The Past, the Future and the RBI

Former Governor of the RBI YV Reddy when asked why the RBI did not make policies based on the expected outcomes said that the future was difficult to anticipate and the past was known.Thank God we have a Central Bank, which keeps on talking Economics and Statistics. Governor Subbarao (please do the right thing by him, Mr.Prime Minister, wink, wink) apparently speaking on World Statistics Day said that 'The Lakdawala Committee used the same measurement criteria for poverty decided in 1979 by the Task Force on projections of minimum needs and effective consumption demand.' He then pointed out the fun and games everybody had with this. But little did the Governor know that the fact that the Task Force was not superseded by the Lakdawala Committee will haunt him, by that I mean Governor RBI and thereby hangs a tale. Therefore we are not talking of the past in the 80s but a page which is still there, quite like the grin of the cat in Alice in Wonderland.

But as Wodehouse would say, first things first. What is called The Lakdawala Committee was not approved by Prof. D.T.Lakdawala. He was in fact quite peeved at the draft. I know it, because I was the Chairman of the Task Force, Governor Subbarao talked of and by 1986 was quite convinced it had outlived its usefulness and as Member Planning Commission set up the Lakdawala Committee in fact to redefine the poverty line the Task Force had developed. The members were only concerned about some statistical adjustments which gave results. Lakdawala who had a lot of common sense would not accept and wanted me, a research colleague at that time, to go and contradict and explain what the Committee should do. I was not biting since I had been dropped by the successor Planning Commission from the Lakdawala Committee, after Rajiv Gandhi, my boss lost the election and I resigned from the Planning Commission. But before the matter could be sorted out Prof Lakdawala passed away and the Report which carries his name doesn't have his signature.

... contd.

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