The economist as saviourPosted: 04/07/2012
Sanjaya Baru, the director of the IISS’s geo-economics and strategy programme, has a new opinion piece in the Hindu, in which he ruminates on the economic philosophy of his former boss, the Indian Prime Minister Manmohan Singh. Of course, this is much more than idle theory, as Singh stewards a nation of 1.2 billion people with an economy fast approaching US$2 trillion a year.
India has witnessed phenomenal economic growth in the past decade. Its GDP reached 1 trillion in dollar terms in 2007-08, and has nearly doubled since. Looking at this and his government’s policies, many consider Singh a ‘neo-liberal’.
Yet, Baru argues, that is to totally misconstrue the Indian premier’s position.
‘The clue to Dr. Singh’s thinking on economic policy’, he says, ‘lies in the lasting intellectual impact of Keynes and his disciples on him.’ The crucial point, argues Baru, is that Keynes himself was a liberal who preferred what his biographer Robert Skidelsky later termed ‘the middle way’. ‘Manmohan Singh too is a liberal, centrist Keynesian walking the “middle way”,’ Baru insists.
Singh’s second term in office has seen a decline in investment rates ‘largely on account of the government’s own acts of omission and commission. Quite understandably, therefore, the focus has again shifted to stimulating investment.’
Nevertheless, Baru concludes: ‘India remains one of the world’s faster growing economies and there is no reason why it should not become the fastest growing one before Dr. Singh’s term is over.’