Extraordinary legacy of a grounded economist
A DOYEN OF LEFTKEYNESIAN ECONOMISTS, KN RAJ FOUND ADMIRERS EVEN AMONG ECONOMISTS WHO LEANED RIGHT
Next Monday (May 13) will mark the 100th birth anniversary of one of India’s most accomplished economists. Kakkadan Nandanath Rajan, popularly known as KN Raj joined the Reserve Bank of India in 1947 soon after finishing his PHD from the London School of Economics, and prepared independent India’s first balance of payment estimates.
Raj then moved on to the newly created Planning Commission, helping draft India’s first five-year plan. Raj’s forecast of India’s savings trajectory turned out to be quite prescient, and he was called upon to firm up India’s official savings and investments data decades later.
Raj’s student, KP Kannan, credits Raj with shaping three important economic institutions of the post-independence era: The Delhi School of Economics (DSE), the Thiruvananthapuram-based Centre for Development Studies (CDS), and the social science journal Economic and Political Weekly (EPW). DSE was founded by another economic giant, VKRV Rao. It reached its peak during Raj’s long stint as its director. Raj left Delhi in 1971, at the height of his career, and set up CDS in Kerala. Raj’s presence helped attract global scholars to the new institution. Raj was also closely involved in setting up the Mumbai-based Economic Weekly (which later became the EPW) founded by Sachin Chaudhuri. He was a founder-trustee of the Sameeksha Trust, which publishes EPW and remained on its board till his death in 2010.
A doyen of Left-keynesian economists, Raj found admirers even among economists who leaned Right. The free trade champion Jagdish Bhagwati who disagreed with Raj on many policy issues still found much to learn from him. “You are India’s most valuable resource, and you should consider it a social obligation to take good care of yourself,” Bhagwati wrote to Raj after the latter had fallen ill in 1986.
There are many lessons for economists and policy practitioners in Raj’s life and work. But three of Raj’s traits deserve special mention: His granular understanding of the economy, deep empiricism, and unwavering integrity.
Raj’s global fame owed a great deal to his intensive and incisive research on his home state. He was the first to highlight the distinctive patterns of Kerala’s development path, much before it came to be seen as a “model”. Despite its low per capita income, Kerala had raced ahead of the country in educational and health outcomes, Raj noted in a landmark 1975 study on the state’s development trajectory. He attributed that success to the historic welfare interventions by the princely rulers during the pre-independence era and pro-poor policies of successive state governments in the post-independence period. At the same time, he also highlighted the need for industrialisation to tackle the state’s twin problems of unemployment and under-employment.
An empiricist par excellence, Raj refused to engage in “endless and mindless” regression models. He subjected all databases to relentless scrutiny and cross-checks before relying on them. And often enough, he was able to draw powerful insights using basic descriptive statistics. In his 1975 study on Kerala, Raj used data on agri-production, nutrition (including primary survey data) and health to poke holes in the National Sample Survey (NSS) consumer expenditure reports. The NSS reports omitted coconut kernels from the food consumption tables while underestimating the consumption of tapioca and bananas (important food items in Kerala). Raj provided alternative estimates of food consumption and argued that his estimates reflected the state’s reality better.
Raj had the ear of several Prime Ministers (PMS) from Jawaharlal Nehru to Manmohan Singh and several chief ministers (from EMS Namboodiripad to C Achutha Menon). Yet, he didn’t shy away from taking a stand against them when the need arose. When a part of Raj’s interview to the All India Radio was censored in 1974, Raj complained to the then information and broadcasting minister, IK Gujral and the then PM, Indira Gandhi. Gujral justified the censorship while Gandhi claimed she was completely against censorship, “even mild forms of it”. Raj pointed out the contradiction between the two in a letter to Gujral. After failing to receive a satisfactory response, he publicly aired his concerns.
Later, Raj would share the entire set of correspondence on this issue with the Shah Commission that examined the excesses of the Emergency years (1975-77). Raj argued that the authoritarian abuses did not start during the Emergency but had been growing over time. “The middle and upper classes of our country had been generally acquiescing in such abuses as long as they were not directly affected very much… and similar things could happen again unless we viewed such abuses of power not merely as the aberrations of particular individuals but as part of a larger phenomenon reflecting a deeper malaise,” wrote Raj in his letter to the Shah Commission secretary.
Nonetheless, Gandhi still consulted Raj on economic matters when she returned to office in 1980. Raj also clashed swords with Namboodiripad but the latter continued to engage with him till the end. Raj’s advocacy was motivated by public interest, not the desire for a public post. This earned him respect across the political spectrum.