A man behind the Plan

Print edition : November 05, 2004

A tribute to K.N. Raj, a teacher and an economist closely associated with India's development process for about half-a-century, on the occasion of his 80th birthday.

in Thiruvananthapuram

IN April 1950, a young economist was sent to Prime Minister Jawaharlal Nehru to explain why he had proposed a slow growth rate for the country's economy in the draft of the First Five Year Plan. At 26, K.N. Raj was barely out of the London School of Economics (LSE) and, as the only professional economist in the Planning Commission, had recommended that new India should "hasten slowly" for two decades, while economists in neighbouring China were talking about a `Great Leap Forward'. Nehru was sceptical: How long would it then take independent India to achieve its ambitious goals? Raj replied: "If you have to choose between democracy and a fast rate of development, what will you choose, Sir?"


That historic moment is part of the lore that surrounds Kakkadan Nandanath Raj, economist and teacher, who has combined a remarkable twin-career with a lifetime of spotting and nurturing talent, policymaking, institution-building and conscience-keeping for the nation.

K.N. Raj made his reputation computing India's balance of payments for the first time for the Reserve Bank of India (RBI) and writing the foreword to the First Five Year Plan document, of which he was a co-author. India did not have a statistical department then, and according to Raj, ideas about statistics were rudimentary. In the post-Second World War period, India did not have any foreign aid either, but only an accumulation of Sterling balances. The country needed to plan well to raise its rate of savings. Raj played a major role in this. Through meticulous planning, he and his colleagues prepared a 20-year perspective of increasing the rate of savings from 5 per cent in 1950-51 to 20 per cent by 1970-71. Today, Raj often tells interviewers that by the target year the country had "superbly met its projections".

Fellow economists consider the analytical rigour he displayed quite early and the methodology he used to arrive at conclusions on planning and economic policymaking as striking factors in his long career. But Raj was never a closeted academic. Like Amartya Sen, one of his illustrious former colleagues, Raj practised welfare economics "without knowing that it was welfare economics", because, he often said: "We were anxious that economics should help the poor." He told Frontline during an interview a few years ago that economic theory is all about how production is organised and so on and not about how it affects the welfare of the community. But being an economist who wanted to relate theory to practice, he had all along had the very same concerns of the common people, on agriculture, education, health care facilities, and even small-scale industries.

Raj served as economic adviser to Prime Ministers from Nehru to P.V. Narasimha Rao, constantly debating with them and often proving them wrong when they chose to ignore his logic-laced arguments. He expressed his concerns unambiguously, whether it be on the need to give primacy to agriculture in India's development, the strings attached to foreign assistance, the need to set India's own priorities while taking decisions on devaluation of the rupee or liberalisation of imports, the slow pace of land reforms or the need for decentralisation.

On many issues he disagreed sorely with the country's leaders - famously with Nehru for his "acquiescing role" in the overthrow of the first Communist Ministry in Kerala in 1959, right when it was implementing what Nehru had always been advocating - land reforms; and with Indira Gandhi during the liberalisation of imports along with devaluation of the rupee under U.S. pressure in 1966; and later, the mother of all such battles, perhaps, during the Emergency.

Throughout, his objective, even at times when he had to revise his earlier assumptions, had remained the promotion of equitable development and the welfare of the common man. Raj's works on planning, commercialisation and other aspects of Indian agriculture, land reforms, rural economy, unemployment, poverty, economic growth and investment, savings and capital formation, decentralisation and India's development experience and so on, some of them written 40 to 50 years ago, are today a staple for scholars.

Prime Minister Jawaharlal Nehru signing the First Five-Year Plan document in New Delhi in 1950. K.N. Raj is at extreme left.-BY SPECIAL ARRANGEMENT

Former RBI Governor Bimal Jalan said at a recent meeting held in Thrissur to honour Raj that there may have been differences among economists about a few of Raj's recommendations on certain issues but his greatest contribution to economics is his advice on the tools, materials and the accompaniments that must be put together before economists proceeded to build the edifice. Apart from the cogency, clarity and the power of his arguments, Jalan said, what was striking in all his scholarly writings was the emphasis on detailed empirical work, the persistence to get the facts right and to define the underlying institutional and organisational assumptions of the model that he was espousing. Raj defined the objectives, including the political ones, of the policies and programmes he was recommending, something most economists shy away from.

RAJ has doting students all over the world. He resigned his job at the Planning Commission (he could not stand the bureaucrats, he told Nehru) and accepted a cut in salary to become Professor of Economics at Delhi University and later one of the leading luminaries of the Delhi School of Economics. His reputation attracted a number of distinguished scholars to the institution. The DSE was at the peak of its popularity and came to be known throughout the world when it had Raj, Amartya Sen, Jagdish Bhagwati and Sukhmoy Chakravarty among its faculty. Raj once told Frontline that the lecture halls at the DSE were always overflowing, so professors found it a sheer waste of time to mark attendance. Finally, the practice was done away with.

