New Delhi: Perhaps taking a cue from his teacher Raghuram G. Rajan, Krishnamurthy Subramanian, India's chief economic adviser, on Friday unveiled his version of the so-called dosanomics that the former Reserve Bank of India (RBI) governor had used to explain the relationship between inflation and interest rates.
Coined Thalinomics in the Economic Survey 2019-20 presented on Friday by the former associate professor at the Indian School of Business (ISB), the treatise aims to explain the economics of a plate of food in India. Subramanian’s smorgasbord of work across banking, corporate governance and economic policy, has perhaps prepared him well to have a dekko at India’s kitchens across the vast sub-continent.
“Though economics affects the common lives of people in tangible ways, this fact often remains unnoticed. What better way to make economics relate to the common person than something that s(he) encounters every day – a plate of food? Enter “Thalinomics: The economics of a plate of food in India” – an attempt to quantify what a common person pays for a Thali across India,” the Economic Survey 2019-20 wrote.
Interestingly, Rajan was Subramanian’s PhD programme advisor at the Chicago Booth School of Business in the US. Fondly remembering Rajan, Subramanian had earlier written, “A teacher is someone who teaches not only through his ideas but also through examples. I have been privileged to learn from his ideas and by observing him even before he was a celebrity.”
“On Teacher’s Day, Indians and young Indians in particular would do well to seek inspiration from former Reserve Bank of India (RBI) governor—he demitted his office on Sunday—and my teacher Raghuram Rajan. Rajan inspires as a teacher for both his professional and personal qualities,” he had said.
In what may help evolve India’s very own Big Mac index, an informal measureof the purchasing power parity (PPP) of currencies of different countries through a price comparison of McDonald's hamburger in stated geographies, Thalinomics is well placed to catch the fancy of commentators.
“Has a Thali become more or less affordable? Has inflation in the price of a Thali increased or decreased? Is the inflation the same for a vegetarian Thali as for a non-vegetarian one? Is the inflation in the price of a Thali different across different states and regions in India? Which components account for the changes in the price of a Thali – the cereals, vegetables, pulses or the cost of fuel required for its preparation?” the Survey added.
The Parliament’s Budget Session started on Friday amid campaigning for Delhi assembly elections, due on 8 February, nationwide protests against the Citizenship Act, and a slowing Indian economy. India’s economy grew 4.5% in the second quarter, its slowest pace since March 2013, due to a sharp contraction in manufacturing output.
The Economic Survey 2019-20, presented today, has projected India’s economy to grow at 6-6.5% in the next fiscal starting April 1. The Survey is a report the government presents on the state of the economy in the past one year, the key challenges it anticipates, and their possible solutions.
“Questions that can engage a dinner-table conversation in Lutyens Delhi or in a road-side Dhaba in the hinterland can now be answered and positions taken on either side of a “healthy” debate. Using the dietary guidelines for Indians (NIN, 2011), the price of Thalis are constructed. Price data from the Consumer Price Index for Industrial Workers for around 80 centres in 25 States/UTs from April 2006 to October 2019 is used. Both across India and the four regions – North, South, East and West – it is found that the absolute prices of a vegetarian Thali have decreased significantly since 2015-16 though the price has increased in 2019,” the government’s report card prepared by the CEA, affectionately called ‘Subbu" by his former ISB colleagues, said while quoting the Rig Veda, the first Veda.
“As a result, an average household of five individuals that eats two vegetarian Thalis a day gained around 10887 on average per year while a non-vegetarian household gained 11787, on average, per year. Using the annual earnings of an average industrial worker, it is found that affordability of vegetarian Thalis improved 29 per cent from 2006-07 to 2019-20 while that for non-vegetarian Thalis improved by 18 per cent,” the former board member of Bandhan Bank, the National Institute of Bank Management, and the RBI Academy argued in the Survey.
In what may also add the secret sauce to this thali or plate would be a quick comparison between India’ consumer price index (CPI) and wholesale price index (WPI) data.
Mint columnist Himanshu, associate professor at Jawaharlal Nehru University recentrly wrote, “The consumer price index (CPI) rose 7.35% in December, hitting the highest since 2014 and crossing the threshold limit set by the Reserve Bank of India. Price pressures were high in both rural and urban areas, driven by food prices. Food price inflation surged to 14%, led by vegetables (60%), pulses (15%), meat and fish (9.6%), and eggs (8.8%). A similar picture emerged from the wholesale price index (WPI) data. While overall inflation, at 2.6%, is not very high, inflation in food articles at 13.2% is close to the CPI rate. The culprit again is food inflation, driven by vegetables (70%), cereals (7.7%), pulses (13.1%), and egg, meat and fish (6.2%).”
