Shabash Mr Surjit Bhalla!!

Dr.Surjit Bhalla is undoubtedly one of the leading Indian economists and a strong proponent of free market economics. He also delivery the 2000 F A Hayek Memorial Lecture! See "Hayek Rediscovered: The Road to Economic Freedom"

In his column in yesterday’s Financial Express, he snipped off some of the economists who some time clime to be an ‘expert’ the field of macroeconomics quite dismally!! His article is really “No Proof Required”

Why I say so? Read his column you will get my point! However, what interested me is the below paragraphs:

• Dear Persons: We, at RBI, are dedicated to deliver both growth and stable low inflation. We have been doing our best, though I must admit that we have not succeeded in our efforts, to date. However, I must frankly admit that I have not been helped by various people providing arm-chair or self-indulgent advice. I have advice for them.

• Kaushik Basu, Chief Economic Advisor, GoI: You are a very welcome addition to the policymaking body in India. Your fame precedes you, and your record as a microeconomist is at least first among equals. It is also hugely welcome that you are now espousing more ‘market’ oriented policies than before, e.g., cash transfers rather than corrupt government intervention programmes. However, try as I might, I cannot find much useful academic output from you on anything even remotely related to macroeconomics. It is never too late to learn, but in the meantime, can you stop offering me unsolicited advice on exchange rates, and interest rates, and stop making forecasts on inflation?

• Subir Gokarn, deputy governor, RBI: RBI regulates the bank deposit savings rate in India (recently raised to 4% after 19 years at 3.5%). Fat cat bankers gain from this repressive policy of low and fixed deposit rates; pensioners and depositors lose immensely from this stupid regulation. Yet, my deputy Subir Gokarn had the gall to state that RBI may not deregulate this rate because “a lot of people see this (fixed savings rate) as a safe and reliable source of monthly income”. This implies that a “free market” savings deposit rate will decline after deregulation—an impossibility given the present inflation scenario. Subir knows, or should know, that the rate can only increase with deregulation. So Subir, either stop talking or stop being disingenuous.