citizens ~ whether housewife, consumer, student, peasant, non-union worker or small businessman ~ have no real voice or representation in Indian politics. We have no normal conservative, liberal or social democratic party in this country, as found in West European democracies where the era of land-grabbing has long-ceased. If our polity had been normal, it would have known that economic development does not require business or government to pauperise the peasantry but instead to define and secure individual property rights and the Rule of Law, and establish proper conditions for the market economy. The Congress and BJP in Delhi and CPI-M in Kolkata would not have been able to distract attention from their macroeconomic misdeeds over the decades ~ indicated, for example, by increasing interest-expenditure paid annually on Government debt as a fraction of tax revenues… This macroeconomic rot originated with the Indira Gandhi-PN Haksar capriciousness and mismanagement, which coincided with the start of Dr Singh’s career as India’s best known economic bureaucrat….”


“Professor Amartya Sen, Harvard University,  Dear Professor Sen,  Everyone will be delighted that someone of your worldwide stature has joined the debate on Singur and Nandigram; The Telegraph deserves congratulations for having made it possible on July 23.  I was sorry to find though that you may have missed the wood for the trees and also some of the trees themselves. Perhaps you have relied on Government statements for the facts. But the Government party in West Bengal represents official Indian communism and has been in power for 30 years at a stretch. It may be unwise to take at face-value what they say about their own deeds on this very grave issue! Power corrupts and absolute power corrupts absolutely, and there are many candid communists who privately recognise this dismal truth about themselves. To say this is not to be praising those whom you call the “Opposition” ~ after all, Bengal’s politics has seen emasculation of the Congress as an opposition because the Congress and communists are allies in Delhi. It is the Government party that must reform itself from within sua sponte for the good of everyone in the State.  The comparisons and mentions of history you have made seem to me surprising. Bengal’s economy now or in the past has little or nothing similar to the economy of Northern England or the whole of England or Britain itself, and certainly Indian agriculture has little to do with agriculture in the new lands of Australia or North America. British economic history was marked by rapid technological innovations in manufacturing and rapid development of social and political institutions in context of being a major naval, maritime and mercantile power for centuries. Britain’s geography and history hardly ever permitted it to be an agricultural country of any importance whereas Bengal, to the contrary, has been among the most agriculturally fertile and hence densely populated regions of the world for millennia.  Om Prakash’s brilliant pioneering book The Dutch East India Company and the Economy of Bengal 1630-1720 (Princeton 1985) records all this clearly. He reports the French traveller François Bernier saying in the 1660s “Bengal abounds with every necessary of life”, and a century before him the Italian traveller Verthema saying Bengal “abounds more in grain, flesh of every kind, in great quantity of sugar, also of ginger, and of great abundance of cotton, than any country in the world”. Om Prakash says “The premier industry in the region was the textile industry comprising manufacture from cotton, silk and mixed yarns”. Bengal’s major exports were foodstuffs, textiles, raw silk, opium, sugar and saltpetre; imports notably included metals (as Montesquieu had said would always be the case).  Bengal did, as you say, have industries at the time the Europeans came but you have failed to mention these were mostly “agro-based” and, if anything, a clear indicator of our agricultural fecundity and comparative advantage. If “deindustrialization” occurred in 19th Century India, that had nothing to do with the “deindustrialization” in West Bengal from the 1960s onwards due to the influence of official communism.  You remind us Fa Hiaen left from Tamralipta which is modern day Tamluk, though he went not to China but to Ceylon. You suggest that because he did so Tamluk effectively “was greater Calcutta”. I cannot see how this can be said of the 5th Century AD when no notion of Calcutta existed. Besides, modern Tamluk at 22º18’N, 87º56’E is more than 50 miles inland from the ancient port due to land-making that has occurred at the mouth of the Hooghly. I am afraid the relevance of the mention of Fa Hiaen to today’s Singur and Nandigram has thus escaped me.  You say “In countries like Australia, the US or Canada where agriculture has prospered, only a very tiny population is involved in agriculture. Most people move out to industry. Industry has to be convenient, has to be absorbing”. Last January, a national daily published a similar view: “For India to become a developed country, the area under agriculture has to shrink, urban and industrial land development has to take place, and about 100 million workers have to move out from agriculture into industry and services. This is the only way forward for bringing prosperity to the rural population”.   Rice is indeed grown in Arkansas or Texas as it is in Bengal but there is a world of difference between the technological and geographical situation here and that in the vast, sparsely populated New World areas with mechanized farming! Like shoe-making or a hundred other crafts, agriculture can be capital-intensive or labour-intensive ~ ours is relatively labour-intensive, theirs is relatively capital-intensive. Our economy is relatively labour-abundant and capital-scarce; their economies are relatively labour-scarce and capital-abundant (and also land-abundant). Indeed, if anything, the apt comparison is with China, and you doubtless know of the horror stories and civil war conditions erupting across China in recent years as the Communist Party and their businessman friends forcibly take over the land of peasants and agricultural workers, e.g. in Dongzhou. All plans of long-distance social engineering to “move out” 40 per cent of India’s population (at 4 persons per “worker”) from the rural hinterlands must also face FA Hayek’s fundamental question in The Road to Serfdom: “Who plans whom, who directs whom, who assigns to other people their station in life, and who is to have his due allotted by others?”  Your late Harvard colleague, Robert Nozick, opened his brilliant 1974 book Anarchy, State and Utopia saying: “Individuals have rights, and there are things no person or group may do to them (without violating their rights)”. You have rightly deplored the violence seen at Singur and Nandigram. But you will agree it is a gross error to equate violence perpetrated by the Government which is supposed to be protecting all people regardless of political affiliation, and the self-defence of poor unorganised peasants seeking to protect their meagre lands and livelihoods from state-sponsored pogroms. Kitchen utensils, pitchforks or rural implements and flintlock guns can hardly match the organised firepower controlled by a modern Government.   Fortunately, India is not China and the press, media and civil institutions are not totally in the hands of the ruling party alone. In China, no amount of hue and cry among the peasants could save them from the power of organised big business and the Communist Party. In India, a handful of brave women have managed to single-handedly organise mass movements of protest which the press and media have then broadcast that has shocked the whole nation to its senses.  You rightly say the land pricing process has been faulty. Irrelevant historical prices have been averaged when the sum of discounted expected future values in an inflationary economy should have been used. Matters are even worse. “The fear of famine can itself cause famine. The people of Bengal are afraid of a famine. It was repeatedly charged that the famine (of 1943) was man-made.” That is what T. W. Schultz said in 1946 in the India Famine Emergency Committee led by Pearl Buck, concerned that the 1943 Bengal famine should not be repeated following dislocations after World War II. Of course since that time our agriculture has undergone a Green Revolution, at least in wheat if not in rice, and a White Revolution in milk and many other agricultural products. But catastrophic collapses in agricultural incentives may still occur as functioning farmland comes to be taken by government and industry from India’s peasantry using force, fraud or even means nominally sanctioned by law. If new famines come to be provoked because farmers’ incentives collapse, let future historians know where responsibility lay.  West Bengal’s real economic problems have to do with its dismal macroeconomic and fiscal position which is what Government economists should be addressing candidly. As for land, the Government’s first task remains improving grossly inadequate systems of land-description and definition, as well as the implementation and recording of property rights.  With my most respectful personal regards, I remain, Yours ever, Suby”


How does India, as a state, treat its weakest and most vulnerable citizens? Not very well at all.  It is often only because families and society have not collapsed completely, as they have elsewhere, that the weakest survive.  Can we solve in the 21st Century, in a practical manner appropriate to our times, the problem Buddha raised before he became the Buddha some twenty six centuries ago?  Says Eliot,


“The legend represents him as carefully secluded from all disquieting sights and as learning the existence of old age, sickness and death only by chance encounters which left a profound impression”


It is to this list we add “the poor” too, especially if we want to include a slightly later and equally great reformer some miles west of the Terai in the Levant.  I said some years ago “As we as infants and children need to be helped to find courage to face the start of life, we when very elderly can need to be helped to find courage to face life’s end”.   Old age carries with it the fear of death, fear of the end of life and what that means, which raises the meaning of life itself, or at least of the individual life, because we can hardly grasp what the end of life is if we haven’t what it is supposed to be the end of in the first place. What the very elderly need, as do the dying and terminally ill, is to find courage within themselves to comprehend all this with as much equanimity as possible. Companionship and camaraderie — or perhaps let us call it love — go towards that courage coming to be found; something similar goes for the sick, whether a sick child missing school or the elderly infirm, courage that they are not alone and that they can and will recover and not have to face death quite yet, that life will indeed resume.  


As for the poor, I said in 2009 about the bizarre Indian scheme of “interrogating, measuring, photographing and fingerprinting them against their will” that “the poor have their privacy and their dignity. They are going to refuse to waste their valuable time at the margins of survival volunteering for such gimmickry.”


“What New Delhi’s governing class fails to see is that the masses of India’s poor are not themselves a mass waiting for New Delhi’s handouts: they are individuals, free, rational, thinking individuals who know their own lives and resources and capacities and opportunities, and how to go about living their lives best. What they need is security, absence of state or other tyranny, roads, fresh water, electricity, functioning schools for their children, market opportunities for work, etc, not handouts from a monarch or aristocrats or businessmen….” Or, to put it differently in Kant’s terms, the poor need to be treated as ends in themselves, and not as the means towards the ends of others…



Part II India’s Right Road Forward Now: Some Thoughtful Analysis for Grown Ups


5.   Transcending a Left-Right/Congress-BJP Divide in Indian Politics

6.   Budgeting Military & Foreign Policy


7.    Solving the Kashmir Problem & Relations with Pakistan


8.  Dealing with Communist China


9.   Towards Coherence in Public Accounting, Public Finance & Public Decision-Making


10.   India’s Money: Towards Currency Integrity at Home & Abroad

Posted in Academic research, Amartya Sen, Arvind Panagariya, Asia and the West, Bengal's Public Finances, Bhagwati-Sen spat, BJP, Britain in India, Cambridge Univ Economics, Cambridge University, Columbia University, Congress Party, Congress Party History, Credit markets, Economic inequality, Economic Policy, Economic quackery, Economic Theory, Economic Theory of Growth, Economic Theory of Interest, Economic Theory of Value, Economics of Public Finance, Financial Repression, Governance, Government accounting, Government of India, India's Big Business, India's Cabinet Government, India's Government economists, India's 1991 Economic Reform, India's balance of payments, India's Budget, India's bureaucracy, India's Capital Markets, India's constitutional politics, India's corruption, India's currency history, India's Economic History, India's Economy, India's Exports, India's Foreign Exchange Reserves, India's Government Budget Constraint, India's Industry, India's inflation, India's Macroeconomics, India's Monetary & Fiscal Policy, India's Polity, India's Public Finance, India's Reserve Bank, India's State Finances, Institute of Economic Affairs, Jagdish Bhagwati, Jean Drèze, LK Advani, Manmohan Singh, Margaret Thatcher's Revolution, Mihir Kumar Roy (MKRoy), Milton Friedman, Money and banking, Padma Desai, Paper money and deposits, Political Economy, Public Choice/Public Finance, Public property waste fraud, Rajiv Gandhi, Rajiv Gandhi's assassination, Reverse-Euro Model for India, Sen-Bhagwati spat, Siddhartha Shankar Ray, Sonia Gandhi, Subroto Roy, Sukhamoy Chakravarty, The Times (London), University of Hawaii, William E (Ted) James (1951-2010). Leave a Comment »

Fact vs Falsification & Flattery in Delhi (& other places) Revised Nov 2014

see also:




from Facebook 5th May 2014

TN Ninan (to the Twitter applause apparently of William Dalrymple) says about Manmohan Singh:

“He became finance minister in 1991 because I G Patel turned down the job. That made him, quite fortuitously, the right person in the right place at the right time. The need for a re-orientation of economic (particularly industrial) policy had already been outlined in the Congress election manifesto of 1991, written and released when Singh was not on the scene. Some correctives (like fiscal correction and disinvestment) had been announced by Singh’s predecessor as finance minister, Yashwant Sinha. Within the government, Montek Singh Ahluwalia had written a controversial paper advocating a broad re-orientation of industrial policy.”

Manmohan Singh became Finance Minister because from even before Rajiv Gandhi’s assassination, Indira-insiders in Rajiv’s inner circle (a circle created on 25 Sep 1990 by Rajiv after I, an Indira-critic and outsider and member of the same circle, gave him on 18 Sep 1990 the perestroika-for-India project I had led in America since 1986) manouevered to bring back into favour PN Haksar, Manmohan Singh’s admitted mentor in the Government of India. From before Rajiv’s assassination, the names of IG Patel, Manmohan Singh and a third unknown name said to be wholly outlandish (possibly my own) were said (in an op-ed in the Asian Age some years ago by a separate Rajiv-insider) to be in the air.

A few weeks ago, on 13 April, I said to Mr Ninan

“I have not read Sanjaya Baru’s book on his boss and mentor Manmohan Singh, and doubt I will soon. But it is said to say that PV Narasimha Rao chose Manmohan as Finance Minister saying “Of course, he knows Vithal”, referring to BPR Vithal, Baru’s father. And the title of the book describes Manmohan as “The Accidental Prime Minister”. My personal experience contradicts all this squarely. Here’s why.

