Economy
"If every critic gets a phone call from a government functionary asking them to back off, or gets targeted by the ruling party’s troll army, many will tone down their criticism," he writes.
PTI

Former RBI Governor Raghuram Rajan has drawn attention to the importance of dissent and debate in a new blog post written on the occasion of the 150th birth anniversary of Mahatma Gandhi. In his essay, where he remembers former jurist and economist Nani Palkhivala, Rajan writes that suppressing criticism is a sure fire recipe for policy mistakes.

“At times like the present ones, we must remember that what makes India strong is its diversity, debate, and tolerance. What makes it weak is narrow mindedness, obscurantism, and divisiveness…what is true politically is equally true from an economic perspective,” Rajan writes.

Taking from Palkhivala’s views on free enterprise and his optimism about India, he resonates that our democracy is self-correcting and that we need to fight the forces that make India a static, unequal, obscurantist and complacent society. 

Rajan, in his post, says that it is important for an economy like India to inculcate more intelligent ways of working, which will enable us to leapfrog from old methods.

“But more intelligent ways of working will enable us to leapfrog old methods and come more quickly to the production possibility frontier – as we have done in parts of the software industry. And, of course, once you are at the frontier and using the best methods in the world, the only way to grow is to innovate and be even better than others in the world,” he says.

To achieve this, Rajan says that it is essential to foster competition.

“This means encouraging challenge to all authority and tradition, even while acknowledging that the only way of dismissing any view is through empirical tests. What this rules out is anyone imposing a particular view or ideology because of their power. Instead, all ideas should be scrutinized critically, no matter whether they originate domestically or abroad, whether they have matured over thousands of years or a few minutes, whether they come from an untutored student or a world-famous professor,” he says. 

Rajan also points out that he worries about three emerging developments in India – the tendency to keep looking to the past to find evidence of greatness, two, to reject anything “not invented in India,” and three, to suppress criticism.

Rajan states that though understanding India’s history is a good thing, using history to thump our own chest reflects great insecurity and can even be counterproductive. 

“While we should be proud of the very real achievements of an Aryabhatt, pride in the past should not divert us from the enormous effort that is needed today to improve our current systems. Indeed, an excess focus on the past makes us its prisoners. Let us find the strength to move on,” Rajan says. 

He goes on to state that there are currently many cultural and political organizations which are trying to oppose anything foreign, not because they analysed it, but just because it did not originate in India. 

“In the “not invented here” syndrome lies stagnation. We cannot be so insecure that we believe allowing foreign competition will demolish our culture, our ideas, and our firms… There is no need for us to be slaves to anything foreign, but it is best that we examine everything, domestic or foreign, dispassionately, and see what is worth keeping. It is only then that we will have a dynamic society, adapting to the needs of the times,” Rajan explained. 

Finally, he speaks of the importance of dissent, and how suppressing it is a “sure fire recipe for policy mistakes” and will lead to the government existing only in a ‘pleasant make-believe environment.

“If every critic gets a phone call from a government functionary asking them to back off, or gets targeted by the ruling party’s troll army, many will tone down their criticism. The government will then live in a pleasant make-believe environment, until the harsh truth can no longer be denied. Constant criticism allows periodic course corrections to policy – indeed public criticism gives government bureaucrats the room to speak truth to their political masters,” he writes.

Rajan’s essay assumes significance as it comes against the backdrop of the economy facing a slowdown over the past few quarters. It also registered the lowest GDP growth in six years. And while some analysts, economists and experts have raised red flags, the government has been firm in its view that the slowdown in the economy is only a part of the growth process.