Friday, March 02, 2012

The Blog has moved again

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Undergraduate Economist

Tuesday, August 17, 2010

V K R V Rao: The Entrepreneur Economist

The contents of the following post was written over a year ago for an in-house publication. Hence, the tone of the post is different from that of the rest. And since we are more enamoured by American economists these days, this is a timely post, which talks of one of the many great economists India has seen.

The Partial Memoirs of VKRV Rao (Oxford India Paperbacks)

V K R V Rao founded Delhi School of Economics (DSE), Institute of Economic Growth (IEG) and Institute for Social and Economic Change (ISEC). These institutions were established so as to impart economics education in India, which would compete with world-famous institutes like LSE, Cambridge, etc. He was also instrumental in establishing the Indian Council of Social Science Research (ICSSR). Apart from establishing these institutes, Rao also served in various administrative positions - Planning Commission Member, Union Cabinet Minister first for Shipping and Transport and then Education and Youth Services. For the services rendered, he was awarded Padma Vibhushan in 1974.

Rao completed his Master's in economics from Bombay University, where he worked on the taxation of income in India for his Master's thesis. He then moved on to Cambridge to pursue his PhD, where he became a student of Keynes. For Rao, economics was a social science that would aid in improving the human condition. In Cambridge, he discovered that the tools of government intervention could aid in fulfilling the objective of economic as well as social betterment. And it was Colin Clark who stimulated his interest in statistical demography and national income accounting. However, as Shigeto Tsuru points out in his review of Reflections on Economic Development and Social Change: Essays in Honour of Professor V K R V Rao by C H Hanumantha Rao and P C Joshi published in 1979, Rao had insisted that “the blind application of Keynesian formulae to the problems of economic development has inflicted considerable injury on the economies of underdeveloped countries.” For Rao, economic theory was only a servant of economic policy.

There are three published works by V K R V Rao on national income- An Essay on India’s National Income 1925-29 (1936), The National Income of British India (1940) and India’s National Income 1950-80 (1983). Though V K R V Rao has published on various aspects of economics, his work on India's National Income is of special interest. This is because of a variety of reasons. Austin Robinson provides one such reason: “I myself remember Rao as the brilliant Cambridge undergraduate and research student of almost fifty years ago, who single-handed tackled the almost impossible task of estimating the Indian national income at a time when hardly a single ingredient was known and even guesses involved heroic despatch of countless questionnaires to every corner of India to establish, for example, the milk-yields of she-buffaloes or the average earnings of village barbers.” An analysis of economic growth and change is possible by studying the National Accounts Statistics (NAS), as Rao has demonstrated in his 1983 book.

Despite the limitations of NAS in India, Rao is able to meaningfully explain the changing structure of the economy through the relative shares of agriculture, industry and services in the gross domestic product (GDP). In addition, he calculates the implicit price deflator so as to understand how much of GDP increase is on account of price rise. Also, implicit price deflators are constructed for the three major sectors to find out how each sector has performed vis-a-vis the others. Savings, capital formation and consumption are also dealt with in detail. V M Dandekar has hailed his 1983 book as “a model of scholarship and objectivity particularly coming from one who, during the period, was in the thick of making and implementing policies and programmes for economic development of the country.”

Thus, V K R V Rao was a model economist – a practical man who was well aware of various theories and their limitations in applicability to India. And because he wanted to use economics for policy purposes, he was committed to extensive data collection and data analysis. Also, he was clear that, in practice, economics must interact with other social sciences, especially sociology and anthropology. This is evident from the name of the institute he founded in Bengalooru – Institute for Social and Economic Change.

Thursday, August 03, 2006


I have relocated my blog to wordpress. I will be blogging on economics at wordpress too. The HTML in blogspot made it difficult for me.
The blog is located @ Undergraduate Economist
I thank all the readers and friends for their support and hope that my relocation would be welcomed.
Thank you blogspot!


I just discovered Wordpress and i am contemplating about a shift to wordpress. It is more convenient. I am in doubt as to whether i should move all my posts in my current blog or to leave it here itself. Could someone suggest a solution?

Wednesday, August 02, 2006

Development: A suspicious Alternative

Recently, I came across an article by Jagdish Bhagwati, a renowned economist at Columbia University. After reading the article I was in a doubtful state of mind.

His main proposal to combat poverty in Africa was “If it is hard to think of aid being spent productively in Africa, why not spend elsewhere for Africa?”

He was of the view that Africa would not be able to absorb the aid efficiently. So it would be profitable and more pertinent to spend the aid for Africa in Developed countries itself, by conducting research for development of new vaccines and cures for crippling diseases afflicting African nations. I call this proposal strange. Because then Africa for ever after be dependent on these rich nations.

This would further widen the disparities in Income between developing and developed countries. It is a wise plot aimed at reducing aid to developing nations.

He goes further to state that he is against those like Jeffrey Sachs who insists that the aid ought to be spent in Africa itself.

It wouldn’t be difficult to predict the outcome. The rich nations would not have to hesitantly part with the aid, instead they would be able to invest in within their geographical territories itself.