Ashok K. Lahiri's driver has extended his leave. As the chairman of the high-level committee on tax laws, Lahiri holds a position equivalent to that of a minister of state. The ministry of finance is just a phone call away, but may take time sending him a replacement. So he travels on the Delhi Metro from his Gurgaon home to his central Delhi office, and has even discovered a shortcut from the station.
"My driver should be back very soon and the Metro is not a bad solution at all. And walking is very good," he reasons. As an "eternal optimist and a pragmatist", Lahiri likes to find his way out of messy situations.
His office is in a suite on the second floor of Janpath Hotel. It has been done up to look like a bureaucrat's office - with wood panelling on the walls, large desks and chairs, and almirahs to store files.
It's an environ that Lahiri, 65, knows well. He was India's chief economic adviser from 2002 to 2007, when the economy took an upward turn like never before. He worked under both the National Democratic Alliance and the United Progressive Alliance governments.
"I can't remember a single occasion when demonetisation was discussed," he says, shaking his head after thinking for a while.
The November 9 decision of demonitisation - disbanding 500-rupee and 1,000-rupee notes - came as a bolt from the blue, he admits. "I was very surprised. I must also say that surprise is the essence of it. You don't demonetise for the purpose that the government has by giving a long notice. You have to catch people when they expect it the least."
A bit like a professor - and he did serve a long stint at the Delhi School of Economics - he asks questions and answers them himself. I point out that his former boss, P. Chidambaram, and Marxist leader Sitaram Yechury are not sure if the move can be called demonetisation as the government has merely replaced old currency with new.
"What is demonetisation?" Lahiri asks. "It is basically an instruction or decision to derecognise something as fiat money. The Reserve Bank of India (RBI) has done that. There is no problem in calling this exercise demonetisation," he sums up.
The government's move has been welcomed by some economists and panned by others. Lahiri is in the former camp, although he treads with caution. "I think of it as cleaning the house. But cleaning up the old muck must be followed up with steps that can minimise accumulation of it in the future. The black money that you can get rid of is about the sins that have been committed in the past. You have to make sure that in the future as many sins are not committed."
The biggest impact of the move, he believes, will be on social attitude towards black money and corruption. "There is an acceptance of the two at every level. If you ask an average person, he will tar politicians, businessmen and bureaucrats with the same brush. Sab chor hai - everybody is a thief - he will say. It is important that the common man gets the message that corruption nahi chalta hai - corruption doesn't work," he says, pronouncing the Hindi words with a broad Bengali accent (Lahiri calls himself a "Bengali masquerading as a Hindi-speaker in Delhi").
"You cannot have a better advertisement than demonetisation to show that corruption and black money are not acceptable," he holds.
It's been more than 10 days since the currency ban, and the impact of it on households, medium- and small-scale industries and businesses, agriculture and urban and rural wages is already visible. Some economists such as Kaushik Basu and Ila Patnaik believe that the government may not have imagined the extent of the negative impact of the move when it was first announced.
Lahiri looks at the ceiling and says in a measured manner, "The pain is there and it is too much for some sections of the people. But we can only hope that it will decrease. I also think that one shouldn't complain too much about what has happened."
He likens the exercise to a military operation. "It is like a big logistical exercise with generals sitting and mapping out a plan," he says. But haven't the generals in this case bungled, if you look at the daily change of rules and ensuing chaos?
"This is not my specialisation," he replies. "I don't know the details and my ignorance is enormous on this." He thinks some more and adds, "Some of the planning could have been better."
The economist, clearly, likes to look at the larger picture. "If you don't want to have any pain at all, forget about any gains for the future," he says with a slight thump of the desk.
Lahiri believes there was a method to what is largely being viewed as the government's madness. "Of course, there was a build-up to this," he says and goes on to list measures that preceded demonetisation - such as the income disclosure scheme, exchange of information pacts with several foreign countries to catch tax evaders, making the Benami Act more stringent and the introduction of the goods and services tax (GST). "A plan was definitely there. I have no doubt about that."