In the autumn of 1973 — yes, 1973 — before I became a first year undergraduate at the LSE, my father brought Manmohan Singh home to our then residence at 14 Rue Eugene Manuel in Paris, to advise me about economics. Manmohan was perhaps 41 or 42, I was 18. He was working for MG Kaul, ICS, my father’s old buddy, and he had come to be introduced to PN Haksar himself, who was related by marriage to the Kaul family. Manmohan has acknowledged to Mark Tully in 2005 having been mentored in the Government of India by Haksar, Indira Gandhi’s right hand man.

Manmohan asked to speak to me alone, and he and I quickly got into a heated debate about the merits (as he saw them) and demerits (as I saw them) of the Soviet example on Indian planning. He stayed 40 minutes or so, before being interrupted by his staff who had to take him to another meeting. We were of course most grateful that he had taken time off from his schedule with an Indian delegation to what used to be the AID-India programme in Paris. Before departing he said he would send a letter of introduction to his friend Amartya Sen at LSE for me; he was taken aback a bit by the debate with this lad; the letter duly came and I carried it reluctantly at my father’s request, as it seemed to me testy in tone and not quite laudatory. I now wish I had kept a copy but really there was no commercial xeroxing back then.

Anyhow, the point of this story is that after Manmohan left our home that day, I told my father about our debate and he told me Manmohan was very highly thought of in government circles, with degrees from both Cambridge and Oxford, and added, to my surprise, that Manmohan was **expected to become Prime Minister some day**… My father was almost certainly expressing a Haksarian opinion, as he himself had been sent to Paris by Haksar in September 1971 in preparation for Indira Gandhi’s visit in November before the Bangladesh war.

Fast forwarding to 22 March 1991, when I was writing the outlines of the economic reform for Rajiv Gandhi, I was challenged by MK Rasgotra demanding to know what Manmohan Singh would say about all this liberalisation… I replied I did not know but did know Manmohan had been in Africa with the Nyerere project. The next day I saw and briefly met on the lawns of Rajiv’s residence, PN Haksar himself, who was clearly delighted to be back in favour with Rajiv after a decade and a half of isolation due to Indira and her younger son. I also met PV Narasimha Rao on that occasion, who was unwell and due to retire… not to become PM as he did… After Rajiv’s assassination, insider Indira-loyalists turned to Haksar for advice, and he would have named his old protege to be Narasimha Rao’s Finance Minister… Nothing accidental about it. Once Manmohan became FM, one of his first deeds in the summer of 1991 was to offer some vast sum of government money to the Rajiv Gandhi Foundation led by the newly bereaved Sonia Gandhi, which she, to her credit, apparently declined. But Manmohan had come to Sonia’s attention. By December 2001, it had become common knowledge among Congress leaders that Manmohan would be the PM in a Sonia-led victory at least for one term, after which other leaders could have a shot as long as they had good relations with her. Such is Indian politics, and indeed economics… Nothing accidental about it, really…””

Mr Ninan thanked me and offered to forward the point to his friend and colleague Sanjaya Baru.

**Mr Ninan’s hagiographic ToI article fails to mention as far as I can see what is well-known publicly that Manmohan Singh came to Sonia Gandhi’s attention in 1991 for the first time by offering her a vast sum of government money for the Rajiv Gandhi Foundation which she, to her credit, turned down. But she now knew his name.**

Mr Ninan says “the Congress election manifesto of 1991, written and released when Singh was not on the scene”, which is broadly right — it is more accurate to say Manmohan **was not in the loop** and, like Pranab Mukherjee, was not one of Rajiv’s favourite people — hence the paradox of Rajiv’s widow ending up relying on both of them: it is a story of the return of the Indira-loyalists, whom Rajiv, in my experience, wished to become free of.

Mr Ninan knows fully well the factual story of how the Congress’s change of direction in economic policy came from Rajiv’s encounter with myself and the project I had led in America since 1986, but Ninan, in his apparent wish to flatter Manmohan in post-post-retirement, has suppressed it.

Mr Ninan mentions something Yashwant Sinha and Montek Singh Ahluwalia purportedly did while in Government adding to the reform before it started. Subramanyam Swamy has claimed the same himself.

Where are the documents relating to these? Where is the paper-trail? Are they not of historical value? Mr Ninan is supposedly a top Indian economic journalist; he and his friends can find these and publish these, if they exist, before gassing about them further in any flattery of politicians or the Delhi elite.

What Mr Ninan also knows of is the London Times editorial dated 29 May 1984 — six years before the reform began in practice — about my critique of Indian economic policy published that day by London’s Institute of Economic Affairs (Philip Booth). After all, Mr Ninan sent me a telex in Blacksburg asking for a copy, and I should have that document in a file somewhere.

From Facebook 14 August 2013

I see a very strange thing happening in Indian politics…

The Sonia-Manmohan Congress continues to be effectively silent in response to national event after national event, whether Uttarakhand or the PRC’s bullying or the Pakistanis and their friends testing Indian resolve…leave aside corruption, inflation, etc… Is this because of incompetence and institutional sclerosis in their decision-making processes? Probably. Except the Congress would like to say and would like people to believe it is because the mystical secrets of Indian governance are only known to their High Command and emerge only when the Oracle speaks… .

At the same time, the BJP is trying almost to do a George Soros sort of “Orange” campaign, designed and run by the spin doctors and modern political PR firms — probably with a few layabout rightwing US Republicans helping and the Overseas BJP playing a major role in the whole design from America and Britain. The BJP are starting to fall in line behind Narendra Modi but only under condition that Modi is not allowed to be himself, i.e. Modi must not be the “uncouth rabble-rouser” he has been in my words, but instead come across as a Churchillian, or rather Sardar Patelian, figure of masculine nationalism.

Both MK Gandhi and Sardar Patel have been nicely purloined by Modi, and the Sonia-Manmohan Congress — being run, after all, by Sonia, who had had no wish for the princely husband she met at a Cambridge restaurant when she had been a language-student in the town, let aside herself, to be in Indian politics, and Manmohan, whose disdain is now obvious for Parliament and politics and everything besides his personal bureaucratic career — has been clueless how to stop the theft of their political legacy.

The BJP wants to take everything of the Congress except Nehru, Indira (except in the 1971 war) and family. Of course they have a problem with me because they cannot teach me anything about Hinduism — *nothing* — either in theory or in practice (my father incidentally in 1947, helped save the Hindu Sindhis of Karachi, probably including LK Advani himself, and the man my father, a Nehruvian, was reporting to was none other than Shyama Prasad Mookerjee, who was a family friend and a mentor of my father’s and also the Minister in Nehru’s Cabinet in charge of my father’s department) — and yet a few of them here and there want to mendaciously claim they were the original promoters of liberal economics in India, not myself and Rajiv Gandhi in 1990-1991. It won’t work. (For their information, I was invited by the Overseas BJP to give a Deendayal Upadhaya Memorial Lecture in Washington — back in 1984!, when of course I was clueless about Indian politics)…

The Rajiv Gandhi I knew had been enthused by me in 1990-1991 carrying the UH-Manoa perestroika-for-India project that I had led since 1986, and he had loved my advice to him on 18 Sep 1990 that he needed to modernise the party by preparing a coherent agenda (as other successful reformers had done) while still in Opposition waiting for elections — and to base the agenda on commitments to improving the judiciary and rule of law, stopping the debauching of money, and focusing on the provision of public goods instead.

**Rajiv I am sure wanted a *modern* and *modern-minded* Congress — not one which depended on him let aside his family, but one which *reduced* that dependence and let him and his family alone.**

Almost a quarter century later, the Sonia-Manmohan Congress (thanks I believe to a sleeper agent here or there) not only preserved but worsened the status-quo while we have the BJP hiding its past and trying to make itself over as some sort of modern conservative party. What worried the sleeper agent(s) and the vested bureaucratic and business interests was that they could see change coming but wanted to be able to control it themselves to their advantage, which they then of course proceeded to do over the next two decades. The foreign weapons’ contracts and other big-ticket imports India ends up buying needlessly had to be preserved.

Both sides now, Congress and BJP, as well as everyone else in Indian politics need to remember Blake: “Truth can never be told so as to be understood and not be believed.”

I am asked “So where are we going? What should we be doing Mr. Roy?” and say this

1. I should be invited to give this talk to a senior all-party meet — being introduced as Rajiv Gandhi’s adviser who initiated the reform:3dec

2. I would explain the *utterly dismal* state of public finances clearly — across all State budgets, across the Union budget etc, and the risk of monetary collapse…

3. I would propose Parliament decree there be no elections in 2014, or whether there are or whether there are not, then a National Government arise, presided over by the President, with a fair and reasonable distribution of portfolios, for a period of, say, three or even five years, along with a “Financial Emergency” (whether that is declared formally or not).

4. During this time, the following is done:

A. There are *system-wide* improvements in public finance and accounting using modern information technology to comprehend government liabilities and expenditures and raise their productivity,

B. There are institutional changes in public decision-making like separating banking and central banking from the Treasury while making the planning function serve the Treasury function rather than pretend to be above it.

C. State legislatures come to be reliably informed about the state of their own States.

The aim would be to bring some semblance of integrity to the national currency, both domestically and externally. The road described is long and arduous but at its end both corruption and inflation will have been reduced to minimal levels, and the rupee would have acquired integrity enough to become a hard currency of the world in the sense the average resident of, say, rural Madhya Pradesh or Mizoram may freely convert rupees and hold or trade foreign currencies or precious metals as he/she pleases.

5. At the end of the National Government period, once the public finances are cleaned up permanently across the country and the debauching of money is stopped, there are new elections and a normal democratic process is resumed.


It is perhaps a bit like saying we have to change all the machinery in a moving train while it is moving in order to prevent ending up in a crash; better to stop, pause, calmly and scientifically do some critical essential maintenance, and then, when the machinery is working again, get going more surely. Here is an example:

This is the way India’s complex state and Union public finance are *supposed* to look — but they don’t…and won’t, until and unless I, all alone, happen to make them… For some 16 years, from when I first became Professor at IIT Kgp in September 1996, I have had zero support — no secretary, no research funding, nothing, except a little volunteer work here and there, to try to start to get things into shape… a project proposal I put to the World Bank in Washington in 1997 — got stolen by World Bank officials! —-

The above is a sketch of how to go about doing the accounts with India’s state level public finances (and the states have something like 60 million people on average…)… Here is analysis at a more detailed level… and it can get more detailed still…(But the Government and its apologists would not know or want to know where to begin…)




From Facebook 14 August 2013

From Facebook 26 July 2013

Can you see Amartya Sen, Jagdish Bhagwati, Manmohan Singh or any of their acolytes in this group photo dated 21 May 1989 at the University of Hawaii Manoa? friedman-et-al-at-uh-india-conf-19891Probably not, as they were not there and Isaac Newton tells us an object cannot be at two places at the same time… Manmohan Singh was deliberately not invited as he and his acolytes represented precisely the Indian economic policy establishment I had been determined to reform! Yet the Government of India was represented amply by the Ambassador to Washington, PK Kaul, as well as the Consul General in San Francisco, K. Rana (besides the founding head of ICRIER who invited himself). Amartya and Jagdish were invited nominally almost at the last minute as I have said, where we knew they would not accept and yet they would have been kept informed as two of the three senior Indian academic economists in the USA at the time (Jagdish was still an Indian at the time); the third, TN Srinivasan, is present, and was a major author of ours as I have said.
Of the two volumes, on India and Pakistan, that resulted from the project, the India-volume
Thus all and any gassing ever since about the 1991 reform which avoids these central facts has seemed to me, even if I have to say so myself, like “Hamlet without the prince”… :)  “It was Wordsworth who first noted, in a letter of 1793, the story of a company of strolling players who advertised a performance of Hamlet and announced, at the beginning of the performance, that they hoped the audience would forgive the omission of the character of the prince”… Facts are stubborn, unalterable things… :)

From Facebook 26 July 2013

Subroto Roy finds a young Indian gassing about Hayek at last, and sends him Hayek’s 1981 letter to a different young Indian…


From Facebook 25 July 2013

I have been very critical of Amartya Sen in recent days but am completely in agreement with him about the unsuitability of Modi whom I have called an “uncouth rabble-rouser”, predicting he will lead the BJP to certain defeat (a small sad minority in the next Parliament)…

The BJP man who gassed about stripping Amartya of the Bharat Ratna seems to have his brain lost somewhere in his innards… What the BJP have done by falling in line behind Modi is allow the Congress a walkover despite their dreadful (Amartya Senian) economics…

From Facebook 25 July 2013

“I’m not going to vote for Modi, I have no particular affection for him, but I have no particular affection for Rahul Gandhi either”, says Jagdish Bhagwati. I am glad to hear this as Jagdish, having become a US citizen in the mid 1990s as I recall, can’t legally vote in Indian elections anyway as far as I know…

From Facebook 24 July 2013

“… What India’s polity needs is to acquire a common understanding of just how dismal the state-level and Union-level fiscal and hence monetary situations are, and to proceed accordingly, in a scientifically honest spirit, in the manner I outlined in my 3 December 2012 Delhi lecture….”

