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Anand Chandavarkar (1924-2011): An Economist at Large

A tribute to Anand Chandavarkar, the economist with wide-ranging interests who was also a contributor and friend of the Economic Weekly/EPW over six decades.


Anand Chandavarkar (1924-2011): first-class degrees for an exit interview. It was not a formal ritual but an interlocu-
An Economist at Large tion with them by the professors under whom they had studied, to caution them
not to be swept off their feet by a first-class
degree; rather they should look at it as a
Deena Khatkhate pathway to becoming real scholars by en-

A tribute to Anand Chandavarkar, the economist with wide-ranging interests who was also a contributor and friend of the Economic Weekly/EPW over six decades.

Deena Khatkhate ( worked in the Reserve Bank of India and then in the International Monetary Fund. He is based in Washington DC and was a colleague and close friend of Anand Chandavarkar for many decades.

Economic & Political Weekly

october 8, 2011

here was an era in Indian academia when a premium on a first class degree and being able to reproduce clichés through rote and theories from the textbooks were “the end-all and be-all” of good education. Economics as well as all the social sciences remained divorced from the real world and unable to solve its intractable problems. A change in the academic ecosystem in India, though slow in the beginning, gathered speed with a growing number of Indians who imbibed critical faculties and nourished them after acquiring foreign degrees. They thus altered the perception about Indian graduates by Joan Robinson as “exam passers coming to England who do well and then come to believe that this kind of thing really is education”. Anand Chandavarkar who passed away recently after a prolonged and traumatic illness is a shining example of Robinson’s idealisation of what a true economist should be. He had a very distinguished career in the Elphinstone College, Bombay, and Bombay University’s School of Economics and Sociology in the 1940s where he nurtured his quest for knowledge. He often used to say that his critical faculties were germinated and nurtured by the stirring teaching by his professors N S Pardasani of Elphinstone College and, later, J J Anjaria in the Bombay School of Economics. He left India in 1950 on a scholarship awarded by the then Hyderabad state to join the London School of Economics (LSE), an institution peopled by intellectual giants like James Meade, Ronald Coase, Friedrich Hayek, Lionel Robbins, Michael Oakshott, Karl Popper and Harold Laski. He saw a different world there, where pursuit of knowledge was a religion. As a result, he transcended himself radically and came out with a rare first class, with banking as his choice of specialisation.

Training for Research

But his excitement over his performance did not last long. In those days, it was a tradition in LSE to invite star pupils with

vol xlvI no 41

gaging themselves with creative writing. Richard Sayers and two others impressed upon them the imperative of extending the frontiers of the discipline which he had studied. A degree was only an instrument to equip him with an apparatus of thought and a technique of thinking and he should harness it for exploring new ideas. In this context, the students were told specifically to aim at publishing articles only in journals which boast of a stringent and demanding referee system and only then would they justify their highfalutin d egrees in LSE. Chandavarkar enshrined this catechism in the inner recesses of his mind. When he joined the Reserve Bank of India’s (RBI) research department, he found the echo of this same edict when Edward Shill of the Chicago University on his visit to the RBI said at his meeting with the economists there that “peer reviewing” is the grammar of judging the quality of research.

The same thoughts had been expressed earlier in the 1940s by B R Ambedkar who interviewed him for a lecturership at the Siddharth College. When asked how he would organise his lectures in class. Chandavarkar’s reply was, “I will not test their memory but their problem-solving ability”. Ambedkar said in response that he was glad that in judging the quality of scientific thinking, they were both on the same wavelength and he referred in that context to the importance of the peer review process.

