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Book details:
Title: An Economist at Home and Abroad: A Personal Journey
Author: Shankar Acharya
Publisher: HarperCollins
Price: ₹599
Writing memoirs can be a tricky proposition. How much does the writer reveal and how much does she conceal? Most writers take the safe option of writing about all the good things that happened in their lives and leaving out the unpleasant or controversial bits or making only peripheral allusions to them. There are some exceptions that focus only on the controversial stuff with an eye on book sales.
Despite these pitfalls, economist Shankar Acharya has written an engaging account of his eventful life in his book An Economist at Home and Abroad: A Personal Journey. Acharya had a 16-year stint in the government of which he was Chief Economic Advisor for a record eight years, serving three different Finance Ministers – Manmohan Singh, P Chidambaram and Yashwant Sinha.
Acharya, by his own humble admission, was very lucky to have been born in his family. Lottery of birth? His father was an ICS officer who was transferred to the newly set up Indian Foreign Service by none other than the then PM Jawaharlal Nehru. That took the Acharya family to Dhaka, Prague, Berne, Berlin, Rabat, Rio de Janeiro, Ottawa and Islamabad. Acharya Sr was the Indian High Commissioner during the run–up to the India-Pakistan 1971 war which led to the creation of Bangladesh. This tense period took a toll on his health.
The Oxford, Harvard years
Acharya moved to England in his early teens to attend boarding school after which he read at Kible College at Oxford University. His first choice was Physics but in the last minute changed to Politics-Philosophy-Economics (PPE). It was in his England years that he made life-long friends such as Mike Minton, Aung San Suu Kyi, Sunetra Bhandarnaike and Montek Singh Ahluwalia and his late wife Isher.
After Oxford, Acharya and his wife moved to the US where he pursued his PhD at Harvard and his wife Gayatri did her Master’s in English at Boston College. At Harvard a young professor Subramaniam Swamy was kind enough to recommend him for a tution fee waiver. There was also an amusing incident with Amartya Sen who was visiting Harvard from the Delhi School of Economics. Having read a paper of his on philosophy while at Oxford, Acharya was surprised to find that Sen was first and foremost an economist.
It was also at Harvard that Acharya and his fellow student Mohiuddin Alamgir wrote a paper titled, ‘Conflict in East Pakistan: Background and prospects’, which went into detail “the long history of economic and political discrimination suffered by the more populous East Pakistan at the hands of the federal Pakistani government”. Acharya’s PhD supervisor Stephen Marglin added a final section and mobilised the signatures of Harvard professors. The paper did a great deal to sensitise the US public, government and academia to the suffering of the erstwhile East Pakistanis.
After Harvard, though Acharya had teaching offers from a few US universities, he decided to join the World Bank where Ahluwalia was his colleague. A professionally rewarding period at the World Bank took him to places such as Tanzania, Sudan, Zambia and the erstwhile Yugoslavia.
Acharya was also part of the team, which also included Ahluwalia, that brought out the first ever ‘World Development Report’.
Back to India
After 23 long years abroad Acharya and his wife decided to move back to India. He joined Raja Chelliah’s newly-established National Institute of Public Finance and Policy as senior fellow. His first assignment there was to study the extent of the ‘black economy’ in India and bring out a comprehensive report on the issue.
Interestingly the report, which was later published as a book, concluded that neither demonetisation nor a voluntary disclosure scheme would be helpful in curbing the black economy. Among the major recommendations of the report were reductions in income and wealth tax, simplification of the labyrinthine tax structure, a shift away from controls and move towards a market economy.
After his two-year stint at NIPFP ended, Acharya was set to pack his bags and return to the World Bank in Washington, when a chance to serve as an advisor in the Finance Ministry cropped up. Thus began Acharya’s long stint with the Finance Ministry with a brief World Bank interlude.
During the early days of the Rajiv Gandhi reign, Acharya was part of the group that came out with the Long-term Fiscal Policy document, headed by LK Jha, who many call as India’s original reformer, where the first attempts to reform and simplify India’s tax system were made. But as Rajiv Gandhi’s term wound down, beset with corruption allegations, the initial momentum for reforms lost steam. Acharya began to feel increasingly frustrated at the Finance Ministry and happily jumped at an opportunity to return to the World Bank to take up a position of chief of the public economics division.
But by early 1993, Acharya was back in New Delhi to begin his eight-year stint as Chief Economic Advisor. It was an exciting time to be in the Finance Ministry as those were the early years of India’s economic reforms when the licence-permit Raj was given a burial. For students of the Indian economy this section of the book would be of most interest. Acharya takes us through those heady days when industrial licensing was scrapped and import tariffs were slashed. He gives a riveting account of how the reforms unfolded and how the economy, which was on the brink just a couple of years ago, began to turn around. He has the utmost respect for Manmohan Singh and says that it was pleasure to work with him. But one suspects Acharya does not have the same opinion of Manmohan the Prime Minister.
Acharya describes in some detail how India countered the Asian financial crisis of 1997 and his daily conversations with the then RBI Governor C Rangarajan. He says his, “role resembled that of a psychoanalyst, listening to his problems as he thought through the possible solutions.”
During the Vajpayee years, Acharya had a good working relationship with Finance Minister Yashwant Sinha. Acharya feels that AB Vajpayee was more committed to furthering economic reforms and his achievements are greater as he had to work through an unwieldy coalition. The years between 1991 and 2004 were, according to Acharya, the best for India’s policymaking, “during which there was a degree of coherence and good economic sense, which was perhaps not matched in the years before or after”.
He is damning in his indictment of the UPA’s economic track record and says, “it’s hard to resist the conclusion that the overall economic legacy is bad, if not ugly”. This is a tad unfair as UPA I had its hands tied with the Left supporting it. Also it brought about important initiatives such as the MGNREGA and the Food Security Act, which were “life savers” for lakhs of people during the pandemic lockdown.
He is particularly critical of the massive stimulus that UPA II injected to counter the 2008 global financial crisis, which he feels led to the runaway inflation and the deteriorating fiscal situation.
Acharya says Narendra Modi’s early years as Prime Minister showed much promise on the economic front but things turned bleak after 2017, especially after the disastrous demonetisation and the botched up implementation of GST. He also frowns at the recent “protectionist tilt” of the Modi government.
After leaving the Finance Ministry, Acharya worked in ICRIER, as a newspaper columnist, non-executive chairman of Kotak Mahindra Bank, and member of 12th Finance Commission.
He writes warmly about his long association with Kotak Mahindra Bank, where he forged a strong friendship with Uday Kotak. He writes in some detail on how the bank pulled off its successful merger with ING Vysya Bank.
There is a separate chapter on the pandemic and its impact on the economy. He is critical of the stringent lockdown imposed and the tragic impact it had on livelihoods. He says instead of injecting a massive stimulus to deal with the Covid blow, easing the lockdown rules and getting the wheels of the economy moving to spur incomes and jobs would be a better option.
Going by the present trends, he is pessimistic about India’s short- to medium-term economic prospects. Acharya ends the book by reflecting on how chance played its part in taking him from England to the US for studies and work and then to a rewarding stint with the Indian government.
This engaging book written with great warmth is perhaps Acharya’s way of showing gratitude for the opportunities that life gave him.