S Gurumurthy

S Gurumurthy



To supplement @svembu Economists need to go beyond economic theories to align national charteristics to policy making. No universally economic theory in operation today that is valid for all countries. Universal economic approach have been given up by global institutions 1/24

Post war OneSizeFitAll (OSFA) model "The measures for the development of underdeveloped countries" formulated in 1951 by a team of economists of Marx & Market persuasion (including VN Gadgil India) mandated a mix of what US & Russia had agreed. See 2/24

The 1951 OFSA set as precondition for economic development. One all old philosophies have to be scrapped. Two, old social institutions have to disintegrate. Three Bonds of caste creed have to burst. All three form the basis of the western anthropology common to Marx & Market 3/24

This became the recommended basis for global and (underdeveloped) national socio economic teaching theorising and policy making. Thro globalisation which rested on the end of all conflicts & victory of liberal democracy & free market, the OFSA became unchallengeable 4/24

With 9/11 shattering the idea of conflict free world & rise of Asia & china, West had to climb down from G7 to G20 and the 2005 Beijing G20 meeting said OSFA model wouldn't work & each nation had to work out it's own development model based on national characteristics 5/24

xtent to which economists ridiculed themselves was to be found in the "dark matter theory" (2006) propounded by two Harvard economists to say how economic & trade laws are inapplicable to USD whose value rested on the insurance power of US, not detracted by trillions of CAD 6/24

In 2008 the World Bank the champion of OSFA model said it has 'learnt the hard way in its working" that no one size will fit all nations and development will have to take into account national charteristics. This was in May 2008 before the Great Financial Crisis 7/24

In 2008 GFC shattered all macro economic theories the smithereens. Alan Greenspan in his mea culpa to US congress said he had trusted Nobel prize winning economic theories and computers and everything collapsed. 8/24

Post GFC economists in US & EU had roadside brawl accusing each other as bone-headed and calling 30 years of macro economics as useless at best and harmful at worst. Economist Magazine (June 2009) said that the arrogant profession has been humbled. Shockingly debate stopped 9/24

From 2010 the UN which had mandated the 1951 OFSA model began condemning it & in formulating Millennium Development Goals the UN explicitly said that OFSA was nonsense and each country's cultural characteristics should form the basis for development. 10/24

Rhese were not reflected in the Indian economic discourse as our economists were busy getting their papers published in the very outmoded theory generating inatitions & getting marks & recognition from them. Most of them never thought there could be and was an Indian model 11/24

The first effort to bring India into our economic model was by the resolution passed by the Modi govt on 2.1.2015 mandating the NITI Aayog to think of what will work in & for India saying we can't transplant outside theories to model India's development. 12/24

NITI Aayog headed by the believers in transplanted models didn't notice their mandate. But the Modi govt began doing fundamental remodelling of the economy in the Indian way. It took decisions disregarding macro economists & economic institutions in Indian system. Examples 13/24

First was demonitisation which ended the asset price led growth model imported from US. This invited the wrath of the entire economic establishment. But today? Next was tens of crs bank acs (PMJDY) which all financial economists inside & outside the system thought was crazy 14/24

3rd was the Mudra scheme which was opposed from within and without. 4th was avoiding asset led growth in housing which was the growth engine of the US EU and China, the publicly assisted and funded housing for poor and unaffordable 15/24

Now with the Covid strike and Ukraine war globalisation is over, WTO needs to be reworked and entire global order has changed. PM's announcement of AtmaNibrhar in 2020 which the macro economists would have thought as abnoxious is now a global reality 16/24

Russia has successfully re-established after 70 years of dominance of finance over commodity the power of commodity over finance. This is no ordinary shock to all macro economic theories. The entire world order is being reworked 17/24

Indian Economists will have to unlearn quite a lot and learn even more about India and than they seem to know. Much of our Economics books needs shredding & new approach, lessons added. They must work on Modi's mandate to NITI Aayog to think of what will work in & for India 18/24

They must learn that our economic model rests on our family society culture and civilization and unlearn the western view that all these need to be subordinated to the individual. Just four points to drive home how different is Indian model 19/24

One In US a decline of 1 person per household from 1960 to now meant an additional 32 million homes costing 8 tril. Indian households have an average of 4.9. it it reduces by one we will need 60 m houses (half of US housing). our policies must promote living and sharing 20/24

Two we have highest home owning population in the world -- 84%. Because more people per house and 67% people being in villages. The first thing one loses in urbanisation is home. Our policies must be promote urban facilities in rural areas which electronic Highways do 21/24

Three RBI says family provides social security for 78% elders. In US Unfunded social security (caused by collapse and nationalisation of families) is $63 trillions. In India social security is privatised by culture. We should have policies in place to promote it 22/24

If the world adopts US food habits it will need 40% more land than the world has. If it adopts Indian food habits it will need only 4/5 of the land it uses now. If India adopts US food habits it will need 6 times the land it has. See ourworld in data. 23/24 (del tweet corrected)

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