My meetings with Dr Reddy

Dr Yaga Venugopal Reddy (www.yvreddy.com)

Another day in 1998

From 1996 to 1998, I was an AGM and Member of Faculty at the Reserve Bank of India’s Zonal Training Centre (ZTC) in Mumbai. The ZTC was then on the fourth floor of the Bank’s Byculla Office opposite the Bombay Central Station. The story of my meetings with Dr Reddy starts on 7 October 1998. On my way home, I saw a tray next to a pillar on the ground floor. It always had letters addressed to the hoi polloi, staff not important enough to receive letters at their desks. Those were still snail mail days. Nevertheless, I always ignored the tray. But that day, my sixth sense indicated a letter for me.

As I rifled through the pile, my fingers fell on a white cover with the RBI logo in navy blue at one end. Turning it over, I found my name and address scrawled at the right end. On the left was printed, also in navy blue, “Reserve Bank of India Central Office Bombay”. Above it was another scribble: Dr YV Reddy, Deputy Governor. Continue reading “My meetings with Dr Reddy”

The NSE Case: The Yogi and the Commissariat

The NSE Case, where Chitra Ramkrishna and a Paramahamsa took the world’s leading derivatives exchange to the cleaners

National Stock Exchange Head Office, Bandra Kurla Complex, Mumbai
The National Stock Exchange

“Man is neither angel nor brute, and his misery is that he who would act the angel acts the brute.” – Blaise Pascal

Continue reading “The NSE Case: The Yogi and the Commissariat”

My corporate governance experience

Henry Martin on Corporate Governance
Henry Martin’s famous cartoon, “All Those in Favor Say ‘Aye'”

I initially thought of titling this Advice to a Young Director, in the manner of Advice to a Young Scientist by Sir Peter Medawar, the British-Brazilian biologist and writer of Lebanese origin, and Nobel Laureate in Medicine (1960). Writing of Medawar, “The wittiest of all scientific writers,” wrote Richard Dawkins, and “the cleverest man I have ever known,” wrote Stephen Jay Gould. Coming from Dawkins and Gould, there cannot be higher praise. Medawar’s short book, suggested by a Physics Professor at IIT Madras, stayed an inspiration through my research. It is highly recommended for researchers in any discipline including corporate governance. Continue reading “My corporate governance experience”

The Kerala Model: The Stories Within

Kerala in Map of India

The Kerala State’s Economic Review 2020 blandly claims that the State’s development outcomes are comparable with the most developed countries. Is this true? Has Kerala’s progress in economic indicators since independence been superior to that of other States? To what extent are the State’s historical, geographical, social, and cultural factors responsible for its superior outcomes? Didn’t countries and regions with similar characteristics have similar and perhaps better outcomes? We examine these questions and are led to conclude that the ‘Kerala Model’ is less a model and more an experience. Continue reading “The Kerala Model: The Stories Within”

RBI Quiz 2021 – The Answers

Last week I had posted questions for the RBI Quiz 2021. The answers are provided below. I should add that most of these questions are curtain raisers to future and more elaborate posts on the subject. Stay tuned! Continue reading “RBI Quiz 2021 – The Answers”

Indian Cooperation: Finding Raiffeisens

That wretched woman with the infant in her arms, round whose meagre form the remnant of her own scanty shawl is carefully wrapped, has been attempting to sing some popular ballad, in the hope of wringing a few pence from the compassionate passer-by.

Charles Dickens, Sketches by Boz

“Cooperation has failed, but cooperation must succeed,” is an oft-quoted extract from the 1954 report of the All India Rural Credit Survey Committee (AIRCSC). Sir Benegal Rama Rau, the fourth Governor, Reserve Bank of India, appointed the Committee.  No other financial sector was the subject of scrutiny by as many committees as Indian cooperation. The quote is believed to be the contribution of Burra Venkatappaiah, of the Indian Civil Service. Venkatappaiah was then the Reserve Bank of India’s first Executive Director, and a member of the AIRCSC. He later became Deputy Governor, and the fourth Chairman of the State Bank of India. Thereafter he chaired the All India Rural Credit Review Committee which reported in 1969. I have a separate post on Venkatappaiah coming up, but my focus here is on Indian cooperation. Continue reading “Indian Cooperation: Finding Raiffeisens”

“Policy Maker’s Journal” by Kaushik Basu

Policy Maker's Journal by Kaushik Basu
Kaushik Basu and his book

Prof. Kaushik Basu in his “Policy Maker’s Journal” describes an incident where he and three friends, on a holiday in Cusco, Peru, were walking back to their hotel through deserted streets, when they saw a native girl, sitting alone and crying. Her mother had made her wait while she went home to fetch something. It was getting late, and she was hungry. But, they found food in her bag, and asked her to eat that. She said that they were for sale, and not for eating. They then bought some food, and gave her. We will never know whether she ate it. But, Kaushik was left “with an awareness of the human predicament that reading books and guzzling statistics cannot give.”