At the RBI

With this mental mould fashioned by his education abroad, in 1953 he joined the RBI’s research department, which until the 1960s was considered one of the best think tanks in the country. While this might appear somewhat like a hyperbole, the department undoubtedly had an institutional infrastructure for serious research in monetary and economic policy. Chandavarkar was fortunate in some ways that the department then had two of the most creative economists – V K Ramaswami


and Vinu Bhatt – who had already published oft-cited articles on trade, choice of techniques and capital-output ratios in prestigious academic journals like the Economic Journal, Review of Economics and Statistics and Oxford Bulletin of Economics and Statistics, an inflection point in the history of the research department. This reverberated in Chandavarkar’s mind, hastening him to publish in such journals to prove his mettle as a researcher. He was excited when his paper on “Saving Potential of Disguised Unemployment” was accepted in 1957 by Roy Harrod, then editor of the Economic Journal. Naturally his joy knew no bounds. The significance of this paper lay in showing that while Ragnar Nurkse, the father of this concept of disguised unemployment was theoretically innovative in showing the existence of a relationship between consumption and investment and paved the way for Arthur Lewis’ initiation of the discipline of development economics, it was subject to several limitations.

The success of his first article spurred him with renewed intellectual energy in research. His next paper was on gold hoarding in underdeveloped countries which appeared in the Oxford Economic Papers of June 1961. He contested the Keynesian theory of baneful effects of gold hoarding and other precious metals which persisted with remarkable tenacity. He showed that the motivation for gold hoarding in developing countries was a different kettle of fish that rendered the Keynesian analysis of liquidity preference inapplicable to those economies and further that the actual extent of misdirection of resources involved was much less than commonly supposed. Despite the novelty and policy significance of his article, however, it did not resonate for some idiosyncratic reasons in the scholarly debate on development economics.

Thus Chandavarkar together with Ramaswami and Bhatt became the role models for their junior colleagues aspiring to be thinking economists and created a remarkable new ethos in the RBI’s research department that was conducive to in-depth and original research in economic theory and policy which aroused envy among other competing research outfits in India.

Battling the IMF

Chandavarkar moved on in 1966 as adviser to the International Monetary Fund (IMF)

– a citadel of monetary orthodoxy at its height of intolerance – with a determination to pursue his research in a new challenging intellectual environment. The quality of research in the IMF’s research department was undoubtedly of a high quality in view of some of the best minds working there producing seminal contributions in the field of fiscal and monetary policy, trade and exchange rate systems. But the transmission of that research to the core of IMF policy in its actual implementation depended on how the popinjays in the higher echelons in the area departments absorbed the import of research produced in the institution. As was often the case in those early years of the IMF, staff of the area departments consisted of “heavers of wood and drawers of water” with a mulish attitude of “my way or the high way”. Chandavarkar being unfortunately in such a department had to face the clandestine hostility of his departmental colleagues in his research work when he aimed at breaking new ground because at times it departed from the “Fund’s gospel truth”. He braved all that and assiduously continued his research projects in his spare time without shirking from his routine departmental responsibilities in regard to country surveillance.

His first paper in the IMF was “Unused Bank Overdrafts: Their Implications for Monetary Analysis and Policy” published in the IMF Staff Papers in 1968. Chandavarkar was the first economist who showed how the unused overdrafts thwart the effectiveness of anti-inflationary monetary policy. Its novelty attracted attention of some of the leading monetary economists like Harry Johnson. Encouraged by this, he wrote one of his best papers “Some Aspects of Interest Rate Policies in Less Developed Countries: The Experience of Selected Asian Countries” also published in the IMF Staff Papers (1971). He took quite a risk in writing this paper in the suffocating adverse milieu as it targeted the IMF’s policy of treating the money rate of interest as sacrosanct. Fortunately for him, this paper’s conclusion paralleled that of Ronald I McKinnon and Edward Shaw, which almost transformed the way money and monetary policy in the developing countries was perceived in economic textbooks. In fact, Chandavarkar’s article preceded the books of both McKinnon and Shaw with the former citing Chandavarkar’s article in his book. For the first time since the famous Irving F isher, these three authors brought out the importance of the real interest rate, disregarding the money interest rate as a monetary policy instrument.

