How does one even start to explain what Bimal Jalan is? He is one of the most important political economists that India has seen. He may be fiercely concerned about nationalism but he is not anchored in any particular ideology. He is eminently practical in his approach to issues and crises and exceedingly focused on results. Jalan is also conscious that public policy affects different sections of society differently. DW talks to one of the most important men in the country on his thoughts regarding India, its economy and civic society

“Personally, I don’t pay too much weight to whether India’s growth is 7 per cent or 8 per cent, or FDI is X or Y in volume in a particular year. Such variations are cyclical. The central issue that we need to tackle is rising fiscal deficits with decline in growth rate and lack of investment in infrastructure and such priority areas. Multiple voices in policy-making without a fixed, clear policy direction, is a question which needs to be resolved for our country to realise its full economic potential,” he said, absentmindedly looking at the door keeping the din out. “Fiscal deficits, government finances, budgetary allocations going out of hand, government spendings at will—well, there is no defence for high budget deficits and providing multiple concessions to the better-off sections and subsidies to large corporates,” he added just then to the question whether concessions to major corporations were justified. His offhand replies were just a glimpse into a complex mind of a nationalist citizen— whatever may be his leaning, Dr Jalan is one of the most balanced minds who is cautious in his replies always. As we wrote before, it was a difficult task trying to unravel a man who has been at the helm of almost all major financial offices in India’s political machinery. Because Dr Jalan has a habit of dismissing his achievements as “chance”—albeit happy ones. He laughs when one points out how fast he rose through ranks and held several administrative and advisory positions in the Government of India. Dr Jalan was the Chief Economic Adviser in the 1980s; Banking Secretary between 1985 and 1989; and Finance Secretary (Ministry of Finance). As Finance Secretary, he was also on the Central Board of Directors of the Reserve Bank of India. He has also been the Chairman of the Economic Advisory Council to the Prime Minister between January 1991 and September 1992. Jalan also served as the Executive Director representing India on the Boards of the International Monetary Fund and the World Bank. At the time of his appointment as the Governor of the Reserve Bank, Jalan was the Member-Secretary, Planning Commission in New Delhi. That is a long, impressive list! But he dismisses it all with a wave of the hand and quips, it is an unhealthy habit for an “old man to reminisce too much”. And then he bursts into laughter, making us join in. “I was interested in working towards my country’s development. It didn’t matter to me (when he chose his subject for higher education and then doggedly pursued it), at that time where and just how I was doing it. I joined the World Bank on a lark as an economist. I was first in the International Monetary Fund (IMF). At that time, IMF was supposed to be financing balance payment crisis providing that kind of financing relatively short-term. Within the World Bank also, there was a whole development arc which appealed to me. It was a tremendous opportunity in the World Bank. I had a mixed milieu of colleagues from Singapore, Hong Kong and Australia. Though developing nations did not have a large share on the Board, and we were minor quota holders vis-a-vis European nations, and the UK and the US, but there was a transparency and clarity and people. And people were open to thinking. We had a whole group of nationalities working towards a similar goal of progress of humanity. We all knew that change, especially positive change, was difficult. But there were buzzing discussions. The Pearson Commission was appointed in the 1968 and I was also on its staff, thinking about what could be done in terms of economic reforms. I was not working on any country but we had a lot of emperical inputs on developing countries. Those of us from developing nations were trying to make people from the developed nations understand the ground reality; what was possible in an industrialised country was not possible in a developing one. We also tried to make people understand that our (India) government had a plan and that the thrust was on primary product being converted, government investment and capital investment—so times were also changing in India. The idealism was on the ground. In 1970 I decided to leave World Bank and come back to India. I had been living outside my country for a long time. I came back,” he said. To him, it seems, it is both the means and the end that matters—a tough stance to uphold, in a nation that’s being wrecked by all sorts of current ills. Also, hailing from a family of lawyers, his foray into the financial world seems happenstance. He laughs off the suggestion that he pursued developmental economics because his motherland was a priority. “When I was growing up; in that time and for the next couple of decades, the nation’s focus was on development planning and economic planning. Development economics was economics. India’s economic revolution was to shift—as a young nation we were in the throes of the first stages of industrialisation moving away from being an exporter of primary products. The focus was on being an economic power. Development and Nehruvian economics were becoming