An alumnus of IIT-Kanpur, IIM-Calcutta and the top-ranked Booth School of Business at the University of Chicago with work experience at JP Morgan Chase, ICICI Bank and Tata Consultancy Services, Dr. Krishnamurthy Subramanian is Chief Economic Adviser of the Union government. Excerpts from an interview with Dilip Thakore: Mainly authored by you, the path-breaking Economic Survey 2019-20, for the first time in living memory, unambiguously recommends that the Union government and Indian society repudiate post-independence India’s socialist legacy and reverts to its ancient and very successful traditions of free markets and free enterprise. What has been the reaction of the BJP government at the Centre and the establishment to this recommendation? It’s been unequivocally supportive. Evidence of this support is seen in several reforms that have been recently announced reducing the role of State and enabling the private sector by efficiencies and reforms in factor markets. Research conducted by historian Angus Maddison, clearly shows that for three quarters of known economic history, that is till 1750 AD, India accounted for more than one-third or 33 percent of global GDP. Just to give you a sense of India’s dominance, the US which has been the global economic superpower for about half a century, accounts for 15-16 percent or thereabouts of world GDP. This magnitude of dominance that India had, didn’t happen by accident. It was by design. And when we examined the design we discovered the timeless principles that create economic prosperity. It’s the combination of free enterprise, the invisible hand of the market propagated by pioneer economist Adam Smith, supported by the hand of trust. In the Economic Survey we provided evidence that it was the marriage of modern economics with time-honoured Indian philosophy and literature — not scripture — contained in ancient Indian texts such as the Arthashashtra in Sanskrit and Thirukkural in Tamil that generated prosperity and doubled India’s annual GDP growth rate after 1991 when the economy was liberalised and deregulated. Unfortunately, after the subjugation of India by the British and later our “tryst with socialism”, we deviated from the timeless principles of free markets and free enterprise. But now we are coming back to those principles and the new reforms that have been announced are in that spirit. Would you say that the recent labour and agricultural reforms are reflective of this new thinking? Absolutely. Not only that, when announcing the prime minister’s Covid-19 relief package the government clearly stated that except in a few strategic sectors, government will have no business being in business. And even in these sectors, the number of state-owned enterprises will be limited to four. As a statement of intent, this is very important because it comes against the backdrop of the socialistic past where wealth and wealth creation was tolerated as a necessary evil. Now for the first time, this government is liberally using the word ‘privatisation’ instead of euphemisms like divestment and disinvestment. I believe that we are on the cusp of a marriage between time-tested Indian economic philosophy…