From Facebook 24 July 2013

On Some Puzzlement at Amartya Sen’s Disclaimer of Academic and Political Paternity of the “Food Security Bill” and Claims to Paternity of “Asian Economic Development” and “Human Capital”….

I am terribly sorry, besides being utterly puzzled, to find Amartya Sen **disclaiming** paternity of the whole so-called “Food Security Bill”:

“Questioner: You are being called the creator of the Food Security Bill.
Amartya Sen: Yes, I don’t know why. That is indeed a paternity suit I’m currently fighting. People are accusing me of being the father”

which he and his acolyte and their friends **did** father while claiming paternity of areas of research he did not, e.g.

1) “Asian Economic Development” [“unlike the process of development in Japan, China, Korea and other countries, which pursued **what Jean Drèze and I have called “Asian economic development” in our book**…”] — neither he nor his acolyte fathered this in 2013, it was in fact a vast area of economic research — in the 1980s!

2) “Human capital” theory… Do you see any reference to T.W. Schultz’s 1960 American Economic Association Presidential Address or his 1979 Bank of Sweden Prize address in this 1997 survey titled  *Human Capital and Human Capability” by Professor Amartya Sen in *World Development* Vol. 25, No. 12, pp. 1959-1961, 1997, the year before his 1998 Bank of Sweden Prize? I do not. If one did not know better, one might have thought from it there was nothing done in economics (worth talking about) on the subject of “human capital” from the time of Adam Smith and David Hume until Amartya Sen…

From Facebook  22 July  2013

I find the current spat between Jagdish Bhagwati of Columbia and Amartya Sen of Harvard (leave aside their respective acolytes who would not be known but for their mentors) over India’s political economy to be rather dismal, unproductive and yes, unacademic, even possibly academically dishonest.

Both were in their mid 50s and, along with TN Srinivasan at Yale, the three senior-most Indians in US academic economics when I and Ted James, in our early 30s, initiated and led the University of Hawaii perestroika-for-India project in the mid 1980s. (Bhagwati stopped being an Indian and became a US national in the following decade, I was told.)  We invited both to Hawaii but deliberately did so very late in the day knowing they would decline, which is what they did; we did not want either to come in and be the “star” who ended up hogging the microphone or the limelight especially as neither was known for work in the areas we were interested in, namely, India’s macroeconomic and foreign trade framework and fiscal and monetary policies.

Bhagwati, after his excellent work with Padma Desai on India in 1966, co-authored a fine 1975 work with TN Srinivasan *Foreign Trade Regimes and Economic Development: India* and that was what made us want to invite TN as one of our main economic authors, charged with writing the excellent chapter that he did titled “Planning and Foreign Trade Reconsidered”. The other main economics author we hoped for was Sukhamoy Chakravarty from New Delhi, but despite my pleading he would not come due to ill health; he recommended C. Rangarajan, telling me Rangarajan had been the main author with him of the critical 1985 RBI report on monetary policy, Rangarajan said he could not come and recommended Amaresh Bagchi, promising to write jointly with him, so Amaresh came and authored a chapter on monetary policy and public finance. Along with Milton Friedman’s suppressed 1955 memorandum which I was publishing for the first time in 1989, TN and Amaresh authored the main economics’ chapters we wanted.

Amartya Sen and I go back, momentarily, to Hindustan Park in 1964 when there was a faint connection as family friends from World War II, and then he later knew me cursorily when I was an undergraduate at LSE and he was already a famous professor — and I greatly enjoyed his excellent lectures at the LSE on his fine book *On Economic Inequality*, and a few years later he wrote in tangential support of me at Cambridge for which he was thanked in the preface to my 1989 *Philosophy of Economics*, and also wrote me nice handwritten letters, some pages of which remain with me, in which I recall him expressing his scepticism of what I had simply called ‘price theory’, namely the Marshallian and/or Walrasian theory of value.  We met briefly in 1978, and then again in 2006 when I was asked to talk to him in our philosophical conversation which came to be published nicely. In 2006, I told him of my whole 1990-1991 Rajiv Gandhi experience in initiating what became the 1991 reform on the basis of my giving Rajiv the results of the Hawaii project, and Amartya was kind enough to say that he knew I had been arguing all this “very early on”, referring presumably to the 1984 London Times editorial.

As for Bhagwati, he received a copy of the proofs of the 1984 work just before it was published and was kind enough to write I had “done an excellent job of setting out the problems afflicting our economic policies, unfortunately government-made problems!” We never met except accidentally for a long conversation on the sofas in the foyer of the IMF in Washington when I was a consultant there in 1993 and he had come to see someone; he was surprisingly knowledgeable about my personal 1990 matter in the Supreme Court of India which astonished me until he told me his brother the Supreme Court judge had mentioned the case to him!1013586_10151543024792285_1764498590_n

Why I find the current Bhagwati-Sen spat rather pathetic is because it seems based on ignorance of Indian macroeconomic facts and the best of Indian monetary and fiscal analysis whether at Union or provincial levels.

I have been harsh with Amartya for saying “unlike the process of development in Japan, China, Korea and other countries, which pursued what Jean Drèze and I have called “Asian economic development” in our book, India has not had enough focus on public spending on school education and basic healthcare, which these other countries have had…” — saying he seems ignorant of all the work in the 1980s on “Asian Economic Development” and have added “Is he reinventing the wheel again with “Asian Economic Development” being claimed to be invented by him and his acolyte? Oh please! Just as he reinvented “human capital” theory decades after TW Schultz’s 1960 American Economic Association Presidential Address and 1979 Bank of Sweden Prize…?”

I have to be equally harsh with Bhagwati if he has been extolling a so-called ‘Gujarat Model’ over a so-called ‘Kerala Model’ — it is all misleading nonsense, there is no such thing, Gujarat and Kerala are both states of India using the same debauched currency and contributing in no discernibly different way to that process of debauching the currency. Can Ahmedabad city or Trivandrum city raise any municipal bonds in any world capital markets freely? Of course they cannot (though I think the former might have tried or at least gassed about it once). That is the question where Bhagwati and his acolyte needed to start but of course they did not — although he has known fully of my work and his acolyte even went about praising Milton’s 1955 memorandum at one point, perhaps wishing that he and not I had in fact published it. (As for Milton himself, he met the Chief Economist of the Tatas about April 1989 at Hoover I think, and the latter told me after the meeting that Milton had said “the only Indian economist he knew was Suby Roy”.)

Why all this has any significance at all is because the Indian press are making out the Bhagwati-Sen spat to reflect a BJP-Congress or Narendra Modi-Rahul Gandhi spat. Perhaps it does, but if so that makes it even more pathetic.

What India’s polity needs is to acquire a common understanding of just how dismal the state-level and Union-level fiscal and hence monetary situations are, and to proceed accordingly, in a scientifically honest spirit, in the manner I outlined in my 3 December 2012 Delhi lecture.

From Facebook  18 July  2013

What is Amartya Sen on about?  He says

“First, unlike the process of development in Japan, China, Korea and other countries, which pursued what Jean Drèze and I have called “Asian economic development” in our book, India has not had enough focus on public spending on school education and basic healthcare, which these other countries have had….”

Sen and his acolyte called it “Asian Economic Development” in 2013?

Where have they been? My Hawaii colleagues, especially Ted James, and many many many others including especially Gerald M. Meier were publishing about all that every month — in the mid 1980s!

Everyone knows all that stuff from *a long time ago*! Where was Amartya Sen in the mid 1980s when all that was happening? (His acolyte was still a student perhaps).

Is he reinventing the wheel again with “Asian Economic Development” being claimed to be invented by him and his acolyte? Oh please!

Just as he reinvented “human capital” theory decades after TW Schultz’s 1960 American Economic Association Presidential Address and 1978 1979 Bank of Sweden Prize…?

Yes, it is true we did not invite Amartya, then at Harvard, to the UH Manoa India-Pakistan projects in 1989… (or rather we did invite him so late that we knew he would decline)…


From Facebook  18 July  2013

Subroto Roy reads “In his explanation for the Taliban’s actions, Adnan Rasheed references a British politician from the 1800s – Thomas Babington Macaulay. Macaulay was famous for wanting to impose an English education system on colonial India, to replace local languages like Hindi, Arabic and Persian and create what he described as a “class of interpreters…Indian in colour, English in tastes,” who would help impose British colonial rule on India”…

and says

Hey, the Pakistan Taliban and India’s RSS/VHP have this in common: both hate “Macaulay’s children”! (And no, liberal secular Indian nationalists, or at least this one, are not Macaulayites)…

What Macaulay said to the House of Commons in 1833 was this: “It may be that the public mind of India may expand under our system till it has outgrown that system; that by good government we may educate our subjects into a capacity for better government; that having become instructed in European knowledge, they may, in some future stage, demand European institutions. Whether such a day will ever come I know not. But never will I attempt to avert or retard it. Whenever it comes, it will be the proudest day in English history.”…

To which I said in 1984: “Less than a hundred years later, in 1930-31, the Indian National Congress – to the considerable chagrin of the British Government – resolved to bring about an independent India in which every citizen would have the right to free speech, to profess and practise his faith freely, and to move and practise his profession anywhere in the country. There would be universal adult suffrage and no-one would be unjustly deprived of his liberty or have his property entered, sequestered or confiscated. In particular, all citizens in the future republic would be `equal before the law, irrespective of religion, caste, creed or sex’, and no disability would attach`to any citizen by reason of his or her religion, caste, creed or sex, in regard to public employment, office of power or honour, and in the exercise of any trade or calling’….”

From Facebook  17 July  2013

The totalitarianism of Indian politics, whether BJP or Congress or any of the political warlord/warlady  strongman/stronglady  parties..:

“Delhi BJP Vice President Aamir Raza Hussain has resigned from his post after his statement against Gujarat Chief Minister Narendra Modi anguished the party leadership. In a letter to Delhi BJP President Vijay Goel, Husain said that he should not have made comments which could cause hurt to a senior leader of the party while holding an important post. Husain had yesterday told a newschannel that Muslims would prefer senior party leader L K Advani or Leader of Opposition in Lok Sabha Sushma Swaraj over Modi as the Prime Ministerial candidate. His intention was not to cause anguish against any leader and he has tendered his resignation from the post, Delhi BJP said in a statement….”

As for the “Left”, there is plenty of “inner party” criticism — as long as there is no change in the entrenched leadership.

From Facebook  10 July  2013

Reflections on the BJP, India, the Congress, 1990-1991 etc (Part I)

Had the BJP been a normal political party seeking to actually win power by winning the Median Voter in an Indian general election, Yashwant Sinha would have been the kind of person they would have promoted to lead them in 2014. He is well enough educated, with an MA in political science from Patna University, he had a good enough career in the IAS before he resigned and entered politics, and he has had more than average experience of senior cabinet posts in the Union Government. He crossed over from Chandrashekhar but would be seen by all as a secularist or at least as much of a secularist as may be found today in the BJP. Had the BJP been a normal political party, Yashwant Sinha would have been the kind of person they would have made leader.

But they have not and did not. They have gone with someone I have called, and consider to be, “an uncouth rabble-rouser” – though of course we should now expect, once Narendra Modi is official leader of the BJP, he is not going to be allowed to be himself, Modi is not going to be allowed to be the uncouth rabble-rouser of his speeches but will have to strictly obey the party’s ultra-modern spin doctors and speech-writers, as the BJP, with the backing of the snazzy jet-setting immigrants to the USA and UK who make up the “Overseas BJP”, tries to create a brand and image where Modi, far from being allowed to be Modi, instead becomes a unifying symbol to be portrayed to the outside world while behind the scenes there is endless internal conflict (i.e. a BJP version of the Congress’s Sonia).

Modi, I have said, will never lead India and the BJP has shot itself in the foot by choosing such a strategy – of seeking to galvanize its own cadre rather than trying to win the Median Voter of the Indian electorate! (Might I guess the “Overseas BJP” inventing this strategy are from the Republican Right in the USA? Since Obama beat Romney, they now need to try to use their theories in the Old Country.) Mr Advani, with his experience, sensed that Modi would lead the party he had built to an irrelevant small minority in Parliament, and he has not changed his mind while he watches how things pan out; Yashwant Sinha is right behind him, and doubtless, with his own prime ministerial ambitions compelled by his party to be frozen, would like a senior Cabinet position in any new BJP-led Government.

I have also said it remains to be seen whether Modi ends up being in fact a kind of Stalking-Horse candidate, who, when the mood makes it obvious he cannot lead India, offers instead to stand aside for Advani to be PM and says he will be happy with Home or Defence. Yashwant Sinha then might aspire for Finance and be happy enough to settle for it in the circumstances. All this comes to mind reading Yashwant Sinha’s criticism of Manmohan Singh in yesterday’s *Economic Times* and today’s *Business Standard* promoting his own purported credentials as a macroeconomic policy-maker and seeking to position himself as the BJP’s only coherent Finance man.