With such anecdotes, Prof. Kaushik Basu, Carl Marks Professor of International Studies at Cornell University, illuminates the account of his six-year foray into policy making. This included two years, 2010-12, as Chief Economic Adviser to the Government of India. The next four years were with the World Bank as Chief Economist.

Meeting Prof. Kaushik Basu

I first met Prof. Basu at a common friend’s house over dinner. A great conversationalist, he expressed an interest in knowing more about how currency in circulation was calculated. As someone who started his career in the currency vaults of the Reserve Bank of India, I was glad to oblige. But, that discussion never happened. Instead, he accepted an invitation to chair a half-day conclave that I helped organise at the New Delhi Office of the Reserve Bank. After he gave a convenient time, the other slots filled up soon. Finally, we had TN Ninan from Business Standard, TCA Anant, the Chief Statistician, and Ulrich Bartsch, then Head of World Bank’s Delhi Office. Prof Kaushik Basu delivered the keynote address and stayed with us for lunch thereafter.

We remained in touch for some time, for reasons other than the economy. He was intrigued by the then Tamil hit, Why this Kolaveri di? I realized much later that my laboured explanations of the song were unnecessary. I had forgotten that he had a Tamil connection through his wife, and did not need my interpretation (I had met once his co-brother in Hong Kong, in 2005). But, he sportingly played along.

Kaushik Basu was always quite dignified in his interactions and polite to a fault. I did not, therefore, waste the invitations he extended for the two Delhi Economics Conclave that he organised, and his book releases. One of them was the release of the two-volume New Oxford Companion to Economics in India, with Annemie Maertens, at the India International Centre.

Policy insights

Prof. Kaushik Basu shares many moments of learning, apart from the first anecdote. This includes his meetings with Kenneth Arrow, John Nash, and other great contributors to economics and finance. There are also embarrassing moments, like someone introducing him to an audience as one tipped to win that year’s Nobel Prize.

The book provides many instances where he contributed his insights to the policy discourse. This includes his stance on the different types of rights that were being promoted by the UPA government. According to him, such rights are meaningless unless if the government is capable of providing them. Another instance was his paper on dealing with corruption, where he suggested that bribe giving be decriminalised when it is paid to get legal things done. This would help bring out such cases. The proposal perhaps had a flaw in that the practical implications were not thought through. Nevertheless, it created a furore at a time when various scams were hitting the headlines, and died a slow death.

The humble and upright Kaushik Basu

There are numerous anecdotes where the basic humaneness and humility of Kaushik come through. One favourite is where he had to sit through a quiz. Two questions on who wrote a particular book had the same answer, Kaushik Basu. He was, no doubt, pleased and proud. But, the realization that nobody, even the audience, knew the answer, brought him back to earth. Kaushik is quick to acknowledge the contributions of others, including former students, colleagues, teachers, and fellow economists.

The Policy Maker’s Journal refers to instances of Prof. Basu’s uprightness and frankness. Like when he advised the new Finance Minister, Arun Jaitley, that he call on Manmohan Singh before his first budget (Jaitley did). Or when he denied admission to the Vice Chancellor’s daughter at the Delhi School of Economics. How he ignored Sheryl Sandberg’s suggestions to drop unflattering references to Facebook in the World Development Report. Or how he ignored gentle suggestions from Pranab Mukherjee, then Finance Minister, pushing a certain (unnamed) candidate as Vice Chancellor of Santiniketan (The FM did not mind).

Achievements

Apart from the Delhi Economics Conclave, his achievements included the Stockholm Statement as a counter to the right-wing Washington Consensus. Apart from decriminalising bribe paying, the unfinished initiatives included a Living Life Index, somewhat different from the Ease of Living Index since introduced. Among the misses is perhaps a discussion on the gross national happiness during his Bhutan visit.

Some misgivings

Kaushik Basu’s “Policy Maker’s Journal” is not without instances where one hoped for more clarity and elaboration. After his first meeting with Prime Minister Narendra Modi, by when he was with the World Bank, he “left his office feeling good.” But, a few months later, he advised President Obama to remind India’s leaders of its heritage of democracy and secularism, and “urge them to preserve it.” The new government was just a few months old. Obama was the Chief Guest at the Republic Day parade. In one of his last engagements, a lecture at the Siri Fort, he did “remind India of its heritage of democracy and inclusiveness, and how some shadows had been cast on this in recent times.” This did raise a furore, and not just for the political incorrectness.

