Economics and the Indian economy have loomed large in my life for nearly six decades. In our very first class in 1967, the professor, a very erudite and learned man, opened his lecture with the following unforgettable words: “India will soon be a land of idiots.”

He was referring to the huge decline in food availability after the two massive droughts of 1965 and 1966 and the impact on nutrition. Today, despite the gigantic improvement in food availability, nutrition remains an bigger problem.

More than half the population has IQ levels of just around 90. These people can’t be very useful contributors to the economy because they will consume more than they can produce.

If agriculture and labour are a problem, so is technology intensive manufacturing. Its share in GDP has fallen from around a quarter in 1980 to about 15 per cent now. What the British managed between 1757 and 1947 we have managed between 1947 and 2017 — slow deindustrialisation. I wonder what DR Gadgil, who wrote the book on the deindustrialisation of India, would have said.

Likewise, India’s share in global trade was around three per cent in 1947. It’s now just about one per cent. Not just that. We don’t like to be a trading economy.

We can go on about these declines but the message must be clear: our governments have made a mess because not only have they tried to intervene too much, they have also done it badly via very bad policies.

I should add that towards the end the professor said India needed to focus on capital, not labour. The opposite has happened. As the saying goes, the path to hell is paved with good intentions.

Analytical babble

However, unlike the economic discourse before Independence and for 25 years after it when it focused on analytical issues, for the last 50 years it’s all been about defensiveness by one side and uniformed criticism by the other. Politics is the reason.

So we don’t analyse any more. We either defend bad policy outcomes or score debating points with the help of selective data. Data has become an analgesic.

The result is a confusing babble arising from an excessive focus on the very short term. Thus, long term issues like nutrition, on the one hand and capital scarcity on the other, don’t figure in the debate except in passing.

The main reason for this is that public policy economists have started taking political sides. The old neutrality is almost gone.

This problem started when the first Indira Gandhi government of 1969-71 was entirely dependent on the Communist party. The chief economic adviser was a Marxist who went on to become the finance minister of West Bengal when the CPM came to power there.

It’s become worse with every passing year since the early 1970s. Today, the statistical debating skills of economists matter more than their analytical skills.

And we have seen an enormously increased amount of this kind of thing in the last 10 years. The focus has shifted from the deeper structural issues to quarterly, half-yearly, annual data, base years, measurement techniques and, in general, splitting hair.

This, incidentally, actually places the government at an advantage. It can treat data with disdain or use discretion, whichever is convenient at the moment. We have seen this also since 2014.

Don’t get me wrong. I am not saying data doesn’t matter. It does. But it’s not the only thing that matters. There is more to economic analysis than just data mining and number crunching. That any computer and its programme can do.

The extra mile

The irony about the politicisation of economic analysis is that it lacks an analytical framework. This contrasts sharply with political and legal analyses. Both draw their strength from the framework provided by the Constitution and certain principles of human rights and dignity.

But what does our economic analysis draw upon now? The pervasive infestation of left wing political ideas has meant that our economics is entirely focused on distribution. That means tax and spend. Nothing more.

Is that all there is to having an analytical framework? What about growth? Why is it not an analytical priority? This was not the case till 1967. We had a clear framework in the second and third Five Year Plans.

This political obsession with ‘welfare’ has placed the least productive sections of society at the centre-stage of our economic thinking and pushed out the most productive ones, who then have to participate from the wings as the private Indian corporate sector does.

This might be good politically, socially and morally but it relegates capital to the fringes of our economic analysis which should be about efficiency of capital use. Indeed, show me one economy that has done this and prospered.

There aren’t any, not even China. Even Karl Marx called his magnum opus Das Kapital.