P. S. Lokanathan at the inaugural function of the NCAER
Idrak Z. Bhatty, the fifth director-general from 1981 to 1990 of the National Council of Applied Economic Research, passed away earlier this month. He spent most of his working life there. I want to write about the challenges of heading social science research institutions in India.
Bhatty led the NCAER through difficult times for the Indian economy and industry. There was little private sector research and in Bhatty’s time, there was heavy dependence on government sponsored research. From the founding of NCAER in 1956 (Bhatty was in charge for 18 years as deputy director-general and then director-general), India followed the “socialistic pattern of society”. Most industrialists and managers were not much interested in in-depth collection and understanding of representative data. The customers for the NCAER were therefore primarily government departments, international agencies and a few public sector companies. Some government officers were interested in baseline data before evolving policies. Many others acted on preconceived opinions. Some wanted an objective evaluation of the impact of policies, so that they could be tweaked for better results. There were few such officers. Government transfer policies also meant that a study begun by one officer might not interest his successor. Much of the research was given by governments, but little of the research findings were used by governments. Findings could be published with government permission and were available to researchers and the public. There was little media interest.
In spite of this climate, Bhatty’s tenure saw research that improved understanding of the economy and society. The research included: a longitudinal study in Punjab which established beyond doubt that there were “millions of missing women” because of infanticide (and later, foeticide); two studies of identical rural households with a gap of over a decade which gave a unique picture of rural development; an evaluation of Operation Flood showed the immense dependence for milk collection on poor households owning two animals, the central role of women in looking after the cattle and taking the milk to collection centres; a national study of over 30,000 households showed the usage of different fertilizers for crops. Bhatty also oversaw the creation and periodic presentation to finance ministers of forecasts from a macroeconomic model. He began the market information surveys of households which gave data from samples starting at 5,00,000 and tapering over the years to 3,00,000 households of consumption of manufactured goods. The data also gave income ranges of households. But, financially, the NCAER had difficulties in even paying salaries a number of times, in buying computers or in building maintenance.
The Bombay University School of Economics and the Delhi School of Economics, which were teaching-cum-research institutions, preceded the NCAER. The NCAER was to be purely for applied economic research, earning its way through contract research. An accepted model in the United States of America, it was the first such attempt in India. The Central government granted some funds. However, there was very little private sector interest.
John Mathai, the second finance minister of India (earlier a director of the Tatas), and T.T. Krishnamachari, then minister for commerce and industry and later the finance minister (he had earlier established a flourishing business in South India), conceived the NCAER. Like the Council of Scientific and industrial Research, established in 1942 for scientific research, the NCAER was for social science research. It would fund itself by contract research. The government gave land, and the Ford Foundation under its India head, the farsighted Douglas Ensminger, provided capital sums for construction and an annual grant for the early years. However, there was no corpus fund to meet occasional shortfalls.
The NCAER started in rented premises from 1956 and moved into its own building in 1960. The first director-general was P.S. Lokanathan (the first secretary-general of the Economic and Social Commission for Asia and the Far East, then ECAFE now ESCAP). He persuaded one of the most distinguished theoretical economists of the day, A.K. Dasgupta, to join as his deputy in order to ensure high quality in the research. Early researchers included A. Vaidyanathan (later a member of the Planning Commission and a noted economist); Raja Chelliah (who went on to found the National Institute of Public Finance and Policy and later headed the indirect taxes reform committee in 1992, whose recommendations laid the foundations for tax reforms), Ashok Mitra (later the finance minister of West Bengal in the communist government), Jay Dubashi, and Ashok Desai, the chief economic consultant to the finance ministry when Manmohan Singh took it over in 1991 among others. The NCAER nurtured many key future policymakers. It is now refashioning itself as primarily a policy research institution. It has to attract a similar calibre of researchers.
The NCAER was created to provide reliable, independent and representative data to governments and industry for their decision-making. Central planning in India began in 1951. The vast amounts of reliable data on different issues it needed at short notice would be partly supplied by the NCAER. This would need excellent sampling techniques for data collection. The NCAER became the pre-eminent data collection organization in India, selecting and using large samples of the populations for issues to be studied, and processing the data. There was practically no aspect of the Indian economy it did not study. The only other large-scale sampling and data collection organization in India was the National Sample Survey Organization whose mandate was to track economic parameters like consumption expenditures, health expenditures and so on for the Indian population.
Having used NCAER data in my marketing job in the private sector, I respected NCAER work and I was happy to accept an invitation from Prakash Tandon, then president, NCAER, to succeed Bhatty in 1990. I saw my role as bringing professional management methods to it. After I took over I realized that the dependence on government had created extreme financial stringency, which had to be permanently corrected.
My strategy was to make the Council’s work known to the public; it required that all research had to be made public soon, acquire large projects within the capacities of specialist centres, to assure revenues for longer periods; develop a regular subscriber base for our data, offer presentations on the economy periodically to companies; streamline data collection to minimize costs; and optimize quality. However, my first priority was to recognize and incentivize good researchers, and recruit bright young social scientists. I replaced lifetime tenure appointments with contractual ones for all new recruits.
The NCAER became open to interested media persons who were briefed on ongoing work. We developed the first ever Business Confidence Index which was sold to companies and also attracted much media attention every time it was released. MISH data, particularly on income changes in the population, was publicized in many ways. It attracted international attention as people began to speculate about the size of the Indian “middle class” and hence the market opportunities in India as it opened its economy. We developed local sub-contractors for data collection over the country, trained for each survey and supervised by our experienced staff. We avoided small short-term studies. Among the large studies we undertook was one for the United Nations development programme that established the human development indicators by states as also by majority (Hindus with sub-classes for scheduled castes and scheduled tribes) and majority-minority religions (for example, Muslims in U.P. or Christians in Kerala). This was a path breaker and led to many other studies and major policy initiatives by governments. These initiatives helped NCAER develop visibility, attracted researchers and new projects. We were also able to build a respectable corpus. The NCAER’s researchers and support staff welcomed these changes.
Over the years, the NCAER has evolved. Its corpus is now bigger, it has collaborative relations with some of the best research institutions and it is into policy work. As a national institution it has no peer. Other research institutions without guaranteed funding can learn from the NCAER experiences.