When one bought a new car, many years ago, it came with a governor. This was a device that was fitted to the engine so that you could not drive faster than a certain speed. If you accelerated beyond that limit, you risked damaging the engine since the piston head, which was still not smooth enough, would scratch the sides of the piston chamber. The governor, by controlling the speed, allowed the car to be broken in gently. Driving a car with a governor was a source of anxiety for one always wondered if the piston chamber got damaged every time one overtook a BEST bus. The removal of the governor was, hence, a time of relief. For that short while, the governor was, however, good for the car.
Much has been said about the removal of the RBI governor. I do not wish to add to the debate on how well or how badly he managed our economy. I do not even wish to comment on the red line he was supposed to have crossed when he spoke about intolerance in his D.D. Kosambi lecture at the festival of ideas in Goa. Can a governor of the RBI sometimes be a public intellectual? Which part of the public domain can she talk about and on which must she remain silent? Is this red line ethics-driven or office protocol-driven? These are fair questions about legitimate jurisdictions and about their trespassing by a public personality as India democratises. Since there are interesting arguments on both sides of the “should be, should not be allowed to give a view” divide, the aspects of “sometimes necessary” would need to be specified.
My interest here, however, is not with what he did as governor, or as an occasional public intellectual, but in speculating about what he may have to do if we are to seriously believe him when he says that he wants to go “back to academics”. Because he has said “I like ideas. I like to play with ideas, I like to think, so my ultimate home is the realm of ideas”, he will have to carry the responsibility that comes from belonging to this realm.
One of the great intellectuals of our time, Edward Said, elaborated on this responsibility in his essay ‘On Defiance and taking Positions’. An intellectual is “essentially an opponent of consensus and orthodoxy, particularly at a moment in our society when the authorities of consensus and orthodoxy are so powerful … So the role of the intellectual is not to consolidate authority, but to understand, interpret, and question it; . I think it is very difficult, once you venture outside the academy, not to be affected by what seems to me the main issue for the intellectual today, which is human suffering”. So, with his return to academics, Rajan has accepted the responsibility to speak out without the constraints of the governor. This is where the fun begins.
He will have to take three calls when he settles down in the realm of ideas. Since he has been a big player, and has had the privilege and good fortune of seeing things from the inside, he owes it to his academic fraternity to illumine and give his views on three important issues of Indian democracy. I am not advocating a “kiss and tell” account by a jilted lover — that would be a dishonourable thing to do — but am asking for facts and analysis so that we can deepen our understanding of the dynamics of Indian democracy. Being the RBI governor has given him the experience, which few academics get, of discovering what is involved in converting a policy recommendation into a political and social outcome. Returning to the academic world hence places on him the weighty moral responsibility to speak.
On three issues he will have to offer his views. The first is what we can call the political economy of the Indian state as seen from the location of the central bank. Rajan will, hopefully, give us both facts and analysis on how special interests operate in India, how lobbying produces policy changes to benefit these interests, how crony capitalists (a term he has used) work against the public good and collect rent in collusion with politicians, and how dissimulation is deployed to mask this collusion. We know this happens. We have documented it in specific cases. But to get an all-India picture from a renowned academic such as Rajan, of the capture of economic institutions and policy by special interests in India using the illustration of NPAs of public sector banks, is literally a steal.
The second issue concerns his views on the place and role of key public institutions in India. Douglas North, Dani Rodrik, Acemoglu and Robinson, Margaret Levi, Elinor Ostrom, have all offered us rich theses on how institutions matter, on how robust institutions are important to place a democracy on a defined path. Over the last two decades we have been celebrating the emergence of robust institutions such as the election commission, the Supreme Court, the CAG, the central information commission, the central vigilance commission, etc. During Rajan’s tenure, the RBI was being added to the list of robust institutions of Indian democracy. In the last two years, however, a counter narrative has emerged, of the undermining of institutions by the BJP-led NDA. We see this in the MHRD interference in universities, IIMs, and IITs. We see this with respect to FTII, IIFT, censor board, and the appointment of judges. Rajan owes the academy his reflections on the question of whether the present regime is undermining institutional autonomy or strengthening it. In language that Vinod Rai will understand, he has to give us his view on the “presumptive loss or gain” to public institutions.
The third issue on which Rajan has to speak concerns the policy package adopted by the regime to address “human suffering” (Said’s talisman), especially with respect to hunger, malnutrition, illiteracy, disease, women and child mortality. There is a big debate on inequality that has divided the economics community globally. Many allege that the package of policies being followed in India by the NDA, on the advice of the IMF/WB orthodoxy, is the cause of this growing and unacceptable inequality. India, some suggest, is in a unique position to navigate a new path to the future, give us a new welfarism which combines increased social sector allocations with increased market friendly initiatives. This new welfarism requires professional competence and moral imagination, that is, moral sentiments for producing wealth for the nation. Rajan has to offer his views on this nagging inequality question.
If he participates in these three debates, Rajan will have earned his return to the academia. If not, his claim that “his ultimate home is the realm of ideas” will ring hollow for he will have returned with the old governor still in tow who censors what he can say. The governor must be removed and freedom of expression restored. When this happens, we will soon learn that an academic without a governor is more dangerous than a governor without an academic.
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