(L-R) Viral Acharya, Arvind Panagariya, Raghuram Rajan and Arvind Subramanian.
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And so the fourth and final horseman is heading back across the Atlantic. Viral Acharya will soon follow in the retraced footsteps of Arvind Subramanian, Raghuram Rajan, and Arvind Panagariya. Media comment projects the country as the loser, but no one is alarmist in the way some were when Rajan headed back to Chicago. Nor does current comment reflect the extreme fears raised by Acharya in his famous speech about central bank independence. But then, neither do too many people reflect the view reportedly expressed by Arun Jaitley as finance minister, that one of the mistakes the Modi government made was to import economists from abroad.

Let’s be clear: The country IS the loser when it loses top-flight economists. But before we come to that, consider the possibility that experts can be wrong. Acharya’s academic qualifications and expertise in central banking are widely acknowledged, but he does have to answer questions on his record at the Reserve Bank of India (RBI). On his watch, the RBI’s macro-economic analysis has been wrong on the inflation rate as well as the economic growth rate — over-estimating both. Flowing from those misjudgments, he has been wrong also in his advocacy of interest rate policy, opposing two of the recent rate cuts announced by the RBI.

A picture of TN Ninan, chairman of Business Standard Private Limited

There is the question of cultural fit. Foreigners doing business with Indians find that Indians don’t say “no” when they disagree, preferring to shift ground or resort to indirect signalling. That’s unlike in the US, say, where you are expected to bluntly say “no” if that is your position. Similarly, those within the Indian government system do not speak out publicly against the government they serve. When you are governor or deputy governor, you do not have the freedom of speech that an ordinary citizen enjoys. Differences are aired only internally.

On the occasions when someone feels the need to start a public debate, it is not done in apocalyptic terms. Naturally, when Rajan and Acharya spoke out bluntly (in the case of the former, on issues with which he was not officially concerned), it did not go down well. And yet, on the one issue (demonetisation) on which one might have expected Rajan to take a stand, he became a homegrown Indian: He advised against, then went along.

Also read: Viral Acharya has left RBI, but his warnings may still come back to haunt New Delhi

Still, it was not a mistake to hire these economists. Rajan’s determination to clean up banking led to the asset quality review, which exposed the extent of the hidden rot. Next, while it is no secret that Rajan and his deputy (later successor) Urjit Patel did not get along, it was under Rajan that Patel formulated a policy framework for the RBI, making inflation control the primary goal of monetary policy. This reflected international thinking on the issue, but was contrary to the view of previous, homegrown governors like Y.V. Reddy and Bimal Jalan. Still, monetary policy has been recast.

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In the finance ministry, Arvind Subramanian’s many policy prescriptions were usually ignored by the government despite his strenuous advocacy. But his report on the modal rate for the goods and services tax did get indirect acceptance, while his opposition to multiple rates has found partial purchase after his departure. Subramanian has also been recognised for raising the quality of analysis in the government’s annual Economic Surveys. But after his recent questioning of the official growth numbers, he must be persona non grata.

At the NITI Aayog, Arvind Panagariya came early and left two years ago. He did not get as much face time with the Prime Minister as he may have expected, perhaps because his reformist thinking on macro-economic policy was tangential to the approach of the Modi government, which has been more interested in programmes and projects, and in specific issues like how to reform medical education. The NITI Aayog played its part here, but Panagariya’s big ideas like coastal economic zones have not materialised.

Today, with growth having slowed and macro-economic challenges in every direction, would the government have benefited from the advice of “Harvard” economists? Perhaps, but judging by past record, it probably would not have paid much heed.

Also read: As its last dissenter, Viral Acharya persistently questioned Modi govt over RBI’s autonomy


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15 Comments Share Your Views


  1. I don’t understand the logic of importing economists from USA into RBI. India doesn’t do similar thing in any other government department. Imported economists may be good at using the western terminology of economics but their understanding of India’s economy is no better than home grown economists. India has to come out from the inferiority complex that home grown experts can’t do better job than the foreign educated Indians with PhDs and American experience. I have concern about the loyalty of Indians with American green card or citizenship. More often they look over enthusiastic to prove their loyalty to America rather than India. Heading a government department is much more than just being a professional. There are times when there will be a conflict between professional ethics and the interest of India. Imported economists seem to have failed on this account. Another factor that generates conflict is the professional ego that comes in the way of implementing government decisions once they are taken. The imported economists have failed to put their whole heart for implementing the government decisions. I am sure the home grown economists would perform better than the PhD holders from America or UK.

    • Imported economists. Ha. Ha. I don’t know what you are talking about. They are not goods to be imported.

      Sure, the home grown Ambassador has always been superior to BMWs and Ferraris.

      It’s the left leaning idiots who try to bring quality to India.

  2. The frog deems himself king of the landowner’s well with lesser toads lapping up every croak, he makes. There is absolutely no room for an incomprehensible subject called economics in this kingdom and so they had to go. Why they do not look up the not too distant past and recall the sagacity of the late PV Narasimha Rao when he entrusted the Indian economy in the very capable hands of Dr Manmohan Singh, is a mystery?

