T N Srinivasan, who died in Chennai on Saturday at 85, provided, along with Jagdish Bhagwati and Padma Desai, an intellectual framework for economic reforms that India undertook in 1991, when the balance of payments crisis hit it hard.
A Padma Bhushan awardee, TN, as he was popularly called, through his papers showed that the rupee devaluation in 1966 had narrowed the trade deficit. Later, the rupee was devalued twice during the 1991 reforms. Srinivasan, along with Bhagwati, was a critic of protectionist policies of successive governments till then.
Later taking stock of economic reforms, he wrote in 2003 a working paper saying corrective actions were needed to revive the investment climate in India.
He suggested fiscal consolidation, including significant tax and expenditure reforms, as well as rethinking of Centre-state fiscal arrangements, further opening up of the economy to foreign trade and investment, credible commitment to the capital account convertibility of the rupee, alleviating infrastructure constraints, and undertaking labour and insolvency reforms.
These ideas saw fructification in the Fiscal Responsibility and Budget Management (FRBM) Act, opening up the FDI regime in phases, and enacting the Insolvency and Bankruptcy Code, though much later.
However, the rupee is yet to be made fully convertible, though Srinivasan wanted it to be so in the “not too distant future”.
However, capital controls now are much more limited than those in 2003.
Also, labour reforms are yet to be expedited though many states, including Rajasthan, have gone on their own carrying them out.
Srinivasan was trained to be a statistician, studying at the Indian Statistical Institute, Kolkata. But, later he moved to economics, and was guided by Tjalling Koopmans, who got the Nobel Prize in 1975, at Yale University. Under Koopmans, he studied operations research and linear programming. He wrote his doctoral thesis on the choice of techniques and earned his PhD in economics (1962) from Yale University.
Srinivasan came back to India from the US to work at the New Delhi-based Indian Statistical Institute in 1962. He also worked at the Planning Commission, now defunct.
Former RBI governor C Rangarajan, who was with Srinivasan in college, said initially he was interested in planning models and worked on the behaviour of savings and investment. “He has worked in almost all areas of economics and, more particularly, international trade,” said Rangarajan, who is chairman of the Madras School of Economics, where Srinivasan was honorary professor. Besides reforms, he wrote on the basic minimum income for all Indians. He said it should be done within a reasonable period of time and this minimum should be raised progressively as development expanded.
Source: Business Standards, November 12, 2018