The Chief Economic Advisor Arvind Subramanian, while speaking at the VKRV memorial lecture, blasted Indian bankers and expert opinions. VKRV Rao was a prominent Indian economist, politician, professor and educator. Subramanian, talking about Dr Rao, said, “Dr Rao was passionate about research not just for its own sake but for its application to policy and solving India’s pressing challenges of poverty.” Subramanian has put up the full text of his speech which he made at the memorial, on his Twitter handle. He said that Macroeconomics is central to the work that is done at the Ministry of Finance and the RBI, and crucial policy decisions are made based on the assessment of the situation. He said that the major source of macroeconomic commentary is from stakeholders like bankers.
Talking about banks, Subramanian said that bankers worry about losing access as they are regulated by the government and RBI. Subramanian also blasted the series of expert opinions and their worrisome pattern. He said, “The MOF and RBI are far from the only bodies that give advice. Assessments of the macro situation are, and must be, the result of a far wider process, in which inputs are also provided by experts in the private sector, academia, and civil society.” He added that the government does not “really benefit from experts’ wisdom” and that is a “serious problem”. Interestingly, Subramanian said that for various reasons, experts feel that they need to stay on the right side of power. He said, “Why do the experts do this? Why do they refuse to speak truth to power? If you ask them, they would say that they are just trying to be “constructive”. But I feel something else is at work.” He basically hinted that Indian analysts fall over backwards To rationalise official decisions.
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The Chief Economic Advisor said that rating agencies have treated India and Chine inconsistently. He said, “In recent years, rating agencies have maintained India’s BBB-rating, macro-economics notwithstanding clear improvements in our economic fundamentals (such as inflation, growth, and current account performance). At the same time, China’s rating has actually been upgraded to AA-, even though its fundamentals have deteriorated.”
Subramanian, through a series of graphs and data, presented a macroeconomic update of the Indian economy. He said, “Treat this as not my update or that of the Ministry of Finance but that of a disinterested observer who has just landed from Mars.” He said that seldom are experts opinions, objective. He said that India needs more disinterested voices, including universities and researchers who are independent of the apparatus of power, to speak up.
According to BloombergQuint’s Twitter handle, Subramanian also lamented the lack of diverse views in India. He reportedly said that today there are hundreds of economists outside the government and RBI and many within, still instead of getting hundreds of views, we get just one view, which is the official view.