When economist Shankar Acharya returned to India in 1982, after studying and working abroad for 23 years, he had a job waiting for him in the newly set up National Institute of Public Finance and Policy (NIPFP) in Delhi. He was to head a study commissioned by the Finance Ministry on the dimensions of India’s black money problem. He and his team submitted the report in early 1985 and it made quite a splash. Among other things it was sceptical about demonetisation and voluntary disclosure schemes to deal with the problem. Anecdotes like this are strewn all over An Economist at Home and Abroad.
Several economists including Manmohan Singh, Bimal Jalan, Montek Singh Ahluwalia, Rakesh Mohan, who would make major contributions to the country’s economic and monetary policies, chose to return to India in the 1980s. All of them went to the best universities in the U.K. and the U.S. and had settled down to jobs in the World Bank and similar international institutions. All of them wanted to do their bit for their country.
Long stint
Acharya was among those who came back. He ended up as the longest serving economic adviser to the Government of India, a member of the 12th Finance Commission and many other committees and panels. He was also Chairman of Kotak Mahindra Bank for 12 years.
He gives us glimpses into the resistance for tax reforms during his years with the government. Finance Minister V.P. Singh’s 1985 Budget speech had promised a long-term fiscal policy (LTFP) and Acharya was asked to be the principal ‘draft animal’ in consultation with senior officials in revenue and expenditure. This was the Budget which introduced MODVAT (modified value added tax), which was a phased introduction of VAT (value added tax) principles.
Says Acharya: “An aside: During the late stages of preparation of the LTFP, Bimal (Jalan) walked into my room one day and asked in effect, ‘Shankar can we drop the MODVAT stuff from the document?’ Apparently, he was getting a lot of resistance from certain quarters. I protested vigorously saying it was the jewel in the crown of our tax policy intentions. He did not pursue the matter.”
Friends at Oxford
The first part of the book is about his growing up years. Born in Calcutta in 1945, Acharya and his brother led a peripatetic life both in India and abroad, thanks to a civil servant diplomat father. Excelling in academics, he went to Oxford and then to Harvard from where he got his Ph.D. Acharya then pursued a career in the World Bank before returning to India. At Oxford, his closest female friends were Aung San Suu Kyi and Sunetra Bandaranaike. They are still his good friends. Till the recent crisis in Myanmar, he had been invited by Suu Kyi to help to get the country’s economy to move forward on several occasions.
As chief economic adviser, his views on the prime ministers he has worked with are interesting. “Manmohan Singh was a great pleasure to work with. In meetings, he listened carefully, rarely raised his voice, but when he spoke his wisdom and substance shone through.” Then, “Compared to the rather inscrutable [Narasimha] Rao, [Atal Bihari] Vajpayee generally conveyed a more friendly and avuncular demeanour.”
Acharya has been writing a column for many years and the last few chapters are drawn from his columns. This book is a product of the lockdown. It is a very readable, rather gentle book which effortlessly mixes the personal, intellectual and professional lives of the author. He does not badmouth anybody or reveal any secrets.
It ends on a sombre note. Acharya has his doubts about whether the increasing non-inclusive nature of polity will be conducive to long-term growth.
An Economist at Home and Abroad: A personal Journey ; Shankar Acharya, HarperCollins, ₹599.
The reviewer is a journalist and author.