… to be continued…

From Facebook  9 July  2013

That the Sonia-Manmohan Government is clueless about economics and is subject at any given moment entirely to the pressure of this or that interest group is apparent from, not merely their ideas about depriving peasants of their land paying them paper money for it and distributing jobs and cereals to them instead, but from the idea that “captains of industry”, namely, Big Business and their friends Big Labour, have anything but commercial self-interest in mind when gassing about “growth”…

The news this morning says

“With economic growth remaining sluggish and rupee depreciating, Prime Minister Manmohan Singh will have an interaction with the captains of industry later this month to discuss ways to boost industrial output and contain current account deficit (CAD).Singh will meet the leaders of the industry on July 29 to review the state of economy and work out steps to push growth. The discussions will cover measures to correct CAD and revive industrial growth, a PMO statement said Monday. The issue of depreciation of the rupee and its impact on trade and industry will also be discussed. The meeting assumes significance as the government has been concerned over the sluggish growth, high CAD and depreciating rupee.CAD last fiscal was 4.8 per cent and government intends to bring it down to 4.2 per cent this financial year. The slide in the value of rupee is another concern in the government. The rupee today fell to an all-time low of 61.19 against dollar.Singh will also discuss with the captains of the industry ways to accelerate skill development, besides development of Delhi-Mumbai Industrial Corridor (DMIC), Chennai-Bangalore Industrial Corridor (CBIC) and Amritsar-Delhi-Kolkata Industrial Corridor (ADKIC).Singh will meet the leaders of the industry a month after setting an investment target of Rs 1.15 lakh crore in PPP (public private partnership) projects across infrastructure sectors in rail, port and power in the next six months to pep up the investor.The meeting takes place at a difficult time with growth slumping to five percent, the lowest in a decade. Sluggish investments and industrial growth have been big drags on Asia’s third largest economy.Manufacturing sector expanded by a meagre 2.6 percent in the financial year 2012-13, according to the Central Statistics Office data.The Indian rupee has weakened by almost 10 percent this year and hit a record low of 61.21 against the dollar Monday.The current account deficit has hit a record 4.8 percent of gross domestic product in the fiscal year that ended March 31….”

Can the July 29 meeting not be predicted clearly? Importers will cry about rupee depreciation, so the Government will promise to look into it, at which Exporters will cry about possible rupee appreciation and ask for export subsidies and get them… and as for “reviving growth” there will be a lot of gas about “single window clearance”, “public private partnership” (i.e., legitimate looting), wicked environmentalists holding back industry, etc etc etc… It is all nonsense and will merely result in further subsidies and concessions from the impoverished Indian exchequer to the Fat Cats of Indian industry (dressed in their Armani as they might be these days…).

Here is what I said in October 2006:

“It is as fallacious to think private investment from foreign or domestic businessmen will support public “infrastructure” creation as it is to think foreign exchange reserves are like tax revenues in being available for Government expenditure on “infrastructure”. Such fallacies are intellectual products of either those who know no economics at all or those who have forgotten whatever little they might have been once mistaught in their youth. What serious economics does say is that Government should generally have nothing to do with any kind of private business, and instead should focus on properly providing public goods and services, encourage competition in all avenues of economic activity and prevent or regulate monopoly, and see to it all firms pay taxes they are due to pay.

That is it. It is as bad for Government to be pampering organised foreign or domestic business or organised labour with innumerable subsidies, as has been happening in India for decades, as it is to make enterprise difficult with red tape and hurdles. Businessmen are grown ups and should be allowed to freely risk their capital and make their profits or their losses without public intervention.

An economics-based policy would have single-mindedly sought to improve the financial condition of every governmental entity in the country, with the aim of improving the provision of public goods and services to all 1,000 million Indians. If and when budgets of all governmental entities become sound, foreign creditors would automatically line up before them with loans to sell, and ambitious development goals can be accomplished. As long as public budgets (and public accounts) remain in an outrageous shambles, nothing can be in fact achieved and only propaganda, corruption and paper-money creation results instead. Whatever economic growth does occur is due to new enterprise and normal technological progress, and is mostly despite and not because of New Delhi’s bureaucrats…”

From Facebook  6 July  2013

Will Manmohan Singh resign his Rajya Sabha seat if he and Sonia lead the Congress into defeat in 2014? Or will he remain there quietly until 2018 waiting for a Bharat Ratna perhaps? Or will he perhaps push off to some kind of foreign academic or UN assignment that can be found for him by his friends at his age?

The peculiar thing the Congress has caused is that they have a PM who has no personal political stake in the longevity, or really the performance, of the Government. Yet there is always rationality, always an explanation!

What explains the Congress clinging to Rajiv Gandhi’s family for unity after Rajiv’s assassination?

Sonia had had no wish to be in Indian politics, in fact she had no wish that Rajiv himself be in Indian politics. I am pretty sure Rajiv would *not* have wished to see her or their children in Indian politics: what, from my personal experience with him, he wished instead to see was the Congress party becoming a modern and modern-minded party, institutionally able to stand up on its own without help from his family. What explains the Congress clinging to Rajiv Gandhi’s family for unity after Rajiv’s assassination? And also Sonia agreeing to play the role?

There is an explanation! And it is related to the explanation of why Manmohan Singh was put forward to Sonia — who did not know him otherwise (if anyone recalls, Manmohan as Finance Minister in the middle of 1991 donated some stupendous sum like Rs 100 cr of government money to the Rajiv Gandhi Foundation, which Sonia, in her mourning, rightly rejected as I recall…)…

Let me hasten to add that I do not think the BJP will win if I say the Congress may lose: I have already said Narendra Modi will never lead India and the BJP has shot itself in the foot again even before they start.

Whom do I think will rule India in 2014 at the rate things are going?

Why, the President of India of course… (and in his favour I will say he is a nationalist, a secularist, and an intelligent and well-experienced man, still open to learning…)

From Facebook  5 July  2013

The Sonia-Manmohan policy (endorsed by Amartya Sen and initiated by his friends) misnamed the “Food Security Bill” which has been today pushed through as an Ordnance, is hopelessly bad economics, probably without precedent in known economic history. The Sonia Congress seems to have well and truly regressed to an attempted Indira “populist” mode of the 1970s — which may not surprise, given that a Sanjay stalwart is now placed as Sonia’s Gatekeeper.  But what should also not surprise is if the whole thing backfires badly on the Congress: India’s voters have become matured and enlightened and well-informed in the new information age, and are hardly the malleable masses of past decades: if they sense the whole thing amounts to a vast political gimmick or worse that causes massive dislocations and more inflation, Congress’s policy-credibility will be merely further shot through (which is a pity since the Opposition are only worse)…

From Facebook  5 July  2013

Was Ishrat Jahan a terrorist? Almost certainly not. Was she in the company of terrorists sent by Pakistan’s LeT? Probably. Did she know she was? Probably not. Were they recruiting her for a suicide bombing of a politician? Possibly. Did she know this? Probably not. Did the police kill the gang, including her, without adequate justification. Probably. Was there a political go-ahead at provincial and national levels? Possibly. Ishrat Jehan was caught in the cross-fire between Pakistan and India, “collateral damage” is the dreadul modern term…. It is a credit to India that the truth has been emerging at all, even after nine years…

From Facebook 29 June 2013

“Dehradun: Uttarakhand Assembly Speaker Govind Singh Kunjwal has said that he fears that more than 10,000 people may have died in the flash floods and landslides that have ravaged the state since June 16…”!

— It is inexplicable if not outrageous that an educated man like Manmohan Singh, as Prime Minister of India, did not immediately instruct the military to send in foot columns of crack mountain troops, supplied by mules, to make their way into the mountains to find and sustain thousands of stranded starving civilians regardless of weather conditions. There is hardly any terrain that a well-led force cannot get through on foot. Whatever helicopter support they had in the beginning should have been used to locate all major groups of stranded civilians, and land small armed forces there to organise them, maintain law and order, and prepare them for survival and evacuation… Everybody knows helicopters cannot function in bad weather, and could not be relied on for mass evacuations in bad weather.

Instead of clear-headed civilian leadership, Government and Opposition politicians merely put on a pathetic show and declared they were throwing (debauched) money at the event after the fact. The military has seemed to me somewhat complacent and unimaginative, not wanting to get their nice uniforms muddied too much. Two cheers for the Army Chief who said yesterday ‘he had asked his commanders to launch relief operations in “very, very difficult conditions” in a proactive manner, without waiting for any requisition from authorities’ — yes, finally, a clear statement of what was needed but far too many days late: when had he issued that order? Prime Minister Manmohan Singh should have ordered this himself on Day One. Did he? What did he in fact do?

Of course yes, Dr Singh and his acolytes have indeed been busy with decision-making! 
Business being business, the Big Business Lobbies cannot be stopped from controlling the Government of India’s agenda even during the Uttarakhand Emergency!

“The government on Saturday decided to set up 51 new low-cost airports with an aim to give boost to civil aviation sector and increase air connectivity to Tier-II and Tier-III cities….The state-owned airport operator, Airports Authority of India (AAI), would set up the low-cost airports in 51 cities in Andhra Pradesh, Jharkhand, Bihar, Punjab, Uttar Pradesh, Arunachal Pradesh, Assam, Madhya Pradesh, Rajasthan and Maharashtra.Apart from the low-cost airports, the government has decided grant new international airport status to Bhubaneswar and Imphal at a cost of Rs.20,000 crore. Also, construction of eight greenfield airports this year would be awarded under public-private-participation (PPP) mode for Navi Mumbai, Juhu in Mumbai, Goa, Kannur, Rajguru Nagar Chakan at Pune, Sriperumbudur, Bellary and Raigarh, a statement from Prime Minister’s Office said.Also, the government was mulling operation and maintenance of airports at Chennai, Kolkata, Lucknow, Guwahati, Jaipur and Ahmedabad through PPP contracts.In a bid to ramp up investor sentiment, Prime Minister Manmohan Singh on Friday set an investment target of Rs.1.15 lakh crore in PPP (public private partnership) projects across infrastructure sectors in civil aviation, rail, port and power in the next six months.The decisions were taken at a meeting Prime Minister held here to finalise infrastructure projects for 2013-14 which was attended by Finance Minister P Chidambaram, Planning Commission Deputy Chairman Montek Singh Ahluwalia and Ministers of Power, Coal, Railways, Roads, Shipping and Civil Aviation….”

Speaking of airports, these are presumably to service aircraft and not, e.g. railways, trucks or other surface transport vehicles used by India’s masses; are all these new aircraft to the imported? Bought from Boeing? Airbus? The Russians? What will be the net forex burden? Are existing airlines and airports in India doing well? NOT!

From Facebook 29 June 2013

Two cheers for the Indian Army Chief who said yesterday
‘he had asked his commanders to launch relief operations in “very, very difficult conditions” in a proactive manner, without waiting for any requisition from authorities’ — yes, finally, a clear statement of what was needed but far too many days late. When had he issued that order? Prime Minister Manmohan Singh should have ordered this himself on Day One. Did he? What did he in fact do? It would have meant foot columns of crack mountain troops, supplied by mules, making their way into the mountains to find and sustain thousands of stranded starving civilians regardless of weather conditions. Everybody knows helicopters cannot function in bad weather. Yet there is hardly any terrain that a well-led force cannot get through on foot. Instead of clear-headed civilian leadership, Government and Opposition politicians merely put on a pathetic show and declared they were throwing (debauched) money at the event after the fact.

From Facebook 28 June 2013

The Army says “Army has so far evacuated more than 33,000 people since 17 June. 25,000 of them by foot alone while 8000 were moved out by helicopter. 13 Army Aviation aircraft conducted 600 sorties to evacuate 2715 people and ferry 24 tons of food, fuel, medicines, blankets and relief material to the people…”

This needs candid assessment. 25,000 people evacuated by foot? By whom? From where to where? When?

I am glad to see Special Forces have been used if only slightly — to build a helipad (a good use), to retrieve bodies of rescue personnel (a not so good use)…

From Facebook 28 June 2013

“Fears mount over 3000 still missing” says one headline,
“Air ops near end, Harsil fully evacuated of pilgrims” says another…

Exactly the problem that I diagnosed some days ago! Namely, the immediate response of the Indian military on 15/16/17th June should have been to mobilise a few thousand highly trained mountain troops and send them in *on foot* with mule-trains to locate all stranded and starving civilians in the mountains, cutting through the jungle and making their own paths if need be, heavy rain and fog or not.   There is very little terrain that an equipped well-led military force cannot get through, regardless of weather conditions…

*We did this as **schoolboys** back in 1970!*…

22365_260097897284_7896224_nWhatever helicopter support they had in the beginning should have been used to locate all major groups of stranded civilians, and land small armed forces there to organise them, maintain law and order, and prepare them for survival and evacuation…

Instead the foot-columns and the mules stayed at the barracks, the helicopters flew as and when the weather permitted, even causing one or two to crash… The military seems to have been a little complacent and greatly unimaginative, not wanting to get their nice uniforms all muddied, and expecting non-existent orders from incompetent political leadership…

From Facebook 27 June 2013

The unopened water-bottles are not the only thing wrong with this picture…. But wait, it also has a lesson in political science, namely, that what the Congress (and by imitation other parties in India) follows is the Principle of Proximity….i.e., how close can one inveigle one’s way in as a courtier…


In my case, I have declined to do any such jostling and my proximity to Rahul Gandhi’s late great father in 1990-1991 occurred due to the late great Siddhartha Shankar Ray thinking very highly of the perestroika-for-India project I had led in America in the 1980s,

friedman-et-al-at-uh-india-conf-19891and also of my 1984 work before that… Rajiv at our last meeting on 23 March 1991 said to me as I was leaving with our advisory group that he wished to see me on his own and would be arranging a meeting… but that never happened.

