“Shoot and scoot” is a phrase made popular by the Bofors field gun – infamous in India, for the alleged corruption in its acquisition. But a winner in performance.
Raghuram Rajan – “Shoot & scoot” Governor RBI
Four decades later, the phrase became applicable to the rock star Governor of the RBI, Raghuram Rajan. He upended the carefully cultivated, decades old legalised financial scam, wherein banks – mostly publicly owned, till the Chanda Kochhar, ICICI scandal came to light- lent money for dodgy investments for personal gain, in compliance with political directions or a combination of both. Public sector bankers are far not stupid. Their lending decisions are calibrated to the prevailing context in which they find themselves.
The result of Rajan’s enthusiasm was the unveiling of perpetually ever-greened dud loans, in aggregate amounting to around one half of the Union Government’s core annual budget. P. Chidambaram, the Congress party’s financial brains trust, alleges that he has repeatedly asked Parliament to table time indexed data on when these bad loans were accumulated. But the government has not responded thus far.
But back to Raghuram Rajan. For the average citizen, Rajan redeemed his international, financial wizard status – he predicted the 2008 International financial bust – when he laid bare the massive stressed assets of public banks whilst also leading on the institution of Indian Bankruptcy Code to resolve the problem quickly.
We were all dismayed when he left us in the lurch, abruptly, to spend time with his family in the United States rather than helm the knotty path to solve the banking sector’s problem of mountains of bad debts. This is when he earned the title of “Shoot and scoot” economist, somewhat like the Bofors Gun which, quickly changes location to escape the fall out of its shot.
In the Rajan mould – Arvind Subramanian – rock star
This week, another revered economist earned the title “Scoot and shoot” economist – Arvind Subramanian, who as Chief Economic Adviser to the Union Government followed the “rock star” trajectory. He was indulged by Arun Jaitley – the Finance Minister at the time, on the welcome grounds that the Economic Division is all about exploring economic policy options, so “free speech” is essential. Ministerial support added to his appeal.
His displayed skill at massaging date to upend long held policy beliefs -for example the extent of “formal” employment which he evidenced to be more than double the earlier assumed estimates – on the basis of excellent prior work done by Ghosh and Ghosh of the State Bank of India Research Division. His facility at providing insights to policy led behavioural change, were eagerly followed by citizens, revelling in the hitherto unmatched “transparency” of government functioning and more important its thinking. Part 1 of the Economic Survey over fiscal 2018 and 2019 became popular reads, so lively was the style and evidence based the content.
Just when we thought he was getting into his stride he left, leaving behind a wide open gap in public sector economic analysis, to spend time with his family. We reconciled ourselves that like finance, quality brains are highly mobile. One should count ones blessing that overseas finance and brains consent to spend short period of public service in India.
Lateral entry to government in jeopardy?
Buoyed by the positive outcomes of “lateral entry” of skills and brains into the civil service, Modi 1.0 initiated a program to systematically enlarge such opportunities. Ten specialists were inducted last fiscal and the program is to be extended to 400 specialist appointments this fiscal.
Arvind Subramanian via his article in the Indian Express on June 11 startlingly called in question the methodology for calculating GDP, used since Fiscal 2014, on the grounds that triangulation with physical consumption of seventeen goods – like cars and services – like electricity, did not substantiate the growth data from the last year of the UPA regime and continuing till today.
The Arvind Subramanian real GDP growth revelation files are old hat
Two issues emerge. First, the fact that the triangulation with physical data points was weak is not a new assertion. Shanker Acharya – one of India’s finest macro economist and Chief Economic Advisor earlier with the UPA government pointed this out publically, when the new GDP series were revealed way back in Fiscal 2016. At a public lecture, in his characteristically mild but erudite manner, he said “It feels more like growth is happening at 5 per cent rather than the claimed higher levels ….”
Reasoned rebuttals to his preliminary revelations argument emerge instantly
Is a reassertion of the same argument a sensational break through merely because it comes via the circuitous route of the Harvard University where Subramanian now publishes? Harsh Gupta writing in the Indian Express today is first off-the-bat in dismissing the argument that growth is 2.5 percentage points lower than claimed using an elementary but powerful smell test of tax to GDP ratio.
If growth indeed has been tepid since fiscal 2014 how then does one justify that the ratio of tax to GDP ratio would become a full 2 percentage points higher, relative to the lower GDP till fiscal 2017 till when no major tax changes had been brought about. An increasing tax to GDP ratio makes some sense when GDP growth is high but increasing tax revenues with tepid GDP growth is not common sense.
And what of the civil service code of the sanctity of participative decision making?
Also, what is not common sense, common decency or civil service morality is to rat on the hand that once fed you. Like the mafia, civil service “omerta” requires, that once you demit charge of a civil service position, you confine yourself to suitably sterilised academic work.
You do not undermine the government, you recently worked in, to retain “rock star” status. You certainly must not do so when the new government is still pulling itself together to present the budget for fiscal 2020 in just a month and the Finance Minister is new.
And what of betrayal of the trust reposed in and by high officials?
Much more significantly, if you occupy a position of trust – Secretary to the Union Government and have had the honour of being privy to cabinet decisions, you are bound by whatever decision you participated in, directly or indirectly. You may not criticise such past decisions. Nothing stops you however, from advising other bright, young, wannabe “rock stars”, from looking in the right places for the data to debunk government estimates.
But such silent backroom work will not of course do, for those trying to remain “evergreen rock stars”. That is why Arvind Subramanian is now a “scoot and shoot” economist. Sadly, he has devalued himself and played to the worst fears of the civil service and the government, that lateral entry is a risky and unrewarding way of upgrading its skills.