  3. At the outset, let us say that we are all proud of the academic achievements of Indian economists abroad and hope they will continue to contribute further to the theoretical and empirical studies in macro economics. However, experiment of getting them to occupy top positions has failed badly.They have been a misfit in our ecosystem and they went beyond their role in their public messages. Did they intellectually contribute much more, compared to what home grown economists could have? Hardly. If RBI is now working quietly and quite fine, it is due a mature person like Das being around, even though he may be just a history graduate. At the best, one should get these jonhnnies for expert opinion or review rather than offering them any authority. Their personal objective is to use this position to embellish their resume for further pastures (which is fine) but why should government help them with this. Arvind and Viral left the job a few months before end of their contract citing ‘personal reasons’ but in effect slapping the government and leaving behind enough insinuations for the left liberal and now orphaned media to wag its tongue. RBI and GOI should have asked them to complete their contract and then let them go! Hopefully, we learn from this and in future decide carefully if we should import economists Indian at heart but also with green cards in pocket.

    • Absolutely bang on! Thanks, for so clearly spelling it out. Esp. liked the bit on these pseuds trying to embellish their CVs by taking up high office and then leaving just a few months before their term ends — to make amends with the left liberal establishment. Exactly my thoughts too!

  4. Prof PK Sharma,Freelance Journalist, Barnala (Punjab)

    Ironically, there is now no use and fun crying over the spilt milk now.

    But even then kudos to Mr. TN. Ninan for debating this issue of national as well as international importance.

    It is indeed disgusting that four celebrated economists popularly known as Harvard’ economists ‘ expertise and talent were frittered away because of complacency and ego problem of those at the helm !

    Should we deem it developing of human resources exercise or otherwise ? There could have been problem with one or two but all the four
    is something quite mindboggling !

    Unless or until the concepts of openness of ideas and recognition of talent in the letter and spirit are given weightage by the polity in the
    best national interests, be it any walk of life , the nation is bound to face the music !

    In wake of these developments, there should be a collegium/ council of four to five top economists to enable the polity to steer clear the economy of the nation out of woods and dire straits ! The number of expert economists has shrunk considerably due to the doing away
    of Planning Commission and absence of congenial atmosphere for the economists to function freely, independently and autonomacally !

    Rising above whimsical, vested and partisan interests is indeed the dire need of the hour !

    Will the polity rise to the occasion or not is a multi- million dollar question ?

    Prof PK Sharma, Freelance Journalist
    Pom Anm Nest,Barnala (Punjab)

  5. It has been 60 years that Indian economy was being run by very these Harvard chickens. Why did India end up lagging behind Singapore ?

  6. Hindutva gets us a Hindu growth rate. Logical.

    Instead of only blaming Modi and the BJP, Hindus should ask themselves why it is impervious to reform.

    Buddha tried and failed. Buddhism was driven out of India. Then came the Muslim invasions. And finally the West (and Christianity).

    Now the BJP is trying to reject both. They forget that only very few Muslims came from outside. They are local people who converted for one reason or the other.

    Ninan’s article would seem to confirm the hypothesis that foreigners – even those of Indian origin – and their reformist ideas – are basically unwelcome in Hinduism.

  7. We can all soon reach UP/Bihar rate of growth and development. The new economic model of the two Gujju bhais and their Gau mutra-powered mind calculations will let us all fly to imaginary planets on our homegrown rickety shared autos. Giriraj Singh will still be peeing human, Mulayam making crass jokes on women, right wing idiots trolling relentlessly to hide their sex starved lives and we will witness the many unfolding and glorious visions of new India in the next 5 years. Hold your family tight and watch how this new Lutyens gang will destroy every institution the makers of this country struggled hard to build!

  8. One is surprised that this should even be a subject matter of serious debate. When Indians of substance contract a serious illness, do they head to Sloan Kettering or to Rishikesh for a spot of meditation and Ayurveda. Managing the Indian economy – a strange, complex beast – requires world class intellect, along with a lot of practical, earthy wisdom. Neither would have endorsed Demonetisation under any circumstances, or a shoddy GST. The truly dismal state of the economy, for which there are no external factors to blame, owes a lot to an unwillingness to get the best people – economists as well as mandarins – and allow / encourage them to advise with candour and courage. There would have been no need to cook the books. In the first two months of the current fiscal year, the deficit has touched 52% of the figure budgeted for the full year.

    • And the irony is that Indians voted for the same who brought misery in their lives.. can they be really complaining now??.. With media replicating Emergency days, did we see anyone raising issues & getting concerned.. Too difficult for Indians to accept their mistakes and it starts from the TOP..

  9. Traditionally, Hindus were told not to travel abroad. The reverse is also true: Hindus don’t accept foreigners (includes NRIs and OCIs) and their ideas.

    This is a real tragedy.

    China’s growth has a lot to do with the know-how and money brought into China by expat Chinese.

    India has missed this important resource. So you have Indian talent running some of the biggest companies in the world, but they will not be welcome in India should they choose to return.

    Anyone know what happened to Sameer Bhatia of Hotmail fame? Last I head he was trying to setup something in India many years ago.

  10. Socialist Bharat doesn’t need Harvard economists. To give Freebies subsidies reservation loan waivers, Rabri Devi is enough


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