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We had the unique opportunity to talk to Dr. Kaushik Basu, former Chief Economist at the World Bank, who visited campus for Techfest’s Lecture Series. Here’s what he had to say:
1. Do you think the effort to bring back black money is justified by the expected pay-off?
This as I have said, to me the negative fallout is bigger than the benefits that you will get out of this. So, that is not the case. But should we have determination to go after the shadow economy to put an end to a lot of corruption. The answer is certainly, yes. But that will need a lot of planning and one particular thing has to be kept in mind that to take on the shadow economy you have to keep in mind that the shadow economy is intertwined with the healthy economy all over. It is a bit like in the human body. If you have a malignant tissue, just going for it without being mindful of the fact that surrounding it there are healthy tissues is not the right way to do, so you will have to use that medical analogy and develop that for the economy to take on the shadow economy.
2. About the larger economic climate in the world, how do you think Brexit and the Trump election would shape the future of the world economy?
I am very worried about the global economy because of the kinds of moves you are saying worldwide. Part of this I feel is rooted in technology. As technology improves, machines a replacing a lot of human labour and very often labour in faraway places are able to work for other places and India is a beneficiary on that, but the technology that replaces labour is a general concern. What we have to ensure, that the middle classe, the lower middle classes don’t feel left out and angry, which is happening around the world is to ensure that as technology replaces labour, wages don’t get entirely replaced by profits. You still have to get income to the people who used to live by their income. So , it is fine to have new technology coming but you have to think of kinds of intervention where the arrival of technology does not mean the end of wages. You have to get other forms of income back to the people which requires a lot of innovative thinking. The kind which may have gone on during the industrial revolution, very innovative thinking, a new round of innovative thinking is called for today.
3. IIT Bombay has announced that it plans to begin a BS economics program soon. There already exists a program in IIT Kanpur. Do you think there is a vital synergy between engineering and economics that we can exploit?
I think there is a huge synergy given the huge reputation of the IITs, their excellent reputation. If you can bring economics here, which begins to do some interfacing here with your engineering disciplines. You have seen examples of that in the United States. MIT, one of the best places for engineering is one of the best places for economics today in the world. The synergy helps. If you look back at history, some great discoveries in economics were made by engineers having building a bridge or trying to calculate the benefit to a consumer. So you are coming into the domain which is economics, but as an engineer, you know the hard, the concrete part of it. So, you discover a mathematical equation of getting to that discovery. There are a lot of examples of this kind in economics and I am very happy that you are planning to do that in IIT.