Savitri Era of those who adore, Om Sri Aurobindo and The Mother.

Saturday, August 11, 2007

Reading Mahalanobis model makes my blood curdle

Posted By : on 05 August,2007
I remember the days when it used to take almost half a day to withdraw money. Govt. banks didn't bring in technology until pvt banks were allowed to grow. It's a well known fact that loan officers in these banks take 5% of the loans as bribes.Ask any auto driver in India. The dominance of public sector banks still exacts abt 2% GDP growth per annum as published in a recent McKinsey research article. Professor, in your opinion, it must be another western conspiracy and hence should be ignored.
The banks in India need not have been made public. If the objective was to spread banking to rural areas, a new law mandating just that could have been achieved. Look at the huge losses of public sector banks - huge NPLs (non-performing loans curiously called NPA non-performing assets in India). It's also a fact that these NPLs are not because of farmer lending but the rich industrialists with political connections who never return the crores they take. The farmer's share in the NPL is miniscule.
I am a great admirer of Sam Pitroda and the work he did in India and he definitely did a lot to make telephone accessible to Indians. There is no denying his great contribution and the IT industry(read offshoring) may not have been possible without his work in India. But Professor, today the telephone density is high in India and getting higher exponentially every day because of the MNC technology and the western model that you conveniently deride in your article.
Mahalanobis model focused intensely on investment and hence savings and that's why the skewed pricing model. What's was wrong with importing capital like we are doing today. In a globalised economy, does it really matter where savings are done? What matters is how many jobs are available to go around. Look at Singapore. In 1965, they were poorer than India. they did wonders using the global capital they invited. Look at Japan in the post world war scenario.
Mahalanobis should have listened to the Western (derided by you professor while living and enjoying the fruits in the west) economist then, Milton friedman in particular who were advising the Indian govt. then. A free-market India in 50s and 60s would have been a richer India today.
Reading Mahalanobis model makes my blood curdle. He made such stupid assumptions in his model and threw out the whole concept of humanity or societal interaction. the thing that angers me the most when I was forced to study it at Delhi School of Economics and argued with my professors that he skewed the price ratio to keep farmers poor and govt industry rich.
Do you think Mahalanobis, a statistician was fit to be in an economist role. He proclaimed-Public sector to the commanding heights of the economy. It took the economy to the rotten depths. In a labor-surplus country, his model led to capital intensive investment and his model changed the pricing ratio intentionally against the farmer and towards industrial goods. (if not sure, just read his model in detail) Rich farmers would have consumed more and hence created more jobs in the efficient pvt sector.
In one broad sweep, you put aside the dirty politics of regionalism and language that it started in India. The language based state boundaries gave another reason for difference among Indians. Rectangle like states as in USA in India would have further united us by bringing different people together and making us more tolerant by forcing us to mingle with people who spoke different languages.
You are a professor of computer engineering. Did you give any thoughts before you wrote about the convenience of the language-divided state and computers in local language. How hard is it to have multiple languages on one computer? I am sure you have used ATMs in US that give you the option of both eng and spanish. This article throws a good light on Indian stalwarts but is too simplistic on its reasonings. Do you think our research labs do worse just because of Mandal1? and not other corruption issues.

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