From Facebook 27 June 2013

Presidency College Calcutta Economics Department was *never* a “cradle of economics” though it is called that today in a morning newspaper and many Presidency alumni have doubtless nurtured that self-delusion. People passing through the St Stephen’s College Delhi Economics BA or MA have had similar delusions and fantasies. Ho hum… each to his own… Here is my 29 May 2000 proposal made as Professor at an “Institution of National Importance” for a “36 Lecture Introductory Economics Course for Advanced Undergraduate Students in India”. Also, my “One-Semester Microeconomics (Theory of Value) Course for Graduate Engineers Planning to Become MBAs” which I myself taught for more than a half dozen years. Do Presidency or St Stephen’s have a comparable syllabus or the faculty to teach either? I would be most pleasantly surprised if they did.

From Facebook 26 June 2013

The 2013 Uttarakhand disaster and the 2008 Mumbai massacres equally reveal the incompetence of the Manmohan-Sonia Government’s political and military responses to national emergencies — **not** that the fascists, communists et al of the Opposition would have been any better, probably worse… All that everyone in New Delhi’s Governing Class knows how to do is throw (debauched) money at things after the fact… Is it the **12th** “Five Year Plan” the country is supposed to be on?? Over which Manmohan, Vajpayee, et al have presided in the name of purported progress? Pathetic.

From Facebook 26 June 2013

The Chindits did not need let aside have any helicopters; just mules and men and grit and determination. Gopal Tandan may remember that in 1970 we, a schoolboy party of a dozen or so led by David Gibbs along with a dozen or so sherpas, cut through mountainous jungle and made our own paths for miles in heavy rainfall or fog carrying backpacks, crossing roaring rivers too. Our legs would be filled with leeches by evening — a completely panicky thought, until you learn to use salt on them and have them drop away. I do not think bad weather itself would prevent trained well-equipped mountain soldiers of the Indian military to have sent columns on foot into the mountains, along with mules, to rescue thousands upon thousands of stranded starving civilians; execrable political leadership and unimaginative military advice from pampered comfortable peace-time generals would be sufficient though. There is very little terrain that an equipped well-led military force cannot get through.

From Facebook 25 June 2013

I do not agree that the public evidence yet shows the Indian military have been heroically rescuing masses of people in the Uttarakhand disaster. They seem to have been doing, at best, a barely competent job. There seems to have been a woeful lack of high quality political leadership and high quality military advice too. The first helicopter priority should have been not even transporting people back in dribs and drabs of a half dozen or so per ride from here and there but rather to have located all the major groups of civilians and have landed with each of them small teams of military personnel (armed to maintain general law and order and to organise them for survival) with some supplies, so logistic contact could have been made for more systematic larger evacuations. I do not see that to have been done. And then there is the business of the helicopters! Initially some 40 light helicopters which did not seem very military in appearance seem to have been on the job. Then they added an MI-26 after several days, and also started to fly around the new expensive US-made transporters, the latter perhaps just for show. And now the excuse is made — could they not expect this? — Oh the weather has turned bad again, all the choppers have to be grounded! What can we do even if 5,000 or 10,000 remain stranded and starving? This is nonsense. The Indian Army has numerous well-trained Mountain Divisions. It has a long history of *mules* being used for transportation in all weather conditions!


Remember the Chindits?! “The 77th Indian Infantry Brigade, otherwise known as the Chindits, was gradually formed in the area around Jhansi in the summer of 1942. Wingate took charge of the training of the troops in the jungles of central India during the rainy season….The standard brigade and battalion structures were abandoned. The force was instead formed into eight columns…The heavy weapons, radios, reserve ammunition and rations and other stores were carried on mules, which would also provide an emergency source of food once their loads had been depleted. With 57 mule handlers, each British column numbered 306 men (the Gurkha columns were slightly stronger, with 369 men). Each man carried more than 72 pounds (33 kg) of equipment, which was proportionally more than the mules carrying the support weapons and other stores….”

Just as I do not see the Indian military to have deployed forward teams with known groups of stranded civilians, I do not see it to have deployed immediately its many many many lowly mules to help reach them and rescue them…. It is more comfortable to stay at a local base perhaps waiting for helicopters to fly again, and also waiting for non-existent orders from some purported leader.

From Facebook 23 June 2013

Subroto Roy reads in the news “As rescue and relief operations in Uttarakhand gather pace, the Indian Air Force has deployed an Mi-26 – the largest helicopter in the world – to augment operations. The chopper, which is usually used to transport goods and troops, is now being used to maintain supply of aviation fuel, critical for other smaller choppers that are already in service to help evacuate thousands stranded across the state. The Army and Air Force have deployed over 40 helicopters for rescue efforts, but a shortage of fuel is turning into a concern. Bringing in new supplies is also very tough since landslides have destroyed several important roads. The Mi-26 will carry fuel to Gauchar in Chamoli district – a landing ground that has been activated by the Air Force – where other choppers can refuel. It will also transport heavy equipment required in repair and construction of roads that is being carried out by the Border Roads Organisation. The giant chopper will also support the construction of temporary helipads to enable smaller helicopters in the evacuating process of those stranded in various parts of the state”

and says This sounds to me a somewhat delayed response, several days into the crisis. Manmohan Singh’s Cabinet should have explicitly announced going onto a war-footing immediately, ordering all available government helicopters to be used and requisitioning private ones. For politicians to be donating money, or asking the public to do so, is a ridiculous hypocritical substitute.

From Facebook 22 June 2013

Subroto Roy reads from Reuters “India has launched a wide-ranging surveillance programme that will give its security agencies and even income tax officials the ability to tap directly into e-mails and phone calls without oversight by courts or parliament…The government started to quietly roll the system out state by state in April this year, according to government officials. Eventually it will be able to target any of India’s 900 million landline and mobile phone subscribers and 120 million Internet users….The new system will allow the government to listen to and tape phone conversations, read e-mails and text messages, monitor posts on Facebook, Twitter or LinkedIn and track searches on Google of selected targets, according to interviews with two other officials involved in setting up the new surveillance programme, human rights activists and cyber experts…. Security agencies will no longer need to seek a court order for surveillance or depend, as they do now, on Internet or telephone service providers to give them the data, the government officials said. Government intercept data servers are being built on the premises of private telecommunications firms. These will allow the government to tap into communications at will without telling the service providers, according to the officials and public documents. The top bureaucrat in the federal interior ministry and his state-level deputies will have the power to approve requests for surveillance of specific phone numbers, e-mails or social media accounts, the government officials said…. The senior telecommunications ministry official dismissed suggestions that India’s system could be open to abuse.  “The home secretary has to have some substantial intelligence input to approve any kind of call tapping or call monitoring. He is not going to randomly decide to tape anybody’s phone calls,” he said. “If at all the government reads your e-mails, or taps your phone, that will be done for a good reason. It is not invading your privacy, it is protecting you and your country,” he said.  The government has arrested people in the past for critical social media posts although there have been no prosecutions….”

and says Yes, I have to admit my attempts since the late 1970s and described in my 1981 Cambridge PhD thesis to advance the cause of individual liberty against a semi-tyrannical state apparatus in India have, probably, failed. Communist sleeper-agents and ideologues and fellow-travellers, opportunistic bureaucrats, fascistic rabble-rousers have prevailed and will prevail in the polity…

From Facebook 21 June 2013

Is there a connection between the ghastly 1999 mob-murder of Graham Staines and his young sons, the 2002 Gujarat riots, the 2012 Delhi gang-rape, the 2007 Nandigram killings, the 2013 Kamduni rape-murder, the 2013 Uttarakhand floods and landslides, etc etc in India (leave aside corruption and general inflation caused by the debauching of money)?

Of course there is: They are all outcomes of appalling governance over decades on end whether by the BJP, the Congress, the Communists or whomever….

I find it pretty pathetic Manmohan Singh has appealed for money to be sent to his PM Relief’s Fund for the Uttarakhand disaster when not only does he know he has presided over endless deficit-finance for decades and his Government can print what it wants in a real emergency and use the Contingency Fund of the budget, he read back in *1986* my 1984 argument sent to him by my late father, which said, e.g. “… if there happen to be millions of cases queuing outside the courts waiting to be heard, or if crime is rampant and police protection ineffective, that may constitute prima facie evidence that too few public resources have been devoted to civil order and justice. Or, if heavy rainfall annually causes landslides in the hills and floods in the plains, devastating crops and leaving innumerable citizens destitute, that also might prompt us to ask whether sufficient public resources have gone towards precautions against such havoc. And so on….”

As for Sonia Gandhi asking MPs to donate a month’s salary for flood relief, who is the political genius making this stuff up for her? Her husband in his 1990-1991 encounter with me, when I gave him the results of the UH-Manoa perestroika-for-India project, was incomparably more serious about governance and change.

From Facebook 21 June 2013

Politics and governance cannot be built, or at least cannot be built with any permanence, on mendacity and propaganda — as the BJP is trying to do with Modi’s execrable behaviour in the 2002 riots. Not that the Congress is a lot better, with its mendacity and self-delusion about its own party’s history in 1990-1991.

From Facebook 19 June 2013

Narendra Modi meets the “Planning Commission” chief and says he is pleased his state is getting more than it asked for;  the NCP says it finds Rahul Gandhi agreeable as a Congress PM choice…

to me, these signal not merely that Modi is utterly clueless about economics but that the real game is merely for the throne of Delhi, namely,

who gets to control

the endless debauching of the currency,
the weapons’ contracts with the Russians, Europeans, Americans,
the free foreign trips,
the capital stock, small as it is, of the Indian polity…

There is no pretence of any discussion of India’s national interest, let aside of the  application of  reason to it…

From Facebook 17 June 2013

Predicting the political future in India: The BJP has shot itself in the foot again, this time, to mix metaphors, on the hare-brained idea that winning India’s Median Voter is to be done by having a notorious extremist leading them; the man seems to me a poorly educated uncouth rabble-rouser, utterly unable to articulate a realistic national vision let aside a winning political strategy for anyone except himself; of course there may yet be a Big Surprise: namely he is actually used as a kind of Stalking Horse candidate, to be sidelined later in the day to allow a “moderate” face to take over… Let us see… Either way, there is no BJP-led Government in India in 2014… The Congress has been doing what it knows best which is acquiring or planning more power for itself; as I have observed since 2004, the quiet (and devious) power behind the throne remains one of Sanjay Gandhi’s notorious friends, and Sonia and her son have been pulled unambiguously in the coarse ignorant wasteful and backward direction of Indira and Sanjay **and further and further away from what I know for a fact Sonia’s husband and Rahul’s father had wanted to see in his last months**! The usual crowd of foreign weapons’ merchants and domestic Big Business and Big Labour will get their way, riding on the endless debauching of the currency that has been presided over for decades by Manmohan (and Pranab). The regional political warlords and warladies will win their due shares, and there will be a hung Parliament — which will probably end up being led by a Congress minority government with outside support… India through 2019 will not have anything like sound public finances leading towards a currency of integrity. Pari passu, the great masses of the poor and illiterate and powerless will remain the same, probably get worse as the businessman-friends of the government take over their land paying them with a debauched paper money. And of course with the systematic destruction or ruination of traditional rural employment and food markets, there might even be spots of famine here and there (caused, let us remind, by those who have been weeping so loudly about such things from far distances). But no one should see or hear or talk about any of this, and it will be conveniently drowned out by Bollywood music and cricket commentary… Such is my assessment as things stand today…

From Facebook  5 June 2013

In a sense, the question became, after Rajiv’s assassination, whom would Sonia choose to learn her political economy from and what would be its flavour and level and who would be on offer to supply this. Almost without exception, classical liberal political economy has been wholly absent in her education as an Indian political leader, and instead communists, neo-communists, communist fellow-travellers, a sleeper agent or two left over from bygone days, sundry statists and socialists besides a motley crowd of opportunists and flatterers, have held the field in her learning of political economy. The one exception was the RTI Act, but even that has become much attenuated.

From Facebook  4 June 2013

LK Advani has wisely (from his party’s point of view) realised that Narendra Modi can never lead India, and will sink the party Advani built. My harsh criticism of the Sonia-Manmohan Duumvirate notwithstanding, they remain less bad than what the BJP seem to portend.

From Facebook 2 June 2013

Subroto Roy asked Does it matter if a thread (on Kashmir) is abandoned? and is told “No.. No..Dr.Roy Its just that the legal and moral questions need debate” and says

The questions have been open for years, and might remain the same for years; my Pakistani hosts have yet to consummate their 2011 invitation for me to speak about all this; it is, in my opinion and experience, too much to expect rationality and good sense to prevail within governments or ruling classes as a general rule, especially in the subcontinent. Observe the absurd media focus on commercial cricket for weeks on end in India. For myself, I have said the biggest personal beneficiary of my 1990-91 encounter with Rajiv Gandhi was Manmohan Singh, and I would be unsurprised if the GoI offered the GoP something like the terms of my (Kashmir) solution and then passed it off as their own invention deserving a Peace Prize. So you see I am rather more sanguine about threads being abandoned.

