Government’s inability to take criticism is ‘sure fire recipe for policy errors,’ says Raghuram Rajan

Former RBI Governer, Raghuram Rajan has in a statement pointed out the government’s inability to take criticism. He said that people in authority have to tolerate criticism and that any move to subjugate opposing thoughts “is a sure-fire recipe for policy errors”.

“What makes India strong is its diversity, debate, and tolerance. What makes it weak is narrow-mindedness, obscurantism, and divisiveness,” Rajan said in a long LinkedIn post on Monday, two days ahead of the 150th birth anniversary of the Father of the Nation.

He wondered how long the government take to realise that it has to face the harsh truths. He asked the government if every critic gets a call to back off, or to stop criticising; the government will get a happy make-believe scenario, but will that be enough to evade problems?

Last week, the Narendra Modi government had removed Rathin Roy and Shamika Ravi from the economic advisory council to the Prime Minister. Both had criticised some of the government’s policies.

Roy had questioned the government's decision of using sovereign bonds to borrow from overseas markets, opening up the funds to travel from overseas. Rajan, too, had earlier warned the government about the ramifications of procuring funds through overseas sovereign bonds.

Raghuram Rajan, who famously stood up against demonetisation, says criticism always fosters better ideas and one should always be open to questions.

He said in his LinkedIn post that he was worried about three emerging developments in India. The first was a “tendency to look back into our past to find evidence of our greatness”

“Using history to thump our own chest reflects great insecurity and can even be counterproductive,” he added.

His second concern was a tendency to regard foreign ideas and foreigners with suspicion.

“It seems a number of cultural and political organisations are trying to oppose anything foreign, not because they have examined it carefully and found it to be bad, but because of its origin,” he added.

“We cannot be so insecure that we believe allowing foreign competition will demolish our culture, our ideas, and our firms. Indeed, it is by erecting protective walls that we have always fallen behind, making us susceptible to total colonisation,” said Rajan, currently a professor of economics at the University of Chicago.

His third concern was the disquieting tendency to muzzle all debate. “A quick resort to bans will chill all debate as everyone will be anguished by ideas they dislike. It is far better to improve the environment for ideas through tolerance and mutual respect,” he said.“We have our weaknesses and our excesses, but our democracy is self-correcting, and even while some institutions weaken, others come to the fore,” Rajan wrote.

At one point, Rajan says “…an attempt to impose a uniform majoritarian culture on everyone can kill minority community characteristics that can be very advantageous to growth and development. Cultural diversity can promote intellectual diversity and intellectual ferment, something every economy at the frontier needs.”

This post comes at a time when the country is going through economic slowdown, the biggest challenge in front of the Modi government. It has resulted in the slowest GDP growth in 6 years, haphazard decisions to cure it; but zero debate to foster on some of its questionable policy prescriptions like the recent move to force banks to start a credit carnival to boost consumption, which will possibly result in bad debts all over again when just now, financial institutions have started to clean their books up.

Here are some excerpts from his post:

It would be retrograde, indeed against our national interest, to give up this vibrant democratic society that tolerates and respects its diverse people and viewpoints for a more authoritarian, monocultural, majoritarian imposition.

The first essential is to foster competition (emphasis added by Rajan) in the marketplace for ideas. This means encouraging challenge to all authority and tradition, even while acknowledging that the only way of dismissing any view is through empirical tests.

What this rules out is anyone imposing a particular view or ideology because of their power. Instead, all ideas should be scrutinised critically, no matter whether they originate domestically or abroad, whether they have matured over thousands of years or a few minutes, whether they come from an untutored student or a world-famous professor.

At one point, Rajan says “…an attempt to impose a uniform majoritarian culture on everyone can kill minority community characteristics that can be very advantageous to growth and development. Cultural diversity can promote intellectual diversity and intellectual ferment, something every economy at the frontier needs.”

This post comes at a time when the country is going through economic slowdown, the biggest challenge in front of the Modi government. It has resulted in the slowest GDP growth in 6 years, haphazard decisions to cure it; but zero debate to foster on some of its questionable policy prescriptions like the recent move to force banks to start a credit carnival to boost consumption, which will possibly result in bad debts all over again when just now, financial institutions have started to clean their books up.

Here are some excerpts from his post:

It would be retrograde, indeed against our national interest, to give up this vibrant democratic society that tolerates and respects its diverse people and viewpoints for a more authoritarian, monocultural, majoritarian imposition.

The first essential is to foster competition (emphasis added by Rajan) in the marketplace for ideas. This means encouraging challenge to all authority and tradition, even while acknowledging that the only way of dismissing any view is through empirical tests.

What this rules out is anyone imposing a particular view or ideology because of their power. Instead, all ideas should be scrutinised critically, no matter whether they originate domestically or abroad, whether they have matured over thousands of years or a few minutes, whether they come from an untutored student or a world-famous professor.