Don’t control exports

No one gave them much attention. Now that the government relaxed the export ban, prices of cotton have improved. But why not earlier? In fact, why control export of cotton anyway? We know the corruption possibilities with discretionary quantitative controls, with all the shenanigans being reported. There is hoarding of onions, we are told. But of course, yes. Some of us never advocated completely free markets. We got that lecture. I and some others like-minded in the government always wanted a strategic presence for the state with rule-based intervention systems. When we present those in practical terms in policy reports, the government rejects them. When they do that I know enough economics to say, be fair. At the least be consistently practical within our own reasoning systems.

Whatever we may say, onion prices are not coming down in a significant manner in the next six weeks. But for the future let us have some semblance of a rule-based policy. Allow trade with variable tariff policies, an option that has been wrongly rejected over my head and those of all the sensible chairmen of the Commission for Agricultural Costs and Prices. Don’t control exports. Let the tariffs take care of the difference between what the farmer should get and the unstable world price. Do try to intervene selectively to ride the cycle at home. 

From Tears for onion policies by Y K Alagh         

Worldly freedom

Russians: Indians Are Coming by Yoginder K. Alagh

• There was a fascinating story last week that there is discussion between Russia and India on sending Indian labour for construction in Siberia. Now this is an old reliable. These stories occur every decade or so.
• In 1988, the PM was in Moscow and discussing reforms and economic ties with Mr Gorbachov. It occurred to them that trade between the two countries should be doubled and that appeared in their official communiqué. I was asked to operationalise that.
• I was hesitant. We were liberalising. Barter trade was to be phased out. So was it in the Soviet Union. But an order is an order, so off I went to Moscow. We worked out important priorities which would otherwise have slipped and that was the beginning of the chequered history of the VVER nuclear reactors, the GSLV rockets and many other projects. I always regret that the Delhi metro was put on the backburner because I listened to short-sighted economists who felt we couldn’t afford it.
• There were two interesting features which were reported but not noticed much. The first was that I insisted that trade should be integrated with reform in both countries. The Soviets were first dragging their feet but soon fell in line.
• The rupee was in the basket of hard currencies that they put in auction in the beginning of exchange reform. We introduced packets of financing outside the trade plan for private and autonomous public sectors. I got IDBI to join and they set up counterpart agencies.
• The second was that they asked their best men to be a part of the process. These were all hand-picked reformers. They were in their forties and had great achievements to their credit. They were Gorbachov’s phalanx.
• I met them one by one and then all of them together in a dinner at the Ashoka in Moscow which B K Chaturvedi organised, as then JS in the Commerce Minstry. It was an occasion as they were the crown jewels of Gorbachov’s perestroika.
• On our side, I got Sam Pitroda to join and he was a hit with them. He was asked to help them in the Azerbejain earthquake with an IT rehab framework. In the next two years, I was to go through the distressing experience in meetings in Moscow and Delhi of these extraordinary men getting frustrated. The Soviets didn’t get their reform institutions working.
• One of them was the man who had planned the Siberian expansion in the Eighties and had great achievements to himself. He was the first one to moot the idea of Indian labour in the Siberian projects. We were taken up. The young Soviet electronic engineer who was my counterpart in their Gosplan; the first Soviet engineer trained in USA, discussed the plans, but not much happened before the context changed but the idea keeps on coming up again and again as many others of the period.
• If it works, it would have another property. It could be the first big labour or factor movement in the globalisation period. There are incidentally interesting proposals by Canadian scholars of a World Visa Organisation arguing that labour mobility across borders will be the great reform frontier.

Rediscovering Ambedkar, and NOT Nehru!!

Years ago Prof.Ambirajan said in his Ambedkar Memorial Lecture:

• I am somewhat distressed to see that he is portrayed as a leader of the ‘dalit’ community and nothing else. Partly it is the fault of the Indian political leadership in the post-independent era. It succeeded in its effort to marginalise him politically. But equally it is the fault of the community itself for having projected him exclusively as its own leader. This led to the repercussion of other much inferior people propelled as leaders of other communities, and the result was that Ambedkar got equated on a politico-intellectual plane with regional pygmies devoid of any significant national presence.

• It is my conviction that in reality we have had only two major personalities who could be considered the founding fathers of modern India. Vallabhbhai Patel unified and organised whatever bits and pieces left of a brutally partitioned geographical entity into a nation state. Ambedkar provided the cementing framework in the form of a Constitution that gave the newly born state a measure of feasibility and stability. All the remaining leaders were mere bit-players in this great story of the building of our sovereign democratic republic.

According to him Nehru was a “much inferior…. propelled as leaders” as compared to Dr.Ambedkar!!