But worldwide, demonetisation is not seen as a popular instrument for battling black money. Barring Zimbabwe in 2015, there haven't been many demonetisation efforts in recent years. And inflation in Zimbabwe was quoted at five billion per cent; its reserve bank had to print even quadrillion-dollar denomination notes.
Lahiri - whose name was on almost everybody's list of possible successors to RBI governor Raghuram Rajan - agrees that central bankers around the world are generally averse to the idea of demonetisation. "Currency is basically an IOU and many central bankers feel that it is a breach of contract, which is not the case. A good governor will also worry about the cost of printing new money," he says.
Minister Piyush Goyal has said that the decision was taken by the RBI Board, I point out. "It is the prerogative of the central government to decide on such things. If you read the history of demonetisation in 1978, the speculation was that the RBI governor didn't even know about it until it was announced in Delhi. It is such an important decision that a governor may be consulted, but it is not his call."
Will this measure help the average man? If banks have more cash to lend and if the government gains money, will, as some experts predict, lending rates of banks come down, making repayment easier for home buyers, industrialists and others in need of loans?
"There will be some advantage," he states. "But it is of no use if there is no demand for loans."
He has one panacea for all the problems facing India. "High growth forgives a lot of sins. If we get our act together, we can see growth in double digits within three years," he says. The sins include the non-performing assets of banks (default loans), stalled projects and under-investment in crucial sectors.
The stars, he stresses, are well aligned for a good growth. The situation is almost as good as the time when he took over as the chief economic advisor (CEA) to the central government in 2002, he says.
"In fact, internally the situation is a lot better now but the external situation is bad. In 2002, the world economy was also doing well. I think we should march ahead when the world is sleeping. Currently, the world is in slumber."
And the march can happen only if the government doesn't develop cold feet after what has been its biggest measure so far, he warns. "There should be no letting up now. There should be a strict enforcement of the law against the corrupt, the loopholes in our tax laws have to be plugged, and there has to be an increase in spending on roads, electricity, water supply, planned urbanisation, etc."
Lahiri will talk about economics at length, but not venture into politics. Doesn't he - one of India's first professional psephologists - miss analysing politics or the political benefits or drawbacks of the latest move?
"Psephology is dangerous business. Look at what happened in the US," he guffaws, referring to media predictions about a Hillary Clinton victory. "I am glad that I, like Sunil Gavaskar, retired before everybody started asking me to go," he says, and laughs some more.
But, unlike the Americans, he got some predictions right during his time - such as the general election results of 1977 and 1980. Now he looks up data of poll surveys the way a retired chartered accountant goes through balance sheets - just for fun.
One thing that has continued is his love for economics. Lahiri was in Class IX at Hindu School in Calcutta when he decided to become an economist. "It was in the 60s, when Germany and Japan were the wonder boys. I didn't know anything about economics but I wanted to know the magic of economics. Later, as I learnt more and more, I realised that there was no magic. Just hard work," he adds dryly.
There is some hard work that is still left. He has a wad of Rs 500 notes at his home which he is yet to exchange or deposit. "I am an eternal optimist. I hope things will fall in place very soon," he asserts.
He - and a whole lot of others.
tetevitae
1970s: Lahiri graduates from Presidency College, Calcutta, and joins Delhi School of Economics for his postgraduation as well as doctorate
1978-88: Is a visiting faculty at the Indian Statistical Institute, Delhi; at the University of Georgetown, US; and is Leverhulme Visiting Fellow at the University of Birmingham, UK
Though his Twitter handle says “psephology as hobby”, he, along with Prannoy Roy, pioneers opinion and exit polls in India. Predicts outcome of the 1977 and 1980 elections accurately
1987-96: Works at the International Monetary Fund on Eastern Europe and countries of the former Soviet Union
1998 and 2002: Under his directorship, the National Institute of Public Finance and Policy carries out a series of state-level fiscal studies. Is key player in the move to sales tax reform and introduction of VAT at the state level
2002-07: Is chief economic adviser of the ministry of finance, government of India Thereafter, has been executive director of Asian Development Bank, Manila, and is currently chairman of Bandhan Bank and the high-level committee on tax laws