It is common to hear Raj's students say that he was not only teaching them theory but also the relevance of that theory to the real world. Says Dr. Sudipto Mundle, one of his students: "This particular perspective he has given to standard economic theory has led him to contribute so many of his central ideas on planning, inflation, work on intermediate regimes, roots of industrial stagnation and so on." Raj has initiated several studies on Village India and its agriculture, perhaps a legacy he inherited from Malcolm Adiseshiah, a teacher he admired most during his early education at the Madras Christian College and whom he often credits with kindling his interest in economic research and its application in Indian conditions.

Raj's students also use him has a touchstone. They talk admiringly of the profound respect he had for those who wish to learn, his uncompromising eye for quality, the principles and convictions he lived by and inculcated in them, and the open, democratic tradition he fostered in his institutions. 'Gheraoed' on one occasion during his stint as Vice-Chancellor of Delhi University, a particularly challenging period in his career, irate students were flummoxed as Raj's supporters slowly swelled to outnumber them. They were eventually worn down, seeing how unflappable he was. The gentle, unassuming exterior, they saw, belied a man of steel.

In 1969, Raj became Vice-Chancellor of Delhi University, perhaps the worst period in his career, when he got trapped in the communal and political maze of the campus, with the Jan Sangh leading a sustained campaign against him. Raj said later that he could not tolerate it when their politics plummeted to very low levels. Academic standards left much to be desired. The Vice-Chancellor's job became one of maintaining law and order on the campus. It was the last thing he wanted to do.

He soon got an offer from C. Achutha Menon, then Chief Minister of Kerala, to come to Thiruvananthapuram and use his great talents for the State, especially in building an academic research institution. It was a mere idea then, but a challenge nevertheless. Raj agreed and resigned the vice-chancellorship in 1971 to build from scratch another great institution, the Centre for Development Studies. "Acutha Menon told me he had set apart Rs.30 lakhs with which I had to buy land, construct the building, set up a library, find the staff, everything. Fortunately, then I happened to meet Laurie Baker and the dream soon became a reality."

Raj's leadership attracted a lot of scholars and CDS acquired an international reputation as a centre for applied economics and social science research. He had an uncanny knack for discovering and encouraging talent, finding them opportunities for personal and professional growth, at times refusing offers that were his for the taking. Among the more famous beneficiaries of this quality of Raj were Prof. I.S. Gulati, a refugee from Pakistan who popped into Raj's room at the Planning Commission one day in the 1950s seeking a job, Prof. Jagdish Bhagwati, who was being refused a post at the DSE after Oxford because he did not have a Ph.D., and K.N. Krishna Raj, an unassuming student whom Raj sent to Sachin Chaudhury when he needed help to run the famous Economic Weekly. In a way, the Economic Weekly itself was a beneficiary. It was about to close down in 1965 because of financial troubles, and Raj (along with Ashok Mitra) launched the only fund-raising campaign in his life to re-launch it as the Economic and Political Weekly. (After Sachin Chaudhury's death, EPW, the staple of economists and social scientists, is run by a trust, with Raj as a leading member. The late Krishna Raj went on to become its editor.)

K.N. Raj with his friend President K.R. Narayanan, after receiving the Padma Vibhushan at the Rashtapathi Bhavan in April 2000.-BY SPECIAL ARRANGEMENT

Raj is a ruthless critic of communal politics, once describing those who represent it as "despicable political reactionaries who come forth with their phoney solutions in the name of the greater glory of ancient and medieval Hinduism".

While at the Madras Christian College, Raj was immensely attracted to communism and the Soviet Union but "did not feel much affinity then to Indian communist leaders". Later, he shared a famous intellectual friendship with E.M.S. Namboodiripad, often taking him on, on issues such as the connotations of the word `productivity' and implications of `deficit financing' for India. "I used to criticise him openly and he used to call me in private and say, `I agree with you entirely'," Raj once said.

Raj describes himself as a `Leftist', but would add, "Marxists will, however, say that I am Keynes' man". In a 1998 speech titled `Has Communism a Future?' where he made the comments about those who pursue communal politics, Raj also said: "Neither religion nor ideology can take human beings very much closer to a visionary state of perfection. Both religion and ideology can help to some extent - if visualised with adequate realism - to take humanity forward to a more satisfying state than now."

AT times, especially early in his career, Raj had indeed been accused of being a Keynesian economist, Western-educated and unaffected by the realities of India - as, when he recommended deficit financing and later, decontrol of the steel industry. But it was he who also cautioned Indira Gandhi against devaluing the rupee and liberalising imports under U.S. pressure. Raj always dismissed such accusations, for his ideas for India were sharp and focussed. He said he had used both Keynes and Marx and moulded them for Indian conditions. Indeed, the lecture halls of Cambridge, where the LSE was located briefly during the Second World War, were full of leading British economists, and Raj had been right in their midst, listening to Keynes, Laski, Haldane, Kaldor and the shilling-a-day lectures of Russell. He used to enjoy the Shakespearean dramas at the Cambridge Arts Theatre, buy books cheap from the streets of London and patronise cheap-food restaurants along with his fellow student and former President K.R. Narayanan.

