How Economics textbooks of the world ignore Indian realities
We are super excited about our "Investing in India" series, where we explore what makes India tick beyond the usual financial analysis. We created this series to address a gap we saw in how global investors understand the Indian market.
In this episode, the hosts, Hansi and Bhuvan, spoke with economist Alex Thomas, a professor at Azim Premji University, who offers his insights on why economics education needs an Indian perspective.
This Episode: Rethinking Economics from an Indian Perspective
Professor Alex Thomas shares why he wrote an economics textbook specifically from an Indian perspective and challenges many assumptions that Western economic frameworks make when applied to India.
The Problem with Mainstream Economics Teaching
Alex explains why he took an unconventional approach to teaching economics:
"I am not a huge fan of textbooks because they generally are very restrictive. They're written in a way that don't push the reader to think. There's a certain dumbing down that happens. I wanted to write something that was addressed at students, but not in the conventional way of writing a textbook."
Why Different Economic Perspectives Matter
On the importance of presenting multiple economic theories rather than just mainstream views, he says:
"Because of the way economics has an importance in the current world, I don't think any other discipline is so close to policy making as economists are. Which also means that there's a lot more responsibility, which also means that the nuance and the limitations need to be stressed even more."
India's Unique Economic Context
Alex highlights how India's economy differs significantly from Western models:
"The mainstream from the West just looks at what is dominant today, which is marginalist economics, and not really other ideas that have been produced even in the West. But your question is more about the local Indian context itself. One is certainly, how do we understand the informal sector? Less than 10% of India may be in the formal sector."
Beyond GDP: How is India Really Doing?
When asked how well India is doing economically, Alex takes a nuanced view:
"If you look at how people are doing, I think there is a lot more that we can do. Whether it's about income inequality, wealth inequality, access to education, access to clean environment, access to health, access to decent housing... on all these counts, I think we have much to do."
The False Household Analogy
He says government spending shouldn't be compared to household budgets because:
"What mainstream economics tells us is that the government is like a household. A household should not borrow beyond its means. But the government is not a household by any stretch of imagination. It's absolutely okay for the Indian government to borrow, but how is it being used? One needs to be transparent about it."
Rethinking Our Economic Frameworks
Looking at about economic thinking, Alex notes:
"We need to recognize there are multiple paradigms of thought, especially within economics. To say that one is necessarily better is just a certain kind of presentism where we think what we know today is good, but I think we need to be critical of that."
The full episode explores many more topics including the role of local economies, the informal sector, environmental considerations in economic policy, and the legacy of Indian economic thinkers.
We hope you are enjoying our “Investing in India” series and would love to hear your thoughts and your suggestions. Feel free to drop us a comment anytime!
See you next time!
hii