Suman Bery has an article in Business Standard today on the nascent beginnings of a world of ideas in Delhi. I agree with him that Delhi is ahead of other cities in India in having more activity: more people, more interesting lunches, seminars and other meetings. I also agree with him that Delhi has gained considerable momentum in the last 25 years in this regard - things are much better than they used to be.
Centripetal forces are starting to come about: the relatively liquid market in Delhi pulls in people to give talks, supply labour, and give out contracts. These agglomeration externalities have helped shrink the staff quality and intellectual life in other cities. Just as young people in India who are interested in making money gravitate to Bombay, and young people interested in science and technology gravitate to Bangalore, young people in India who are interested in economics gravitate to Delhi.
One important thing that has gone right is the creation of effective think tanks that are disconnected from the universities. In an ideal world, the universities would have been good. But places like DSE or ISI, which used to be good a half century ago, have fared badly for the last 25 years. Given the absence of effort in putting the universities back on track, the world of policy discourse has hinged on the relative success of the think tanks. One key element of this was the effort led by Rakesh Mohan at NCAER many years ago, of breaking away from government wages, which has since percolated to a few other places like ICRIER and IDF. Higher wages have helped pull in better people.
But at the same time, I feel the situation is quite weak in absolute terms. The two symptoms which, to me, convey weakness, are as follows:
- As Suman says in his last paragraph, we haven't yet begun on a good fusion of an empirical economics literature and the policy process. Most of the empirical economics done in India is focused on the Western journals and not on the domestic discourse. People who are closer to the discourse tend to not do the hard work of looking at data; the people looking at data are other worldly and could equally be sitting in the US. Writing stuff that sells to the journal editors is seldom an effective way of writing stuff that matters for realworld issues in India. As an example, there is almost nothing going on in India in financial economics today, of the sort described here.
- There is a real shortage of people. As a fair thumb rule, by the time you get down to one focused question (e.g. the Goods and Services Tax, or banning futures trading in wheat, or capital controls on debt capital), it is impossible to put together a panel of five people who can do a high quality discussion on it. With fewer experts occupying any one niche, competition is lower, and individuals tend to inefficiently defocus into too many fields.