In the interest of completeness, Basu could have spelt out what made him change his view after that first meeting with the Prime Minister which he left feeling good. Even in the absence of the Obama episode, an update on his views of 2014 is left hanging when published in 2021. This would have made many admirers happy that it was not just another off the cuff remark. Hopefully, Prof. Basu is keeping this for a later book.

Kaushik Basu and the Congress

Prof Basu does not conceal where his political sympathies lie. In his last meeting with Sonia Gandhi as CEA in mid-2012, they had frank discussion on various political leaders. This included Mamata Banerjee, Narendra Modi, Subramaniam Swamy, the communists, and the RSS. He confesses to having political views that are aligned to hers.

Prof. Basu lists three important qualities of Rahul Gandhi which would make him a good leader, though he is not a natural political leader. First, honesty and transparency. Second, that he is a good listener. Third, he is not infatuated with power, and is willing to give it up gracefully.

In my view, the majority in the country would not consider these as sufficient conditions in their conception of a future Indian leader. The era where anyone can be catapulted into positions of power on sheer strength of political lineage has passed. Those who remain had either proved themselves earlier in ministerial positions, are heading unstable alliances awaiting their political denouement, or for a more robust and credible political formation to come up. The majority would yearn to see hard evidence of performance and delivery rather than distant promises based on assumed qualities. Considering this, Rahul Gandhi perhaps erred in letting pass invitations to join the Manmohan Singh cabinet and prove himself like Indira Gandhi who gained experience and confidence serving in the Nehru cabinet.

The above is, however, key to Prof Basu’s meetings with the Congress leader whenever the latter wanted, and his addresses exclusively for Youth Congress leaders and Congress MPs. These would have been unprecedented for a government functionary even if he were on a fixed term appointment. One cannot recall another CEA, before or after, addressing a political audience solely of one hue.

Conclusion

The Policy Maker’s Journal is a great read with the Kaushik-esque take on many issues, his understated humour, and restrained sarcasm, often self-deprecating. I enjoyed reading the book notwithstanding a few minor errors (2020 instead of 2012), names of people presumed to be known, and a few points of disagreement. I am already looking forward to the next big one.

Kaushik Basu, Policy Maker’s Journal – From New Delhi to Washington, D.C., Simon & Schuster, 2021. Rs. 699.

© G. Sreekumar 2021.

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History of Indian Currency: The Fowler Committee

Sir-Henry-Fowler
Sir Henry Hartley Fowler

Five years after it implemented the Herschell Committee recommendations in 1893, the Government of India made fresh proposals. The British Government, in turn, appointed the Fowler Committee in 1898 to examine these proposals.

In 1893, as endorsed by the Herschell Committee, and approved by the British Government, the Indian Government discontinued silver coinage. The intention was to eventually introduce a gold standard, the most important step in ensuring an exchange rate of 1s. 4d. This was not achieved for nearly five years. Therefore, the Government of India submitted fresh proposals to the Secretary of State for India to hasten the process. Some of these were drastic. These included the sale of bullion worth £ 6 million. There was also to be a sterling loan issued to make good the loss. Continue reading “History of Indian Currency: The Fowler Committee”

Purshotamdas Thakurdas, Part 3

Sir Purshotamdas Thakurdas

Sir Purshotamdas Thakurdas next made a major contribution to the work of the Indian Retrenchment Committee. The implementation of the Acworth Committee recommendations, including greater investment for railway expansion and a separate railway budget, increased government expenses substantially. The government feared that it might not be able to meet these rising expenses. Following this, the government responded by cutting expenses even by laying off people wherever possible. To find the means of doing this, it appointed the Indian Retrenchment Committee, which functioned during 1922-23. Continue reading “Purshotamdas Thakurdas, Part 3”

Roses and Magnolias: Deshmukh’s Lovely Gardens

 “…appreciation of a garden lies not with the gardener but with the observer of the many gardens I have cultivated.”

C.D. Deshmukh, The Course of My Life.

Deshmukh Chowk

C.D. Deshmukh

If one were to walk down from Churchgate in South Mumbai, towards Mantralaya, along the Jamshetji Tata Road, the third round is Deshmukh Chowk. It is so named after Chintaman Dwarakanath Deshmukh, the third Governor of the Reserve Bank of India, and India’s third Finance Minister. There could be two claimants to getting the roundabout so named after Deshmukh. Continue reading “Roses and Magnolias: Deshmukh’s Lovely Gardens”

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