Sukhamoy Chakravarty: The Economist Who Advised Three Prime Ministers

Sukhamoy Chakravarty was an Indian economist. He lived from 26 July 1934 to 22 August 1990. He was born in Mymensingh, which is now in Bangladesh. He died aged 56.

He is remembered for three things:

• He helped plan India’s Five-Year Plans, working on theory and on practice.
• He chaired the RBI committee that reviewed the monetary system from 1982 to 1985.
• He chaired the Council of Economic Advisers to three Prime Ministers.

Why do people link him with Mahalanobis?

The ISI note calls the two men the leading intellectual figures of Indian planning. Both shaped plans. They did it in different ways, and card 9 explains how.

Chakravarty studied economics at Presidency College, Calcutta. Amartya Sen was a batchmate there. He later took his MA at Calcutta University.

Even as a student he read widely. His interests ran to literature, philosophy, history and mathematics.

What did his short stint at the ISI give him?

The Indian Statistical Institute put him in touch with P.C. Mahalanobis. That contact helped start his career. Jan Tinbergen was also visiting the Institute at the time.

Tinbergen was impressed. He offered Chakravarty a fellowship for doctoral study in the Netherlands.

Tinbergen was a Nobel laureate economist. He supervised Chakravarty’s doctorate at Erasmus University, Rotterdam. The thesis was on the theory of planning.

How fast did he finish?

He completed the doctoral work in less than a year. After that he spent two years at the Massachusetts Institute of Technology. He taught and did research there.

His first major book grew out of this work. It is called The Logic of Investment Planning. His early research was on planning theory and on optimal savings.

Why does the ISI note stress his maths?

The note calls him a mathematical economist. His planning work was technical. It used models to ask how much a country should save and invest.

On 23 April 1961, P.N. Rosenstein-Rodan wrote a letter to Prime Minister Jawaharlal Nehru. Nehru had asked for the best Indian economists abroad. Chakravarty was the first name on the list.

At that time he was an assistant professor at MIT. The letter was about the Planning Commission, not about an MIT job. A.K. Sen, Jagdish Bhagwati and K.N. Raj were the next names.

What did he do on return?

He taught at Presidency College, Calcutta, until 1963. Then he took the Sir Shankarlal Professorship in Mathematical Economics at the Delhi School of Economics. It became his longest professional home.

The Delhi School was lively in the 1960s. Jagdish Bhagwati, A.L. Nagar and Amartya Sen joined its faculty around the same time. Its seminars ran jointly with the Planning Unit of the ISI. Visiting economists from British and American universities joined in too.

When did he join the Planning Commission?

He became a member in 1971, at an unusually young age. The Azim Premji note says “the early seventies”. The RIS booklet says he served as a member in the 1970s.

The ISI note says he spent over 20 years at the centre of Indian planning. He was either a Commission member or one of its chief advisers.

Did he stop teaching?

No. The Azim Premji note says the Delhi School stayed his first love. He kept teaching there during his Planning Commission years.

In December 1982, RBI Governor Manmohan Singh appointed the committee. Its job was to review the working of the monetary system. Chakravarty was the chair.

Who were the other members?

• M.P. Chitale
• R.K. Hazari
• F.A. Mehta
• C. Rangarajan

The members were chosen as individual experts. C. Rangarajan later became RBI Governor. That is a separate fact from this committee.

What was its brief?

• Review the structure of the monetary system in light of planned development.
• Study how monetary policy and public debt management affect each other.
• Judge the monetary and credit instruments by their effect on the economy.
• Look at links between banks, non-bank lenders and the unorganised sector.

How long did it take?

The first deadline was 30 April 1984. The work grew large. The deadline moved back by a year, and the report came in 1985. It made more than 200 recommendations and observations.

An RBI history paper calls the report a case of “cautious revisionism”. It proposed some financial liberalisation. Banks would face “controlled” price competition. Deposit and lending rates would be deregulated step by step. Financial markets would grow beyond the basic idea of money targeting.

What is money targeting?

The central bank picks a growth path for the money supply. The RBI used broad money, called M3, as its intermediate target. An RBI report says that from the mid-1980s until 1997-98, India’s framework was broadly this kind of monetary targeting. It followed the lines the committee recommended.

Why does the money market matter here?

The RBI says the Chakravarty Committee of 1985 first made comprehensive recommendations for developing the Indian money market. The Vaghul Committee, which the RBI set up later, looked at that market in detail.

Chakravarty became Chairman of the Council of Economic Advisers to the Prime Minister. He served Indira Gandhi, Rajiv Gandhi and V.P. Singh. The Journal of Asian Studies obituary lists all three names.

What else did he head?

• He chaired the Indian Council of Social Science Research.
• He was President of the Indian Economic Association.
• He was a Fellow, and later Vice-President and Honorary President, of the International Economic Association.
• He was elected a fellow of the World Council of the Econometric Society.
• He was Founder Vice-Chairman of RIS from 1983 to 1990.

What visiting posts did he hold?

In 1976 he was the first Tinbergen Visiting Professor at Erasmus University. In 1984 he was Jawaharlal Nehru Visiting Professor at Cambridge. He also visited MIT and Johns Hopkins.

How is he different from Mahalanobis?

Both are linked with the Five-Year Plans. Mahalanobis’s two-sector model was used in the Second Plan. Chakravarty came to the Planning Commission in 1971. Mahalanobis died in 1972.

NCERT’s Class XI textbook Indian Economic Development, in chapter 2, profiles Mahalanobis. Its source line cites Chakravarty’s own essay on him in the New Palgrave Dictionary of Economic Development.

The ISI note adds a difference. Chakravarty worked on theory, and also directly on carrying out the plans. The RIS booklet says his models showed limits in the Mahalanobis model.

Who chaired, and who was a member?

Chakravarty chaired the 1982 committee. C. Rangarajan was a member. A question naming the “Chakravarty Committee” is about the chair’s committee.

Which committee came next for the money market?

The Vaghul Committee is a separate RBI committee. It examined the money market later. Do not swap the two names.

Exam questions on this topic usually ask one of four things. Who appointed the committee, and when. Who chaired it. What it reviewed. Which three Prime Ministers he advised.

What is the quick memory chain?

• December 1982: appointed by RBI Governor Manmohan Singh.
• Chair: Sukhamoy Chakravarty.
• Subject: the monetary system.
• Report: 1985.
• Later job: Chairman, Council of Economic Advisers, under Indira Gandhi, Rajiv Gandhi and V.P. Singh.