Arvind Subramanian’s new book serves up an eye-opener for the uninitiated, and for the rest, a reminder on how little economics and economists influence policy in India. Writing weeks after remitting office, the former Chief Economic Advisor (CEA), discloses that he was provided no clear job description for the role by the government. That, aside of producing an annual economic survey, which can be delegated, not much is really required of the CEA. And so, involvement in policy-making is all about self-motivation.
The book’s title, Of Counsel: The Challenges of the Modi-Jaitley Economy , promises insights into the government’s economic thinking and approach. The book offers none of that, though. It tells the story of the author’s intellectual experience in the government, his personal learning curve. His observations, opinions, understanding and analyses of issues.
Dissent notes, back stories
The book is a compilation of the author’s speeches, writings, official interventions such as dissent notes that have been updated and fleshed out. These are peppered with interesting new asides and back stories. It doesn’t break new ground in analysing problems or identifying issues, but Subramanian’s writing style makes policy discussions more accessible and less dense. He retains his love for literature and music and uses it effectively to press his points. In chapter seven, spilling the Finance Ministry’s home truths, he invokes Paul Simon: Just as there are more than 50 ways of leaving a lover, there are as many ways of meeting deficit targets. Governments hedge, fudge and make use of creative accounting.
His passion for policy shines through the book. In the chapter on the Reserve Bank of India’s (RBI) reserves, currently in the news for being at the centre of a rift between it and the government, he confesses to a recurring dream in which a public event is going on. On one side are seated “Messrs Bimal Jalan, C. Rangarajan, Y.V. Reddy, D. Subbarao, Rakesh Mohan, Raghuram Rajan, Urjit Patel and Viral Acharya.” On the other, he writes, “I am alone... I am being lectured on the RBI’s balance sheet... the fawning elites... are cheering them on.” Suddenly Ben Bernanke and Mario Draghi appear, examine the case and pronounce their verdict, taking his side naturally.
The book’s biggest success is on two counts: The arguments in chapter ‘Speaking Truth to Power’ for openness to debate and dissent. The author records how the need to stay on the right side of power prevents people from speaking their mind, the main interventions in public debates come largely from vested interests, including officialdom, and the non-experts pretending to be know-alls. All that officialdom wants is validation for its action. It ends up creating an echo chamber, not a good thing in the long run. The quality of the discourse, thus, has dipped. What is required, Subramanian writes, is capability and competence, but above all, “voices that are not silenced, compromised, or conveniently moderated by the lure or fear or power.”
Challenging assignment
Secondly, it is refreshing to see an economist make mea culpas and strive constantly to refine his own grasp of issues. While, being a policy wonk in Washington D.C., he was well equipped for the job’s technical demands, once in Delhi, he quickly realised how under-prepared he was for the challenges that awaited him. These included adjusting to working in a complex government set-up that required him to work with politicians as bosses and entrenched bureaucrats as colleagues, but also revisiting the conclusions he had held all along. The dominant theme of the book is how India — the economy, the system, the public response to policies and just about everything else — constantly surprised and overwhelmed him. An expression his predecessor Raghuram Rajan used to describe his own experience as a policy economist seems apt here too: Subramanian appears like a child let loose in a candy shop. He writes of the thrills: “I possess a manic energy, bordering on insanity, which makes me think (probably self-delusionally) that I can juggle many balls... be the fox and the hedgehog.”
And yet, as the chapters progress, it is hard to miss how immune his political bosses and colleagues in the bureaucracy probably were to the excitement he felt at encountering new puzzles and questions for research and analysis. The absence of intellectual curiosity and rigour and overriding political timidity in the system he operated in can be inferred, as much as he tries to praise the individuals he is surrounded by. Rarely is he approached for advice, or asked to identify a bottleneck, crystallise new insights or find new solutions.
At one point, he comes under pressure to not publish his report on the rate structure for the GST (Goods & Services Tax) that, incidentally, was closer to that of the Opposition’s position and the recommendations from neutral experts. He resists and goes ahead anyway. But his report fails to guide the decisions. It would be a pity if the discussion on extending the GST to electricity, land and real estate in this section do not guide the Council going forward.
The chapter on demonetisation is a disappointment. It provides no new insights into how and why the decision was taken, or satisfactory analysis of the outcomes, or lack of them.
Of Counsel: The Challenges of the Modi-Jaitley Economy ; Arvind Subramanian, Penguin/ Viking, ₹699.