Engagement with Keynes

After Chadavarkar retired from the IMF, he wrote another paper on “Keynes and the International Monetary System Revisited” in World Development of December 1987. In that paper he ingeniously used the meaningful taxonomy of select Keynesian ideas on the subject from the sheer wealth of historical material on Keynes in regard to the institutional framework, international liquidity and convertibility, the exchange rate regime, the adjustment mechanism and last, but most significant, the developing countries’ problem. Chandavarkar


approaches this issue “with due circumspection for Keynes combined with his intense intellectual curiosity, innovativeness and equally self-critical habit of mind, which was never the slave of any ‘foolish consistency of views’ that is so often the hobgoblin of small minds”. His paper therefore presented a panoramic grand view of how effective, just and equitable the international arrangements should evolve for the benefit of all. This article made great waves, resulting in a rare honour bestowed on him by a Cambridge economist, Mark Blaug who included his paper in his Keynesian anthology.

Venturing into Books

Chandavarkar was a life-long scholar of Keynes, who was his intellectual icon but his professional preoccupation left him little time for exploring Keynes, whose journey to economics from mathematics began with his accidental involvement in Indian currency and finance. He embarked on his new project on the Keynesian saga after retirement from the IMF. Soon he realised that an article is an inadequate medium in dealing with the larger theme. He, therefore, decided to undertake a more demanding chore of writing a comprehensive book. On being queried by one of his interviewers when his book on “Keynes and India” (1989) was out, about how he felt writing a book as against writing an article, he intoned with his characteristic sarcasm and insinuation that “I really had to free myself from the shackles of articlewriting, and institutional prose after long service as a central banker and international civil servant. The architectonics of book-writing are very different, and have to be learnt on the job.” Those who knew him well over the years could figure out his subtle slings and arrows at the turgid “officialese” in the institutions where he earned his livelihood.

His bold decision to write a book and that too on Keynes proved to be a blessing. John Thirwall who organised the Tenth Biennial Keynes seminar at Canterbury in 1991 on “Keynes and the Role of the State”, a highly topical theme in the prevailing conjuncture of the collapse of the Soviet Union and other communist states in east Europe and the worldwide wave of d eregulation and privatisation, invited him to

Economic & Political Weekly

october 8, 2011

present a paper on “Keynes and the Role

of the State in Developing Countries”. This

paper, being the first of its kind received

plaudits from economists like Alan Peacock,

Alex Caincross, Michael Lipton, Samuel

Brittan and many others of their ilk and

established Chandavarkar in the galaxy of

Keynesian scholars like Robert Skidelsky.

The success of his book on Keynes

whetted his appetite for more book wrt

ing. His “Central Banking in Developing

Countries” published by Macmillan (1996)

soon followed. The most striking feature

of this book was the discussion on Islamic

banking and its theoretical rationale,

whatever that may be and the rhetoric and

reality of central bank independence. His

conclusion on Islamic banking, rather dis

concerting to the avid advocates of that

form of banking, was that “the policy

issues in Islamic finance are by no means

intractable and are no different from those

posed by regimes of low and stable inter

est rates in conventional economies which

also effectively precluded the use of interest

rate as a policy instrument thereby oblig

ing central banks to rely on other mone

tary policy instruments”. Chandavarkar

makes no bones about his views on the

RBI’s independence when he argues, “The

crowning irony, seldom noticed even by

Indian commentators, is that the RBI,

which was envisaged even in the colonial

regime, as an ‘independent authority

which can act with continuity’ enjoyed

more auto nomy before Independence”.

His conclusion has salience even today as

he showed in his article “Towards an

Independent Federal Reserve Bank of

India: A Political Eco nomy Agenda for

Reconstitution” (EPW, 27 August 2005).

Chandavarkar’s third book Unexplored

Keynes and Other Essays (2009) is an

intellectual feast for the Keynesians as he

shines light on Keynes as a social philo

sopher as also some of the unsavoury

a spects of Keynes’ persona. He tries to find

an answer to the question whether Keynes

was really anti-semitic despite his close,

enduring and rewarding friendship with

Richard Kahn, Carl Melchior, and Isaiah

Berlin. His eventual assessment, after tra

versing the field of Keynes’ relationship

with leading Jewish friends, is that “Keynes’

attitudinal and selective anti-semiticism

was certainly not of the monolithic variety

vol xlvI no 41

like the rabid rancour of Ezra Pound and Richard Wagner, nor did it wear the raiment of Chesterton and Belloc or agenda of T S Eliot”. This jibes well with what Isaiah Berlin, himself a Jew, in his letter to Chandavarkar wrote “Keynes did suffer from the prejudices and tastes of his milieu”.

