Last week the IMF published an article that said economists needed to get their act together because, as a group, they had lost their influence. The link to that article is published at the end of this one.
It is a devastatingly comprehensive indictment. “Today, however, economists are increasingly sidelined. While they still dominate the staff of central banks and multilateral institutions, political leaders are more likely to prioritize ideology and expediency over economic analysis. Meanwhile, public trust in economists has been eroded by high-profile policy failures, growing political polarization, and mounting challenges to expert authority from new and often unreliable information sources.”
The writer, Karen Dynan, suggested nearly a dozen ways in which they could do this. But in summary, “There are four ways to do so: acknowledging and learning from missteps, listening to people’s concerns, upholding data integrity standards, and engaging more effectively with politicians and the public.”
The article missed out on an important fifth necessity: the importance of working from theory to evidence rather than from evidence to theory. If, from 1950 to 1990, there was only mostly theory and little evidence, since then we have had mainly data and very little theory. And in India we have not had much of either and are poorer for it.
The State and Economics
This decline of economics as an important influencer of policy is indirectly linked to the expanded role of the government in the economy. It was what you might call a negative externality of Keynesian economics. As politics and politicians have intruded more and more into our lives, the need to please them has become paramount. Economists have not bucked the trend.
India after 1971 is a perfect example of this. Men and women who are today celebrated for their eminence in economics, all donned pink clothes of various hues — pink as in soft leftist. Conversely, those who refused to endorse and carry forward Left oriented ideas were relegated to the margins. Many names come to mind.
Privately many of these sarkari economists disagreed with the government. But while their agreements were loud and oft-repeated, the disagreements were whispered, usually after a couple of strong drinks. Again many names come to mind.
As employees of the government they saw themselves as civil servants. Manmohan Singh even said so. That made things difficult for them because their loyalty shifted from pure economics to political economy, that is, from efficiency to equity. Also, there was the power that they enjoyed when they were promoted into executive positions, always a magnet.
Overall, the need to be on the right side of leftist governments meant that the governments they served were deprived of sound economic advice. That’s why the 1991 crisis happened. Over time, this tendency to nod and keep nodding meant that the political leadership could ignore them.
The IMF article says this has happened worldwide. “Transparency, openness to revision, and honest engagement with evidence are the best ways to show that economics remains a vital discipline.” In other words, you choose to crawl when you are only asked to bend.
The BJP and economics
Intellectually, except in culture and history, the BJP is nearly a wasteland. Its economics provenance is non-existent. The Congress and the Left never had this problem. One might disagree with the kind of economic ideas they preferred and propagated but they were at least based on intellectually consistent ideas.
The economists who have been associated with the BJP have been co-opted out of mutual convenience, rather than conviction, except for a very few.
The BJP anyway has scant respect for them and they, in turn, regard the ideological moorings of the party with disdain. The exceptions to this general rule are far and between but the gap is closing.
In a sense, in terms of economists, the BJP is where the Congress was after 1955, when Nehru turned Left but with an emphasis on state-led investment and growth. Not many economists understood what he wanted. So Nehru ignored all but a few of them.
In 1972 Indira Gandhi turned even further Left with emphasis on political economy via distribution. During 1972-76 the Congress carefully identified a few economists and gave them patronage. They in turn nursed a whole bunch of wannabes who, by the mid-1980s, captured the intellectual domain. Some of them are still quite vocal, but not active.
The BJP is likely to be in power for at least a decade more and needs the one thing it doesn’t currently have: economists who will further its vision for 2047 the way the Left lot did for the Congress after 1972. That requires it to get back to the basics of economics. For this, pushing the state back where it belongs — law, order, justice, education and health — is an absolute necessity.
“Reclaiming a Policy Role for Economists” https://www.imf.org/en/Publications /fandd/issues/2025/06/point-of-view-reclaiming-a-policy-role-for-economists-karen-dynan.