B. R. Shenoy – a legacy of foresight and intellectual rigour

Saturday, 10 February 2024 00:00 –      – 15

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Thursday marked the 46th death anniversary of B.R. Shenoy – the acclaimed Indian economist who had a close association with Sri Lanka.

Last year, President Ranil Wickremesinghe publicly claimed that the country’s economic problems would not have arisen had the recommendations of Shenoy’s Report been implemented (which was prepared at the request of the Ceylon government way back in 1966). The illustrious economist was familiar with the intricacies of the country’s economy, as he was a lecturer at the University of Ceylon apart from having provided his expertise to the Ceylon Commission on Currency as well as the Ceylon Department of Commerce.

Shenoy was born in 1905, and his views represented the classical liberal school of thought in economics. He studied economics at Benares Hindu University and later at the prestigious London School of Economics (LSE). At the LSE, Shenoy was heavily influenced by the Nobel Prize-winning economist-cum great Libertarian philosopher Friedrich Hayek.  Although his ideas and teachings did not gain much acceptance among India’s policymakers when he was alive, today they have become part of the most populous state’s mainstream economic policy framework. The recollection of Shenoy’s legacy across the globe even 4 decades after his death is testament to the perpetual validity of the principles he espoused. In 1931,the erudite scholar became India’s first economist to have an academic paper published in a leading scholarly journal – Quarterly Journal of Economics.

The distinguished economic thinker taught at Wadia College, Pune, Gujarat University and his alma mater – the LSE. He also worked at the Reserve Bank of India, IMF, and the World Bank. Shenoy was President of the Indian Economic Association in 1957. The renowned academic came into prominence when he was the only expert to submit a Note of Dissent from the Panel of Economists appointed in 1955 to apprise the Late Indian Premier Nehru’s grand Second Five-Year Plan – which targeted heavy industrialisation.

Nine years ago, in his weekly column to this newspaper, the highly regarded former Deputy Governor of the Central Bank W.A. Wijewardena described the ignored Shenoy Report of 1966 as yet another missed opportunity for Sri Lanka. As part of the said report, the Indian economist had strongly recommended de-nationalization of selected State corporations while urging the State to withdraw from business activities and leave them to the private sector. He had also advocated the adoption of a freely floating exchange rate to resolve the recurrent balance of payment complications faced by the country while proposing the removal of import and export restrictions. The noted intellectual further insisted on providing the rice subsidy – which was prevalent at that time – through a cash grant instead of a commodity subsidy in order to ease the budgetary pressures on the Treasury.

Nevertheless, in the typical Lankan fashion, the then Dudley Senanayake administration had refused to implement Shenoy’s proposals. Dudley had suspected his Deputy J.R. Jayewardene (it was JR who obtained the services of Shenoy via his relative Esmond Wickremesinghe) was undertaking a conspiracy against him by urging to carry out the recommendations of Shenoy that were not politically popular. The massive civil unrest which occurred during the 1953 Hartal, consequent to the removal of the rice ration too, would have influenced his decision.

Unfortunately, democracy serves as a barrier against economic stability and development in countries like Sri Lanka where the populace is illiterate in economics. Due to the fear of being voted out by the public, policy makers are reluctant to take rational economic policy decisions. Alarmingly, in this peculiar island, not only the hoi polloi, but even the educated professionals have a very poor grasp of economics. The fondness towards freebies and absence of self-initiative have severely retarded the progress of the country. Even after having endured the worst economic crisis in its post-independent history, the islanders have not learnt a lesson.

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