From Facebook 1 June 2013

Subroto Roy reflects on how peculiar indeed is our Duumvirate in India these last several years… smdrIt is something never seen before. Something unprecedented. Manmohan as PM of India without being a member of the Lok Sabha! Ergo, if his Government resigns and new elections are called he does not lose his own seat — as he is in the Rajya Sabha! (Ambedkar and Nehru, and yes Indira and Rajiv, would have been appalled that India’s PM is not from the Lok Sabha as had been always intended!) He derives all his legitimacy as PM from Sonia who does command the Lok Sabha. Yet she is not officially a part of the Government! Except she and he beam down together in the Government propaganda campaign about “Bharat Nirman”… It does not make any political sense — until you see it to be based on the old USSR model of governance. Of Kosygin and Brezhnev (and Podgorny thrown in too; Pranab was one of the Indian trio after all).


The old USSR Communist Party with its Politburo etc was the model for the Congress with its “High Command”; the CPSU affected the Congress and the Communists in India and also the Kuomintang and the Communists in China! The BJP and friends had European fascism as their model! So India is left between fascists and communists of some or other description with nothing in between! Jeffersonian Liberals, or even a few Churchillian Conservatives or Attleean Socialists, are in short supply… (Of course it is especially odd that Sonia derives *her* power from having been Rajiv’s wife — and Rajiv had little truck with either Manmohan or Pranab; thereby hangs a tale…)

From Facebook 29 May 2013

29 May 1984, a year short of thirty years today… *The Times*, London’s leading newspaper at the time, wrote its lead editorial about my critique of Nehru-Indira economic policy… Where was Manmohan Singh? At the Planning Commission perhaps on his way to the RBI; he acknowledged in 1986 receiving from my father a copy of my critique…

From Facebook 23  May 2013

Friday June 15, 1973, my father’s diary records he gave a dinner-party at our then-Paris residence for “MGK” (MG Kaul, ICS, his good buddy and the one-time boss of Dr Manmohan Singh), “KB Lall”, “Amb” (D.N.Chatterjee), “Dr Manmohan Singh”, “RamaKrishnan”, and “Shroff”…. It may have been the next day, Saturday, that my father returned from the office with Manmohan Singh to advise me about economics, before I embarked on my undergraduate studies at the London School of Economics a few months later… Dr Singh (then in his early 40s) and I (then 18) spent about 40 minutes together alone in what became a heated debate about the influence of the USSR on Indian economic planning, he arguing in favour and me arguing, rather vehemently, against… At its end he said he would be sending a letter to me addressed to his friend Amartya Sen, then Professor at the London School of Economics, introducing me; the letter was, as I recall, ambiguous at best, harsh at worst, and I had not wished to carry it by hand but my father insisted I do… I rather wish I had kept a copy but there were no xerox machines around back then… Of course my Cambridge doctoral thesis some years later came to take a very different perspective on India than the economics of Manmohan Singh and Amartya Sen…

From Facebook, 23 May2013

“Go, go, go, said the bird: human kind

Cannot bear very much reality….”

 Certainly Indian politics, and the Government party in particular, cannot bear very much reality…

From Facebook, 12 May 2013

The saddest thing about Manmohan Singh qua statesman was simply that he quietly loved and rewarded well the sycophancy around him, and believed the myths and propaganda and general fiction created by his flatterers about his own purported achievements as an economic policy-maker since 1991. Politically, his role as nominal leader of the country and his party is now fatally wounded with the forced resignations on grounds of corruption or impropriety of two of his most sycophantic proteges (both of whom were most keen to be photographed with him as he walked to or fro, and one of whom invariably held his own hands together like a schoolgirl while walking alongside him as a superfluous mark of submissiveness)… The best thing his party can do now for itself is to get him to not be a nominee, again, for a Rajya Sabha seat from Assam (yes Assam, a state well-known for its Punjabi culture) and to get Sonia Gandhi herself to be PM to lead it into the 2014 elections… Sonia in 2013 is politically not the same as Sonia in 2004…

I should say, again, as I have said before that there is nothing personal in my critical assessment of Dr Singh’s economics and politics. To the contrary, he has been in decades past a friend or at least a colleague of my father’s, and in the autumn of 1973 visited our then-home in Paris at the request of my father to advise me, then aged 18, before I embarked on my undergraduate studies at the London School of Economics. My assessments in recent years like “The Politics of Dr Singh” or “Assessing Manmohan” etc need to be seen along with my “Assessing Vajpayee: Hindutva True and False”, “The Hypocrisy of the CPI-M”, “Against Quackery”, “Our Dismal Politics”, “Political Paralysis” etc. (Also “Mistaken Macroeconomics”, June 2009). Nothing personal is intended in any of these; the purpose at hand has been to contribute to a full and vigorous discussion of the public interest in India….

From Facebook 1 May 2013

from C.G. Somiah’s *The Honest Always Stands Alone* (Niyogi Books): “In the next meeting of the Planning Commission, the soft-spoken Dr Singh deliberated at length on the negative economic indicators prevalent in the country, which could not be ignored for providing relief in any future plan. The Prime Minister was not impressed and made some hurtful derogatory remarks about Dr Singh’s presentation. He then turned to the other members for comments but none of them had the courage to speak up. He finally turned to me and said sarcastically, ‘Let us hear what the Secretary has to say about the approach to the plan.’……A few days later the Prime Minister shared his thoughts with journalists, calling us a ‘bunch of jokers’ who were bereft of any modern ideas of development. When this news made headlines in the newspapers, Dr Singh, emerging out of an urgent meeting with the other members, called me to his office. He looked distraught and terribly upset with the Prime Minister’s remarks. He told me that he was tendering his resignation as he seems to have lost the confidence of the Prime Minister. I sat with him for nearly an hour and told him not to take the extreme step and blamed the Prime Minister’s ignorance for this behaviour. I further advised that since the Prime Minister was young and inexperienced, it was our duty to educate him rather than abandon him…. “

— Manmohan traipsed off to join Nyerere’s “South South” project in 1987 and was not physically in India when I on 18 Sep 1990 gave Rajiv the results of the perestroika-for -India project that I had led at the Univ of Hawaii since 1986… Manmohan’s name was not mentioned again until 22March 1991 when MK Rasgotra challenged the proposals that I had written for Rajiv (in Rajiv’s absence) wanting to know what Manmohan Singh would make of them…

“The next day, Friday March 22, I worked from dawn to get the penultimate draft to Krishna Rao before noon as planned the night before. Rasgotra arrived shortly, and the three of us worked until evening to finish the job. I left for an hour to print out copies for a meeting of the entire group, where the draft we were going to submit would come to be decided. When I got back I found Rasgotra had launched an extended and quite unexpected attack on what had been written on economic policy. Would someone like Manmohan Singh, Rasgotra wanted to know, agree with all this talk we were putting in about liberalization and industrial efficiency? I replied I did not know what Manmohan Singh’s response would be but I knew he had been in Africa heading something called the South-South Commission for Julius Nyrere of Tanzania. I said what was needed was a clear forceful statement designed to restore India’s credit-worthiness, and the confidence of international markets. I said that the sort of thing we should aim for was to make clear, e.g. to the IMF’s man in Delhi when that person read the manifesto, that the Congress Party at least knew its economics and was planning to make bold new steps in the direction of progress. I had argued the night before with Rasgotra that on foreign policy we should “go bilateral” with good strong ties with individual countries, and drop all the multilateral hogwash. But I did not wish to enter into a fight on foreign policy which he was writing, so long as the economic policy was left the way we said. Krishnamurty, Khusro and Pitroda came to my defence saying the draft we had done greatly improved on the March 18 draft. For a bare half hour or so with all of us present, the draft was agreed upon. Later that night at Andhra Bhavan, I gave Krishna Rao the final copy of the draft manifesto which he was going to give Narasimha Rao the next day, and sent a copy to Krishnamurty who was liaising with Pranab Mukherjee. Pitroda got a copy on a floppy disc the next day for Solanki.”

Ragini Bhuyan asked me “You mentioned that Milton Friedman in 1955 had proposed a convertible currency for India on the lines of the Canadian currency. Why was this suppressed by the GoI?”

I said:
“The ideology of India’s economists was one of Sovietesque pseudo-socialism and that has remained the ideology of many. Discussing Milton’s memorandum at the time would have exploded that, which is what I ended up doing decades later. Rajiv Gandhi agreed with me. Sonia Gandhi and Manmohan Singh apparently do not.”

From Facebook 5 February 2013:

Subroto Roy reads “The sense of importance is familiar territory for someone who is remembered as one of the posterboys of economic reforms of 1991. Together with boss and mentor Manmohan Singh, then the country’s finance minister, Ahluwalia and a team of bureaucrats plotted and executed the dismantling of the licence permit raj and the liberalisation of the Indian economy. Immortalised by their trademark light blue turbans, the senior Singh dreamt up the big changes while Ahluwalia and the other officials worked out the policy nuts and bolts and explained them to the world”

and says

“the senior Singh dreamt up the big changes”?

Nope. He did not. ** He was out of the loop** and had nothing to do with originating the 1991 reform when I gave Rajiv Gandhi the results of the UH-Manoa perestroika-for-India project that I had led since 1986… The pink business newspapers, the comprador media, and other vested interests have created a fiction, now exposed…

Do you see Manmohan Singh or Montek Ahluwalia in the photograph? Probably not as they were not there. They, after all, represented the system we were trying to reform!

From Facebook 21 January 2013

Subroto Roy reads Rahul Gandhi to have said yesterday

“And it’s an honour that Manmohan Singhji is sitting here because he spearheaded another revolution. In 1991, he unleashed the voice of thousands in the field of entrepreneurship and changed this country forever”

and says

Manmohan Singh had nothing to do with originating the 1991 economic reform. To the contrary, he represented the system we were seeking to reform!  He has not claimed to have done anything himself but he has allowed others to do so on his behalf. It is a flattering fiction, though an explicable one as it allows facades to be created in the media behind which real economic and political forces may work as normal, specifically, Russian and European weapons’ merchants.

From Facebook 17 Dec 2012

Subroto Roy says to Mr Sathe, Shekhar, changing the direction of a ship of state is very hard, knowing in which direction it should change and to what degree is even harder; it has rarely been something that can be done without random shocks arising let aside the power of vested interests. Had Rajiv Gandhi lived to form a new Government, I have little doubt I would have led the reform that I had chalked out for him and that he had approved of; Sonia Gandhi would have remained the housewife, mother and grandmother that she had preferred to be and not been made into the Queen of India by her party; Manmohan Singh had left India in 1987 for the Nyerere project and it had been rumoured at the time that had been slightly to do with him protesting, to the extent that he ever has protested anything, the anti-Sikh pogrom that some of Rajiv’s friends had apparently unleashed after Indira’s killing; he returned in Nov 1990, joined Chandrashekhar in Dec 1990, left Chandrashekhar in March 1991 when elections were announced and was biding his time as head of the UPSC; had Rajiv Gandhi lived, Manmohan Singh would have had a governor’s career path, becoming the governor of this or that state one after next; he would not have been brought into the economic reform process which he had had nothing to do with originating; and finally Pranab Mukherjee, who had been made to leave the Congress when Rajiv took over, would have been likely rehabilitated slowly but would not have come to control the working of the party as he did. I think I have said in my Lok Sabha TV interview that there have been many microeconomic improvements arising from technological progress in the last 20+ years but the macroeconomic and monetary situation is grim, because at root the fiscal situation remains incoherent and confused. I do not see anyone in Manmohan Singh’s entourage among all his many acolytes and flatterers and apologists who is able to get to these root problems.


Facebook March 26 2011

Mr Chidambaram knows better than that!

by Subroto Roy

I remain amused by the powers-that-be in Delhi continuing to attempt to deny me credit for the origins of the 1991 economic reform based on the UH-Manoa perestroika-for-India project I had led 1986-1992, and the results of which I brought with me to my first meeting with Rajiv Gandhi on September 18 1990.

After almost a decade of relentless pressure from me for the truth to be told, Rajiv’s widow on December 28 2009 finally admitted her late husband “left his personal imprint on the (Congress) party’s manifesto of 1991″.

Now yesterday, March 25 2011, Mr Chidambaram has admitted “The Congress manifesto prepared for the general elections in 1991 did talk about an agenda of reforms but with the assassination of Rajiv Gandhi, there was no certainty that these would have remained on the agenda”.

Well, Mr Chidambaram, you know better than that!  Did you not yourself say in Tokyo in April 1993 that the reform “was not miraculous” but based on “rewriting of the Congress manifesto while in Opposition. We were ready when we came back to power in 1991″? (And as for those two former World Bank types with you on the podium yesterday, one was out of the country and cannot possibly claim to have been part of anything, though he had begged me to come to Hawaii and I had said sorry, no; the other, well, perhaps the less said about his capacity for self-delusion the better for India (though his shift from Sovietism to Americanism and his power to waffle endlessly on TV etc is a true bureaucratic marvel). The third man on the podium with you was someone I had tried hard to get to come to Hawaii, upon recommendation of Sukhamoy Chakravarty; but he could not make it; he though has inevitably lost his way for some years now with his wish to stay in Delhi much longer than he should ever have done.)

