By Nachiket Kondhalkar
Rajiv Kumar has replaced Arvind Panagariya as the new vice-chairman of NITI Aayog. Kumar has a DPhil in Economics from Oxford and a PhD from Lucknow University. In the past, he has held many senior positions in the Ministries of Industries and Finance. He is currently serving as a founding director of Pahle India Foundation, a non-profit financial, economic and political research think-tank.
In his recent column, he referred to the exit of Raghuram Rajan and Arvind Panagariya in the past year, saying more such resignations can come. He also talked about how the foreign influence on Indian policy making by Indian-American economists is fading.
Reading between the lines
According to him, people’s fascination with foreign goods went down in the aftermath of the 1991 liberalization of the economy. This was because they became more easily available and cheaper. This turned highly coveted foreign goods into readily available foreign goods. But it took a long time for the policy making establishment within the country to get rid of the “Macaulayist mentality”. During this time, experts from domestic academic spheres were considered inferior to their foreign counterparts. Hence, they were not considered deserving of high-ranking positions in the government. During this time, ‘imported experts’ were regularly coming in. They were people who had studied the Indian Economy from foreign academic circles. They were not in touch with the delicate changes of the ground reality but were still in charge of making policies.
Another problem was that Indian policies had the influence of organizations like IMF or the World Bank. In comparison, China has always heeded the experiences of the World Bank and the IMF. But none the less formulated policies keeping in mind its own goals and ground realities.
Changes to come
India has used all sorts of approaches known to economists during the last few decades. These include nationwide political campaigns to eradicate poverty to subtle changes in the banking structures. In spite of this, the country continues to languish in poverty even after 70 years of Independence. It is obvious that India needs a fresh perspective. One that is tailored for and by the people living in the economy and not studying it from abroad.
Though Panagariya had studied the Indian economy from Columbia, he was essentially a trade economist. Kumar has a more all-rounded reputation in comparison, having dealt with foreign trade, finance and liberalization issues in the industry before. He has a comprehensive view of the developmental challenges facing India, a trait that will be useful in his current role.
Domestic economists in demand
Kumar’s challenge is two-pronged: finding methodologies to achieve accelerated and inclusive development and influencing nation’s politics so that the politicians at all levels will also play by the new rules of the game. Kumar has to navigate politics in such a way that his moves are not politicised. At the same time, he has to plan and implement an economic reform procedure that is custom-made for India.
Kumar talked about the three simultaneous transitions economic, political and social that India is going through and how India needs to work on its own model of development. He said, India cannot succeed by following some weather-beaten development model or economic theology. Neither the Washington nor the Beijing consensus can be adopted wholesale in India. There will have to be an Indian model that is derived from the ground realities upwards.
He said that as a result of this transformation, India may witness the appointment of many other people with a much better understanding of Indias ground reality. He claimed, A key transformation taking place on the policy front in the current central government led by Narendra Modi is that the colour of foreign influence, especially Anglo-American, on the Indian policy making establishment that came in the last few decades, is fading away.
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