A tale of two economists, Arvind Subramanian and Raghuram Rajan

A tale of two economists, Arvind Subramanian and Raghuram Rajan: Chief Economic Advisor (CEA) Arvind Subramanian started 2015 on an over-optimistic note. He is likely to have ended it in disappointment. The economy is slowing down: in the first six months of the f



My VIEW:

January 19, 2016
Tale you win!

This refers to Puja Mehra’s interesting article “A
tale of two economists” (The Hindu, January 19). Unlike other pairs of
economists (I refuse to list), Dr Raghuram Rajan and  Arvind Subramanian express their differences
in views gracefully and elegantly in a language understood by common men. The
numbers they arrive at, based on not so reliable ‘figures’, many a time decide
the direction of monetary and fiscal policy respectively. One would like to
believe that even when they disagree on approaches, as of now, there is a broad
consensus about the need for a joint effort by RBI and GOI while handling
policy issues affecting economic development.
While GOI has ‘given’ and RBI has ‘accepted’ a
target approach to inflation to be pursued through monetary policy measures, it
is common knowledge that monetary policy has no existence independent of fiscal
policy.
One aspect specific to India is continuously ignored
by economists and analysts. That is the existence of a huge quantity of
‘unmapped’ wealth which is really the accumulation of past savings lying idle in
the form of gold and jewellery within the country. If this is factored in there
will be a change in the growth potential. The three gold schemes announced in
2015-16 budget and now under implementation have not attracted much attention
from the institutions and religious bodies which hold this wealth. Centre need
to consider measures to bring a portion of this wealth. After all, even the
expenses for maintaining the stock safe are met by the exchequer.
M G
Warrier, Mumbai



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