There is a wrong propaganda even today. Just see what Y K Alagh says’s:

• To Nehru the harnessing of modern technology to economic development was very important. There were two implications of this. The first was an acceptance of the emphasis on heavy industries in the process of industrialisation. While there has been considerable controversy in India on large scale vs small scale industrialisation, Nehru himself had clinched the issue in his own mind even in his early economic thinking. This was perhaps one of the few economic choices he really made. Discussing the issue of the big machine vs cottage industries, he stated emphatically that “it is not a mere question if adjustment of the two forms of production and economy. One must be dominating and paramount, with the other as complementary to it, fitting in where it can. The economy bases on the latest technical achievements of the day must necessarily be the dominating one.” The second, wider implication of this approach was his emphasis on scientific education and research. He seems to have a particular fascination for the idea that under “proper” social conditions, experimentation with the machine would inculcate the “scientific temper” and widen the experience and outlook of men. Formal economics is now accepting this idea in the shape of the productivity implications of “learning theory approach”.
• The economic implication of this to him was the emphasis on basic minimum needs. His earlier emphasis on rural development was argued with this end in view. (Later speeches accept the role of agricultural production as a constraint in the process of economic development). The role of cottage industries, albeit a secondary one, was argued from this objective, as also the long-term employment potential of heavy industrialisation.
• Another basic economic idea for Nehru seems to be a concept of “national self-sufficiency”, with a strong autarchic element in it. Heavy industrialisation and a scientific research policy were argued partly with this end in view. The emphasis was conditioned by early experience. (“We were anxious to avoid being drawn into the whirlpool of economic imperialism.”)
• There was in Nehru a genuine concern about the need for a peaceful transition through consensus in the developmental phase. There is frequent emphasis on the “social” implications of economic ideas and programmes. The late Prime Minister was liable to discuss it sometimes along “wider” national, international or even philosophical lines. The earlier method of “democratic collectivism” remains later in the shape of “democratic socialism” and the “mixed economy”. Equality of opportunity for all remains a basic theme.

All roads led to low level of growth, low level of development, no choice and no freedom.

Yoginder K. Alagh on B R Shenoy

But the real outlier was B.R. Shenoy, who built a school in Ahmedabad, castigating those who never made money. His world was unfashionable as the country moved to the left, but he had a hardcore following.

Invisible Hayek’s Gangs among Indian economists!!

This is the first time I hear about economist Yoginder K. Alagh writing on Prof F A Hayek:

In today’s IE he writes:

• As a country we seem to live in a state of nirvana. The discipline of strategic policies and planning was quietly given up almost two decades ago, so quietly that the logic of markets was never explained. Even as he brought in a Hayekian world with a vengeance, PM Narasimha Rao talked Nehru’s socialism right up to his defeat in 1996. His successor, understandably, did not want to be the bearer of bad news either.

• we needed to explain to our people that we will now, subject to some restrictions and regulations, follow free markets and that means that prices at home and abroad will not only be costs, but will also play a role in allocating resources.

• When people are hurt they will be angry, but it is the dharma of an economist, who’s not entering a popularity contest, to say that some prices have to rise for all of us to be better. I don’t believe in free markets for a strategic vision is the heart of policy in a poor country, but living in western India I know that some things markets do better than economists and babus and we must use them, where they work.

Home and abroad education

Yes sir its same but in different bottle yet colorized.

What is good education?

An econometrician, academician and politician turned Yoginder K Alagh writes what is good education? Though he did not do much when he was in charge of some university in India!

• “The interesting part of the current debate is that there is no discussion of what good education is all about. The focus is on the needs of parents who very legitimately want to send their children abroad. Senior civil servants, high profile politicians who left teaching decades ago and entrepreneurs and geeks who know everything also want foreign education. This is good because it is the purchasing power that matters. And those who don’t know their customers suffer.
• There are two characteristics of good education. It is a long haul business, so if I start today, I may have to wait for five to ten years before the product comes out. Second, it is not a standard assembly line product like a sausage. You can’t sit on a teacher when he reads, writes or lectures, so you may judge him or her only by outcomes.
• The only real way we can make the best in the world bond with us is to make Indian academia professionally exciting to them. That means reform at home. It means encouraging the best and the brightest. It means giving autonomy to institutions of higher learning at home and making them achieve mutually accepted goals. It means letting the best here pair up with the best abroad in research and teaching. It means rewarding them if they perform and punishing them when they don’t.
• Nobody is talking of this. A university teacher of arts is suspended without due process, his student is arrested and not allowed to complete his exam and his results are still not declared after three years. A defeated politician is made chancellor of a university for a lifetime. We will have to build firewalls to stop all this before we can use the best elsewhere.”

Hillary ben: Amey Global Che

Yoginder K. Alagh on:

• “Then the adivasi girls will largely be in school and having got across the cantankerous phase we would have learnt how good lectures can be given in India and good Phds produced by universities which had made global grades but fell down after everybody who has never produced a Phd reformed the system. Then we will really get going and the G8 will be also-rans. At present you are seeing only a trailer.
• We will really respond when somebody tells us that nuclear weaponisation is a disaster. We will send h(er)im a free copy of My Experiments With Truth and Nehru Chacha and Rajiv Bhaiyya's speeches and say we thought of all this before but we will make you do it and then will do it together. People like me would have finally succeeded in convincing others that they shouldn't be luddites because technology is the flip side of removing poverty and social progress and nuclear power would be a reality. We will make the one of a kind fast breeder reactor and go the thorium route because that is the only sure guarantee that our educated adivasi girl and the young ones we train will get the energy we need. It's tough but he said if the truth is on your side then your tormentors will have to go even if they wrongly believe that the sun never sets on them.”

Here is full article