Have you heard the one about the chief economic adviser that is currently doing the rounds in Delhi?

So, according to one version, the new prime minister asked the new finance minister to invite Arvind Panagariya to become the new chief economic adviser. Unfortunately the new finance minister had just got a new smartphone, and was still coming to terms with the auto-complete system. So imagine his shock and horror when, a few days later, one Arvind Subramanian instead of Arvind Panagariya responded to the email with great delight.

Puzzled by this development, the PM then sent another message to the FM: “What nonsense! I don’t want this Arvind."

A panicking FM shot off an “urgent withdrawal of posting" email, only for auto-complete to kick in again and send it off to Arvind Mayaram, the finance secretary. And, thus, after what many in Delhi are calling “The Arvindocalypse", Mayaram is now tourism secretary, Subramaniam is chief economic adviser and Panagariya is, I presume, legally changing his name to Xylophone Zabaleta Vyasarpadi, or something similarly un-Arvind-like.

But then India has always had a colourful history with advisers of an economic persuasion. Especially back in the 1950s when the country was still somewhat coming to terms with… being a country. Through the late 1940s and early 1950s, a string of economists were invited to help India develop its economy.

Oskar Lange, Michael Kalecki, Paul Rosenstein-Rodan, Nicholas Kaldor and John Strachey all visited India to offer their perspectives and models, most of them socialist. Unsurprisingly India embarked on a planned approach to the economy with the first five-year plan launched in 1951. In 1955 India prepared to draw up a second five-year plan and once again welcomed economists from all over the world.

“In that connection, the Indian government asked the Eisenhower administration for assistance. The administration recognized an opportunity to counter the influence of the left-wing advice by sending two strong proponents of free markets. (Neil) Jacoby was assigned directly to the Planning Commission, and I to advise Mr. Deshmukh, the finance minister of India." Thus begins the recollection of that trip to India in the remarkable memoirs of the second of those free market economists, Milton Friedman. (Actually Two Lucky People: Memoirs was written by both Friedman and his wife Rose.)

Friedman flies to Delhi via Tokyo, Hong Kong and Bangkok, and at each stop he is shaken by the poverty he witnesses. He wrote in a letter to Rose: “We really have no idea how poor people can be and still live." This, Friedman writes in his memoirs, “has led me to assert that there is no level of income below which it is impossible for people to live." But on arriving in Delhi Friedman realizes that Indian poverty is another step below the misery he has already witnessed.

“As in most poor countries," he writes, “the contrast between the masses and the classes is extremely striking. In New Delhi, the latter consisted largely of members of the government, including the top civil servants, representative of foreign governments and businesses, and a sprinkling of well-to-do businessmen, land owners, and the like."

Friedman also notices the cheapness of labour and how wastefully labour is used in India. As soon as I enter my office, Friedman recollects, a peon “runs down the hall to grab my bag and keep me from carrying it." Friedman’s original plans are to spend three months in India, but he rushes back home after just one due to a family emergency. But even in that one month Friedman seems to have understood the Indian situation with some depth. He submitted an 11-page memo titled ‘Some Initial Comments on Current Problems of Economic Development in India’.

He concludes: “The present writer is convinced that the fundamental problem for India is the improvement of the physical and technical quality of her people, the awakening of sense of hope, the weakening of rigid social and economic arrangements, the introduction of flexibility of institutions and mobility of people, the opening up of the social and economic ladder to people of all kinds and classes." This prescient Friedman memo remained a secret for many years before it was published in 1989. It has since received a new, more public life thanks to the Internet.

So did Friedman’s visit and advice sway minds in New Delhi? Hardly. The second Five-Year Plan, based on the Mahalonobis model, was passed with little dissent. It was not a thumping success. The substance of the Second Five Year Plan and its departure from the First Five Year Plan is best left for a future column.

In 1976 Milton Friedman won the Nobel Prize for Economics. It would take a stubborn India a few more years to see the wisdom of his ways. So it is not so much that Delhi doesn’t get the right economic advice at the right time, but that it usually listens with extreme prejudice. Therefore I would like to wish all the very best of luck to all the assorted Arvinds.

Every week, Déjà View scours historical research and archives to make sense of current news and affairs.

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