Chandavarkar and EW/EPW

Chandavarkar was introduced to Sachin Chaudhuri, the founding editor of the Economic Weekly and its later avatar, the Economic and Political Weekly, by K S Krishnaswamy when both were studying in the LSE. From then, Chandavarkar was a leading member of the reserve army of the honorary economists of high talent with their subterranean contributions, constantly rolling in to the EW office during the time most of them were working in the RBI. After he cast away the bureaucratic stranglehold on him, he became a regular and valuable contributor to the EPW with articles not necessarily confined to economics. He was also a versatile book reviewer in the weekly because of his wide reading, scholarly demeanour and a stylised English prose. His paper “Economics and Philosophy: Interface and Agenda” (EPW, 20 January 2007), first presented on invitation at the annual meeting of the American Philosophical Association (Eastern Division) in 2003 is an admirable exercise in interdisciplinary social science discourse. It reveals that Chandavarkar was not a narrow specialist but one with a wide vision. His important conclusion is that the economist innocent of the history of economic ideas is likely to be an incomplete economist, given the sheer complexity and limitations of economics as a social discipline. The importance of this paper is thrown in bold relief when Kenneth A rrow, a doyen among economists, wrote to Chandavarkar on his own initiative after he went through the proceedings of the American Philosophical Association, that his paper is “indeed an excellent and provocative survey, raising many questions beyond the familiar ones of epistemology and Hume’s Law”.

Crime Fiction

Chandavarkar was an addict of crime fiction. He was excited to see that economics


entered the world of murder mystery when Murray Wolfson of California State University and Vincent Burnelli, a professional writer and history graduate, in 1990 authored a crime novel In the Long Run We Are All Dead with an economist as the principal protagonist and macroeconomics as the arena of conflict and crime. The economist whom Chandavarkar cites with more pleasure than he derived from his own economic writings is Per Jacobsson, former managing director of the IMF, who entered crime fiction in collaboration with Venan Bartlett, a British journalist. Their two thrillers, The Death of a Diplomat and The Alchemy of Murder poke fun at controversies between Keynesians and monetarists which, as Chandavarkar a rgues, makes grand entertainment for non-economists.

Though serious in his mien in his pursuit of knowledge, Chandavarkar had a rare biting wit in his conversation with his colleagues and friends. Once he defined economics in pre-independence India “as an art in India and science abroad”. He

described one of his pompous colleagues who was fond of spouting bromides as if he was making a profound economic argument as “Grantha Saheb”. Once, a friend of his asked him whether he was still in the IMF’s area department which involved globetrotting; he mischievously limned: “I am now chair-borne and nolonger air-borne”.

Chandavarkar was an avid reader of English literature, sociology, philosophy and politics. Without books, life for him was a black hole. Being gifted with a good memory, he could effortlessly explain the main themes of the books he had read and their significance. His friends used to call him a walking vade mecum whom they could approach for quick references or anecdotes. He had a particular penchant for those who were serious about scholarly pursuits, r egardless of whether they were friends or otherwise. His sense of humour was his most important asset in developing friendships. But at the same time, he had no p atience with coxcombs, solely bent on impressing others with their half-baked knowledge. His intellectual patina, ready wit, neo logism, quick repartee in discussions were his many endearing qualities. His esteemed friend, the eminent economist, Jagdish Bhagwati well epitomised his persona, both as a man and intellectual, in his tribute to Chandavarkar, that “Anand was in a class by himself, a bibliophile, an intellectual, a gifted writer, and a superb economist, and all this without arrogance and with a lot of grace and charm. It will be impossible to fill this void he has left behind.”

Chandavarkar was tenacious, despite his failing health about writing two more books – one on “Philo-semitic and India” and the other on “Economics for the Sceptics” in the twilight of his life with a setting sun and a lengthening of the shadows. As luck would have it, his ambition remained only a dream. While saying adieu to this world, he may have mused like Sabine Baring-Gould.

“Now the day is over,

Night is drawing nigh,

Shadows of the evening

Steal across the sky”.

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