The simple truth is very simple: the positive change in direction of the Congress Party’s economic and other thinking  occurred due to the Congress President’s meeting with me on September 18 1990, where I gave him the perestroika-for-India project results and advised him to look to the future and write a fresh and modern manifesto. He agreed with his actions the following week, and subsequently, viz., Rajiv Gandhi and the Origins of India’s 1991 Economic Reform. Later, after his assassination, against which I had warned, the process came to be taken over by the greedy and the mendacious (specifically, organised big business lobbies, big bureaucrats and politicians, Soviet sleeper agents etc). So the truth got lost and has had to be reconstructed slowly.

(And puleaaase, baba, Manmohan Singh or any of his acolytes had nothing to do with it! Not in the loop! After all, if they had had the creativity and economic knowledge and intellectual honesty and courage, during all their years and decades in the Government of India and sundry international bureaucracies, to do what we did, they would and should have done it!  But there is just no evidence that they did, sorry baba! Time almost to say Uff!)

My colleague Ted James who with me led the Hawaii projects said of it in January 2010 a few months before he tragically died: “Seldom are significant reforms imposed successfully by international bureaucracies. Most often they are the result of indigenous actors motivated by domestic imperatives. I believe this was the case in India in 1991. It may have been fortuitous that Dr. Roy gained an audience with a receptive Rajiv Gandhi in 1990 but it was not luck that he was prepared with a well-thought out program; this arose from years of careful thought and debate on the matter.”

Why all this is important is not because I want a national award and due recognition etc, which I won’t of course mind getting, but because Dr Singh, Mr Chidambaram et al (as well as all the BJP and CPI-M etc people in Delhi too) have rather ruined the fisc, the currency and the exchanges…. It may be hopeless….

From Facebook December 20 2010

Subroto Roy is glad to hear today, for the first time, Dr Manmohan Singh explicitly praise Rajiv Gandhi for chalking out the roadmap of the 1991 economic reform, as Rajiv did thanks to his encounter with the UH-Manoa project I had led since 1986. At last year’s Congress Party meet, Sonia Gandhi for the first time on Dec 28 2009 said Rajiv “left his personal imprint on the (Congress) party’s manifesto of 1991″. Better late than never.

From Facebook Sep 20 2010

Subroto Roy  notes the 20th anniversary just passed over the weekend of Rajiv Gandhi’s encounter with the UH-Manoa peresteroika-for-India project that I had led. On Sep 18 1990, when Rajiv and I first met, Dr Manmohan Singh was not physically in India, ending his final assignment before retirement with Julius Nyerere of Tanzania. Of the others whom Rajiv appointed along with myself as advisers a week later on Sep 25 1990, at least one has recently proved to be mendacious in print — stating Manmohan Singh and not I was in the group that got created on Sep 25 following my single meeting with Rajiv on Sep 18! — and I had to expose the mendacity; he has not sued me for calling him a liar because, of course, truth is a first and full defence against a charge of defamation!

National policy should not float on self-delusion and flattery and myth and mendacity — or grave problems like Kashmir and macroeconomic inflation are the inevitable result.

I have met Mrs Sonia Gandhi once in December 1991 when I gave her a tape of her husband’s conversations with me during the Gulf War; she later in 2001 was kind enough to write acknowledging receipt of an earlier draft of this story.

From Facebook  June 26 2010:

Subroto Roy reads yet another of New Delhi’s economic bluff-masters say in today’s pink business newspaper: “The architect of reforms in 1991 was… Manmohan Singh”. Manmohan is on record himself  that he had nothing to do with it, & all the bluff-masters know for a fact but cannot admit it happened due to my encounter with Rajiv Gandhi beginning Sep 18 1990 when I gave him the results of the UH Manoa project I had led since 1986.

(Subroto Roy notes that this particular bluff-master is yet another who calls himself a Dr but cannot recall or state where his PhD is from or what if anything his dissertation was about. The stench of intellectual fraud from purported economists in New Delhi continues to keep me as nauseated as a pregnant Johanna Van Beethoven.)

From Facebook:

Subroto Roy  has great sympathy for the people who were made to officially disappear by Stalin — and suggests that even today old Stalinist habits die hard in countries where there has been no liberal revolution against them.

Subroto Roy  is amused to read in the pink business papers this morning more self-serving fabrication emerge out of New Delhi’s vapid formerly Stalinist bureaucrats about what happened in 1990-91. And says he must dig out those old Stalinist photos which rubbed out Trotsky from standing beside Lenin! Hey Trotsky, I need some advice, man! Please channel…

Subroto Roy  finally declares, on the basis of what Dr Manmohan Singh’s chief aide Chief Acolyte said yesterday as quoted in the pink business papers today, that there has been a systematic attempt at a Stalinist falsification of history in New Delhi as to what happened between September 18 1990 and March 23 1991 with respect to the prospective economic policy-making of the Congress Government following the 1991 election. The falsification has failed and is destined to fail further.

Subroto Roy  needs to channel Trotsky: “Leon Trotsky was a close friend of Lenin, and shared his idealistic ideas about the communist state. In the following photographs he canbe seen together with Lenin. The next set of images are nearly identical,however Trotsky is removed from both photographs. The historical reason for this alteration is that Stalin eventually began to see Trotsky as a threat and labeled him an “enemy of the people”. After he was deported from the Soviet Union in 1929, Trotsky criticized Stalin’s leadership, arguing that the dictatorship Stalin exercised was based on his own interests, rather than those of the people. This contributed substantially to Trotsky’s removal from photographs and history.”

Sonia’s Lying Courtier (with Postscript) November 25, 2007

Two Sundays ago in an English-language Indian newspaper, an elderly man in his 80s, advertised as being “the Gandhi family’s favourite technocrat” published some deliberate falsehoods about events in Delhi 17 years ago surrounding Rajiv Gandhi’s last months. I wrote at once to the man, let me call him Mr C, asking him to correct the falsehoods since, after all, it was possible he had stated them inadvertently or thoughtlessly or through faulty memory. He did not do so. I then wrote to a friend of his, a Congress Party MP from his State, who should be expected to know the truth, and I suggested to him that he intercede with his friend to make the corrections, since I did not wish, if at all possible, to be compelled to call an elderly man a liar in public.

That did not happen either and hence I am, with sadness and regret, compelled to call Mr C a liar.

The newspaper article reported that Mr C’s “relationship with Rajiv (Gandhi) would become closer when (Rajiv) was out of power” and that Mr C “was part of a group that brainstormed with Rajiv every day on a different subject”. Mr C has reportedly said Rajiv’s “learning period came after he left his job” as PM, and “the others (in the group)” were Mr A, Mr B, Mr D, Mr E “*and Manmohan Singh*” (italics added).

In reality, Mr C was a retired pro-USSR bureaucrat aged in his late 60s in September 1990 when Rajiv Gandhi was Leader of the Opposition and Congress President. Manmohan Singh was an about-to-retire bureaucrat who in September 1990 was not physically present in India, having been working for Julius Nyerere of Tanzania for several years.

On 18 September 1990, upon recommendation of Siddhartha Shankar Ray, Rajiv Gandhi met me at 10 Janpath, where I handed him a copy of the unpublished results of an academic “perestroika-for-India” project I had led at the University if Hawaii since 1986. The story of that encounter has been told first on July 31-August 2 1991 in The Statesman, then in the October 2001 issue of Freedom First, then in January 6-8 2006, September 23-24 2007 in The Statesman, and most recently in The Statesman Festival Volume 2007. The last of these speaks most fully yet of my warnings against Rajiv’s vulnerability to assassination; this document in unpublished form was sent by me to Rajiv’s friend, Mr Suman Dubey in July 2005, who forwarded it with my permission to the family of Rajiv Gandhi.

It was at the 18 September 1990 meeting that I suggested to Rajiv that he should plan to have a modern election manifesto written. The next day, 19 September, I was asked by Rajiv’s assistant V George to stay in Delhi for a few days as Mr Gandhi wished me to meet some people. I was not told whom I was to meet but that there would be a meeting on Monday, 24th September. On Saturday, the Monday meeting was postponed to Tuesday 25th September because one of the persons had not been able to get a flight into Delhi. I pressed to know what was going on, and was told I would meet Mr A, Mr B, Mr C and Mr D. It turned out later Mr A was the person who could not fly in from Hyderabad.

The group (excluding Mr B who failed to turn up because his servant had failed to give him the right message) met Rajiv at 10 Janpath in the afternoon of 25th September. We were asked by Rajiv to draft technical aspects of a modern manifesto for an election that was to be expected in April 1991. The documents I had given Rajiv a week earlier were distributed to the group. The full story of what transpired has been told in my previous publications.

Mr C was ingratiating towards me after that first meeting with Rajiv and insisted on giving me a ride in his car which he told me was the very first Maruti ever manufactured. He flattered me needlessly by saying that my PhD (in economics from Cambridge University) was real whereas his own doctoral degree had been from a dubious management institute of the USSR. (Handling out such doctoral degrees was apparently a standard Soviet way of gaining influence.) Mr C has not stated in public how his claim to the title of “Dr” arises.

Following that 25 September 1990 meeting, Mr C did absolutely nothing for several months towards the purpose Rajiv had set us, stating he was very busy with private business in his home-state where he flew to immediately. Mr D went abroad and was later hit by severe illness. Mr B, Mr A and I met for luncheon at New Delhi’s Andhra Bhavan where the former explained how he had missed the initial meeting. Then Mr B said he was very busy with his house-construction, and Mr A said he was very busy with finishing a book for his publishers on Indian defence, and both begged off, like Mr C and Mr D, from any of the work that Rajiv had explicitly set our group. My work and meeting with Rajiv in October 1990 has been reported previously.

Mr C has not merely suppressed my name from the group in what he has published in the newspaper article two Sundays ago, he has stated he met Rajiv as part of such a group “every day on a different subject”, another falsehood. The next meeting of the group with Rajiv was in fact only in December 1990, when the Chandrashekhar Government was discussed. I was called by telephone in the USA by Rajiv’s assistant V George but I was unable to attend, and was briefed later about it by Mr A.

When new elections were finally announced in March 1991, Mr C brought in Mr E into the group in my absence (so he told me), perhaps in the hope I would remain absent. But I returned to Delhi and between March 18 1991 and March 22 1991, our group, including Mr E (who did have a genuine PhD), produced an agreed-upon document. That document was handed over by us together in a group to Rajiv Gandhi at 10 Janpath the next day, and also went to the official political manifesto committee of Narasimha Rao, Pranab Mukherjee and M. Solanki.

Our group, as appointed by Rajiv on 25 September 1990, came to an end with the submission of the desired document to Rajiv on 23 March 1991.

As for Manmohan Singh, contrary to Mr C’s falsehood, Manmohan Singh has himself truthfully said he was with the Nyerere project until November 1990, then joined Chandrashekhar’s PMO in December 1990 which he left in March 1991, that he had no meeting with Rajiv Gandhi prior to Rajiv’s assassination but rather did not in fact enter Indian politics at all until invited by Narasimha Rao several weeks later to be Finance Minister. In other words, Manmohan Singh himself is on record stating facts that demonstrate Mr C’s falsehood.

The economic policy sections of the document submitted to Rajiv on 23 March 1991 had been drafted largely by myself with support of Mr E and Mr D and Mr C as well. It was done over the objections of Mr B, who had challenged me by asking what Manmohan Singh would think of it. I had replied I had no idea what Manmohan Singh would think of it, saying I knew he had been out of the country on the Nyerere project for some years.

Mr C has deliberately excluded my name from the group and deliberately added Manmohan Singh’s instead. What explains this attempted falsification of facts – reminiscent of totalitarian practices in communist countries? Manmohan Singh was not involved by his own admission, and as Finance Minister told me so directly when he and I were introduced in Washington DC in September 1993 by Siddhartha Shankar Ray, then Indian Ambassador to the USA.

A possible explanation for Mr C’s mendacity is as follows: I have been recently publishing the fact that I repeatedly pleaded warnings that I (even as a layman on security issues) perceived Rajiv Gandhi to have been insecure and vulnerable to assassination. Mr C, Mr B and Mr A were among the main recipients of my warnings and my advice as to what we as a group, appointed by Rajiv, should have done towards protecting Rajiv better. They did nothing — though each of them was a senior man then aged in his late 60s at the time and fully familiar with Delhi’s workings while I was a 35 year old newcomer. After Rajiv was assassinated, I was disgusted with what I had seen of the Congress Party and Delhi, and did not return except to meet Rajiv’s widow once in December 1991 to give her a copy of a tape in which her late husband’s voice was recorded in conversations with me during the Gulf War.

Mr C has inveigled himself into Sonia Gandhi’s coterie – while Manmohan Singh went from being mentioned in our group by Mr B to becoming Narasimha Rao’s Finance Minister and Sonia Gandhi’s Prime Minister. If Rajiv had not been assassinated, Sonia Gandhi would have been merely a happy grandmother today and not India’s purported ruler. India would also have likely not have been the macroeconomic and political mess that the mendacious people around Sonia Gandhi like Mr C have now led it towards.