separate academic disciplines. And those of us who actually pursued the subject in our higher education were fortunate to interact with some of the pioneers in our times,” he said. So anyone who wished to contribute studied economics? Well, that and plenty of other things— depending upon a person’s interest. Knowing the period when he was in the institutions of higher learning; some of the “pioneers” who he mentions would have ranged from Bhabatosh Dutta, Tapas Majumdar and Deepak Banerjee (economists) and UN Ghosal (political scientist) in Presidency College, to Joan Robinson and Nicholas Kaldor in Cambridge. Cambridge at that time was in throes of Keynesian and post-Keynesian economic revolution. “Again in Cambridge I was blessed by a whole bunch of superb professors. As students we had access to these brilliant minds, complete access, which was a wonderful experience. It was quite a humbling experience also,” he said. Perhaps it was this exposure which led him to be most cautious and balanced while answering questions—whether on tax or on subsidies and the present trend of hiking prices and, at the same time, providing tax subsidies to exporters and corporates on pretext of increasing GDP and employment. How did that help? “There are no simple answers. Some subsidies which benefit the poor, are desirable and necessary. However, all sorts of tax concessions to the better-off sections or corporates are unjustified in a situation of rising fiscal deficits and lack of adequate public investment in priority sectors.” As he says it, the din evades the glass doors and reaches us. Dr Jalan has seen his country change—through turbulent times to stronger ones. In one of his recent commentaries he wrote—“Thus, we have had a fine combination of good economists, an operational governance structure, and a functioning democracyall working together. Yet, the results on the ground in terms of social or economic development over the long period since independence—leaving aside the most recent period—were rather disappointing. For the first fifty years after Independence, India lurched from one crisis to another. We also had low growth, low literacy, and an abundance of poverty. The vision outlined in 1956, at the beginning of the Second Plan, of a poverty-free India with full employment in 25 years, i.e. by 1981, still eludes us.” So, has contemporary India finally outgrown its socioeconomic policies? “We are very, very fortunate as a nation to have so many highly-qualified and competent economists in the government. If there is policy failure, it is not at the individual level but rather a systemic one which has with multiple voices and no accountability. It would be more productive if instead of talking, policy-makers could concentrate fully on delivering and improving public services. However, there are too many agencies at the Centre and states that are involved in the implementation of India’s socioeconomic policies. As a result, nobody takes the responsibility for failure in delivery—the Centre ends up blaming the state, while the state blames the Centre. Let us just ask ourselves: why is it that all policy parameters, irrespective of ground realities in different states, for any important programme are decided by the Centre, even though states are highly divergent in terms of poverty level, unemployment or nutrition? Why don’t we decide on the amount that Centre would reimburse per person employed under a scheme but leave actual wages or works to be covered to different states depending on local circumstances?” The public accountability for widening corruption, policy paralysis and inability to tackle poverty, to him, is a collective responsibility—to be shared between a triad comprising citizens, government and bureaucracy. “India continues to have the largest number of poor in the world despite high growth. The diversion and corruption in supply of public services for the poor, such as food, shelter and water, is also too widely known and accepted. From the public policy point of view, these are the problems which must be given the highest priority. What we need is an autonomous body (e.g. Election Commission) which does not report to a Home Ministry. There will be little hope in improving the socio-economic sectors unless public expenditure priorities are reconsidered and altered in favour of social sectors. And just as too many cooks spoil the broth, involvement of multiple agencies and ministries will generally work at crosspurposes and time would be lost in trying to dissolve those disputes.” And what he would like to see more is focus— “While I was working in the Reserve Bank of India, the most important matter was the balance of payments problems because India was perennially caught in it. But we had an incredible team and together we worked towards stability of policies. And to some extent we managed to tide several crises, including the Asian crisis.” Alongside financial reform and development of markets, according to Dr Jalan, the country’s attention must now turn to fiscal empowerment of the state and improvement in public administration. “Many state functions are inefficiently done because of financial stringency at the Centre as well in the states. The dependence on borrowings to finance even essential expenditure has been increasing year after year leading to vulnerable fiscal situation. Without adequate finance the state can’t fulfil its developmental role. So, withput a reviatlised fiscal situation and further progress in establishing a forward-looking, stable financial system, there would not be true development.”