His critics did not know that his Ph.D. thesis at London University was on the monetary policy of the RBI, perhaps among the first such studies about monetary and banking theory from the perspective of an underdeveloped economy. "Even when I went to England I studied how to apply Keynes' monetary theory in Indian conditions," Raj said in a recent interview. One of the conclusions of his 1948 study was that the lack of adequate credit channels between the Reserve Bank and the ultimate users of agricultural credit frustrates the power of the central bank to exercise any real control over the bulk of the economy. His recommendations included setting up of cooperative enterprises with access to RBI credit, which in turn would be able to help the farmers with credit, supplies and marketing. He also suggested the RBI should establish and finance separate institutions for providing long-term finance.

ALONG with Narayanan, with whom he shares an abiding friendship, and from whom, years later, he received the Padma Vibhushan, Raj was also politically active in London. He was a frequent visitor to V.K. Krishna Menon's office near the LSE and used to accompany Krishna Menon to the meetings of the India League and Labour Party and the movement for Indian independence. Even in those early years, Raj was a fiercely independent man. A book published on Raj in Malayalam recently recounts an interesting anecdote. One day, soon after they were acquainted, Krishna Menon, known for his temper, proclaimed that Raj would soon end up in the Indian Civil Service like many other Indians in London. Raj retorted in anger: "There are two groups here in London, a majority are your enemies; others are your slaves. I don't want to become a member of either of these groups." Curiously, they remained friends until Krishna Menon's death.

Raj has a gift of maintaining good relations with even those whom he criticised, among them Nehru, Krishna Menon, Indira Gandhi, Namboodiripad, even Vajpayee, at times, after he apologised to Raj once for the politics that made him quit the vice-chancellorship in disgust. Raj is frank with those who seek his professional and personal advice, at times, brutally so. He also has the wonderful quality of not losing his objectivity in judging people with whom he has had his quarrels, none of them personal.

RAJ was born on May 13, 1924, in Thrissur, Kerala, and became an economist at a time of great confusion and tension. The Great Depression had preceded the War. His father, K.N. Gopalan, was a judge in the Madras judicial service, a social reformer, a man of high ideals, "a benign, humane gentleman who never used a harsh word". His mother was "efficient, firm and tough, a homemaker". Raj, his friends say, has imbibed both these qualities. Raj has fond memories of his parents and believes that his father's vision and his love for books had a great role in shaping his personality. "I belong to a joint family which was not very prosperous but which placed a premium on the education of its children, a tradition which started with my grandfather. I grew up reading Haldane, Shaw and Russell, Nehru and many of the greats, thanks to my father," Raj once told Frontline.

Since then he has travelled widely, first as a student, then as civil servant and economist. Today, his greatest heroes are from myriad walks of life and places. He admires the "hermit-like qualities" of (Nobel Prize-winning econometrician) Jan Tinbergen, the lectures of Russell, Keynes and Kaldor, the friendship of Joan Robinson, the vision of Nehru, the greatness and richness of Indira Gandhi's personality, the candidness of Namboodiripad, the brilliance of Krishna Menon, the rustic simplicity of Ho Chi Minh, as only a successful teacher could. He hates the viciousness of the Bharatiya Janata Party, the mindless drift of student politics in India, the corruption of the bureaucracy, the increasing laziness in Kerala society, the elitism among economists and their reluctance to say `I don't know'.

For a brief while, Raj was in Ceylon (now Sri Lanka), in his first job as Assistant Editor of an English daily. A photograph in Raj's personal album is of a crowd in the streets of Colombo. Raj said in an interview that he has kept it to remind him of a stunning moment in history, the assassination of Mahatma Gandhi. Raj, then in Colombo, was terrified of the enormity of the occasion, as the crowd swelled in the streets on hearing the news. In the absence of the editor of the newspaper, it was Raj who was required to write the editorial that day.

On one of his trips to Thiruvananthapuram in the early 1950s, he had a minor surgery to be performed at the clinic of a famous doctor who had an aversion to anaesthetising his patients. Raj suffered the pain of the surgery but gained a wife. Sarasamma was the assistant doctor who nursed him. Their home became a great meeting place for scholarly discussions for economists, teachers and students and their families, a place where romances bloomed, family quarrels were settled and literary dramas were rehearsed. As they grew old together, they had their momentary spats but until her death in 2002 they remained thick friends and a happy, close-knit couple - the stuff that makes great parents.

Raj now lives with his two sons, Gopal and Dinesh, in a quaint hillside Laurie Baker-built home in Thiruvanathapuram. He suffers from occasional lapses of memory after an attack of cerebral thrombosis about a decade ago. A dream project is still on: a book on India's development experience from the period of the First Plan. He retains that subtle sense of humour that has endeared him to a lot of friends. To one of them, Hiten Bhaya, a former member of the Planning Commission, who asked him, "You are such a great economist, why do you look so humble? You don't look like a great chap at all," Raj's reply was: "Hiten, don't forget, I am also a toddy-tapper."

As Bhaya remarked then: "But what a toddy-tapper!"

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