POSTSCRIPT: The Congress MP was kind enough to write in shortly afterwards; he confirmed he “recognize(d) that Rajivji did indeed consult you in 1990-1991 about the future direction of economic policy.” A truth is told and, furthermore, the set of genuine Rajivists in the present Congress Party is identified as non-null.

Subroto Roy… reads Manmohan Singh’s Media-Flatterer-in-Chief (as opposed to the Chief Acolyte) claim in the pink business newspaper today that a young Dr Singh in 1974-5 had “crafted” a “strategy” to reduce India’s “hyperinflation” and purportedly won Indira Gandhi’s praise & confidence. Sheer nonsense I am afraid. There was no “hyperinflation” at the time in India, only a massive readjustment of relative prices caused by the first oil shock & a lot of “repressed inflation” typical of controlled economies. People like LK Jha & PN Dhar (if memory serves rightly) were the key economic decision-makers, not Dr Singh. The “strategy” was one of “forced saving” and price-controls (i.e., almost no “strategy” at all). And the data show it did not work! Look up *Indian Economic Journal*, Special No in Monetary Economics Oct-Dec 1975, especially the keynote address by my great professor, Frank Hahn, titled “Money and General Equilibrium”, republished in *Money, Growth and Stability* (MIT 1984)…

A Small Challenge to the RBI’s Governor Subbarao

The Hon’ble Gov of the Reserve Bank of India Shri D Subbarao

Dear Governor Subbarao,

You said yesterday, April 20 2010, that the Reserve Bank of India has a macroeconomic model which it uses but which you had personally not seen.

I have given two lectures at your august offices, one by invitation of Governor Jalan and Deputy Governor Reddy on April 29 2000 to address the Conference of State Finance Secretaries, the other on May 5 2005 to  address the Chief Economist’s Monetary Economics Seminar.  On both occasions, I had inquired of the RBI’s own models by which I could contrast my own but came to understand there were none.

If since then the RBI has now constructed a macroeconomic model of India’s economy, it is splendid news.

May I request the model be released publicly on the Internet at once, so its specifications of endogenous and exogenous variables, assumed coefficients, and sources of time-series data all may be seen by everyone in the country and abroad?  Scientific scrutiny and replication of results would thus come to be permitted.

I would be especially interested to know the demand for money function that you have used.   I well remember my meeting with the late great Sukhamoy Chakravarty on July 14 1987 at his Planning Commission offices, when he signed and gifted me his last personal copy of the famous Reserve Bank report by the committee he had chaired  and  of which he told me personally Dr Rangarajan had been the key author – that report may have contained the first official discussion of the demand for money function in India.

With cordial regards

Subroto Roy

“Rangarajan Effect”

A Note on the Indian Policy Process

A Note on the Indian Policy Process
Subroto Roy

During the University of Hawaii perestroika-for-India project two decades ago, I had wished to attract Sukhamoy Chakravarty from Delhi. He very kindly met me on July 14 1987 and presented me his last personal signed copy of the famous RBI report his committee had chaired. He said he could not come to Hawaii because of ill health but he strongly recommended I take C. Rangarajan instead because, he said, Dr Rangarajan was the main author of the report. I met Dr Rangarajan in Kolkata at Jadavpur University where he was giving a speech in his role as President of the Indian Economic Society that year. Later in correspondence, he wrote to say he was over-committed but that if I took Amaresh Bagchi instead, he would help co-author Bagchi’s contribution to our project. So I commissioned Amaresh Bagchi, then Director of New Delhi’s National Institute of Public Finance and Policy.

In my next project-related visit to Delhi in December 1988, I met Amaresh Bagchi personally for the first time; he was about to retire or had already done so. He told me he knew my name from the fact the High Commission of India in London had sent the Finance Ministry in Delhi the May 29 1984 lead editorial of The Times of London on my work which had been very critical of Indian economic policy; Bagchi had been at the time in the Finance Ministry, and, as an old sarkari statist, had naturally taken exception to what I had said by way of liberal criticism. He wished to co-write his contribution for our Hawaii project with a young colleague of his; I declined permission for him to do that and told him our understanding was that Dr Rangarajan would be writing with him.

In any case, in May 1989, Amaresh was the first person to reach Honolulu in the team we had put together for the project, arriving early by several days. He was all alone and seemed miserable, so I took him to the supermarket and later invited him to dine with my small family at our home at Punahou Towers, 1621 Dole Street. It pleased him to eat some home-cooked Indian food, and he warmed slightly. He told me he had joined the Government as a bureaucrat in the income tax department and later acquired a doctoral degree in economics, though I did not get a sense that he was familiar with traditional public finance of the sort in Richard Musgrave’s classic textbook. I gifted him a copy of James Buchanan’s lectures that I had put together when Professor Buchanan had visited the University of Hawaii at my invitation in 1988 and which the University had then published with a preface by myself. He remarked he found it terrible that American supermarkets had all this canned pet food when the world was so hungry. Later I invited him to a larger dinner party again at my home before the conference began.

At the conference itself, I placed him next to Milton Friedman, which some said was a master-stroke. There was a long and somewhat heated interchange between him and TN Srinivasan, though not with Milton, as Milton was, as always, invariably polite, patient and clear-headed in argument for the two days that he stayed.

The chapter Amaresh Bagchi wrote for us in the book Foundations of India’s Political Economy, edited by myself and WE James, was useful as practically the only statement until that time on the fiscal-induced monetary weakness of India (that still continues today, indeed may have gotten worse since). It contributed to placing him in the policy-limelight in his post-retirement years. Dr Rangarajan was not a co-author after all but apparently contributed the most important paragraphs on the subject. (We have been trying for almost a year now to get the University of Hawaii to allow free republication of the book on the Internet; the original publisher, now dead, reneged on a promise to produce a paperback edition after there was leftist academic pressure on him in Delhi.)

I gave a copy of our book to Manmohan Singh when I met him and his senior aides in September 1993 in Washington at the Indian Ambassador’s Residence; I was introduced to Dr Singh by the then Ambassador of India SS Ray as the person on whose laptop computer the 1991 economic reform had been designed for Rajiv Gandhi during Rajiv’s last months, a statement accurate enough as has been told elsewhere. (Dr Singh had 20 years earlier kindly visited our then-home in Paris at 14 Rue Eugene Manuel at the invitation of my father who knew him, to advise me about economics just before I headed to the London School of Economics as an 18 year old freshman; but in 1993 both he and I had forgotten that earlier 1973 meeting.)

Today’s newspapers report Amaresh Bagchi’s passing and say that “When (Manmohan) Singh was finance minister in the early 1990s, Bagchi was one of his key advisers on fiscal policy”. Dr Singh has described Bagchi as “one of our most distinguished fiscal policy experts” and said “It is no exaggeration to state that Amaresh has been associated with almost every major fiscal policy reform in the past 30 years”.

I am afraid I disagree with the Prime Minister of India in that I do not see any “major fiscal policy reform” having taken place at all in India, just a lot of unsystematic tinkering here and there. The root cause has been the failure to face or want to comprehend the extremely dismal state of government and public sector accounts throughout the country. Without proper government accounting, there can be neither accountability nor any serious fiscal policy, and hence no serious monetary or macroeconomic policy either.

My review of Sukhamoy Chakravarty’s *Development Planning* 1987

Preface August 2008 : In the summer of 1977, I had run out of money completely after my first year as a Research Student at Cambridge; I was offered a job to teach at a renowned girls’ school at Cambridge but when I returned to India, I was offered a Junior Research Fellowship at the Indian Statistical Institute, New Delhi, by Professor VK Chetty (author of some excellent work on Indian monetary economics) which I accepted for a few months.  (It was all vegetarian by way of cuisine at ISI so I used to cycle to the Jawaharlal Nehru University campus for some non-vegetarian food — only to encounter at the restaurant there some of those who run the CPI-M party today!  They did not quite know what to make of a libertarian!)  From the ISI, I moved for most of 1977-78 to the Delhi School of Economics as Visiting Assistant Professor, thanks to an invitation from Mrinal Datta-Chaudhuri and the late Dharma Kumar, where I was given the office of Sukhamoy Chakravarty as he was on sabbatical leave.  Professor Chakravarty and I met   and talked for the first time then; ten years later on July 14 1987 at his Planning Commission offices, he signed and gifted me his last personal copy of the famous Reserve Bank report by the committee he had chaired.   I tried strenuously without success to invite him to the perestroika-for-India project I had been leading at the University of Hawaii , Manoa, but he could not come due to ill health.  This review of his 1987 book Development Planning was written at Manoa on November 5 1987 for the journal “Economic Affairs” in London, and must have been published  sometime in 1988.

“A Review of Sukhamoy Chakravarty, Development Planning, The Indian Experience, Oxford: Clarendon Press, 1987, First published in Economic Affairs, London, 1988.
Subroto Roy

Readers of Economic Affairs may know that this reviewer has been far from sympathetic towards the thinking behind the process of economic planning in India.  In a recent IEA publication, (Pricing, Planning and Politics: A Study of Economic Distortions in India, Occasional Paper 69, 1984),  it was argued that the feasible role of the State has been fundamentally misconceived and misdescribed in independent India, with tragic consequences for both economy and polity. Without mitigating the force of that conclusion, it is possible to recommend the slim volume under review as indispensable to anyone seriously interested in the complexities of economic policy in India.

Sukhamoy Chakravarty is perhaps the foremost economist in India today.  He has been a principal student of the theory of development planning as well as instrumental in the formulation of economic policy in the country.  The work under review derives from his Radhakrishnan Memorial Lectures given at All Souls College, Oxford, in 1985.  It is a critical and yet sympathetic assessment of Indian experience, which offers critics of planning a more formidable foil than has been available thus far.

The key decisions which have shaped the present state of India’s economy and polity were taken in the mid 1950s by Jawaharlal Nehru on the advice of PC Mahalanobis.  Both had been impressed with what they supposed to be Soviet experience and disillusioned with what they supposed to be the experience of the relatively decentralized market economies of the West.  The decisions taken entailed, among other things, widespread and detailed regulation of private industry, large-scale industrial investments by the government, widespread and detailed control of foreign trade and payments, an assumption of inflows of foreign aid, and a neglect of agriculture.

Chakravarty suggests these decisions may have been rational at the time.  In other words, whatever we might think of them now, given the circumstances and the state of knowledge then, India did what India should have done.

The present reviewer disagrees.  The grounds for disagreement briefly are (a) a liberal alternative had been clearly expressed in India even in the 1950s (by B.R. Shenoy, Milton Friedman and Peter Bauer) but was for all practical purposes forcibly silenced; (b) this alternative has had at least as strong a claim, if not a much stronger claim, to economic reasoning and evidence than what came to be accepted.

Be this as it may, Chakravarty is a serious, scholarly, and undogmatic planner, and it so happens that several of his strongest opinions in the book are ones with which the liberal critic will have no disagreement at all.   For example, he stresses the great importance of providing infrastructure in agriculture, and of “the need to upgrade the quality of human agents through appropriate investment in health, education and nutrition” (p. 75).  T. W. Schultz of the University of Chicago has argued precisely the same for several decades now, and in fact received the Nobel Prize in recognition of it.  So had Milton Friedman in a Memorandum to the Government of India in 1955.  Then Chakravarty decries mere stimulation of monetary demand through what is called deficit financing, which amounts to little more than printing money” (p. 76), and points further to the government monopoly over the banking system, which gives it “command over financial savings of the community at largely negative real rates of interest” (p. 79).  Here Chakravarty draws upon his experience as chairman of a very important commission of the Reserve Bank of India, which, in an excellent report, made a candid assessment of the politicisation of the money supply in India (Report of the Committee to Review the Working of the Monetary System, Bombay: Reserve Bank of India, 1985).

Then Chakravarty speaks of the “level of efficiency in the operation and maintenance of the public sector”, and says “the type of managerial culture that is needed to realize a higher level of productivity of capital and labour cannot be reached with the present style of running public enterprises” (p. 79).

Critics of development planning can hardly be in disagreement with such statements.  They might add perhaps that a major way to improve competitiveness and raise revenues which could then go towards provision of public goods and investment in agriculture draw out the huge volumes of black money in the underground economy would be to sell most if not all of the non-defence public sector.  Combined with optimal provision of public goods, the deregulation of private industry and the encouragement of competition in all spheres, such a policy would go far towards a commonsensical approach at home, even while the economy remained relatively closed to the outside or opened only slowly.

Chakravarty expresses a considerable scepticism with respect to current beliefs in India that the importation of the latest industrial technologies will somehow swiftly turn the economy outward to export-led growth (pp.72-73).  His argument is sobering, as when he points to balance of payments problems in a transition and also to possible external constraints on the growth of exports.  This too the critic of Indian planning may find plausible.   And besides, if shallow liberalization fails, then there is danger that the real thing will never come to be tried.

In general, Chakravarty advocates a method of careful and undogmatic assessment of facts and given circumstances, followed by measured and incremental responses.  His splendid essays will be useful to friends and critics of development planning alike.”


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