Chapter 29: Economics

Introduction

An old joke says that you can obtain five different opinions on an issue from four economists. The popular perception behind the joke is that economists never agree. Implicit in the perception is that economics is largely a matter if opinion and that economists unlike physical and biological scientists do not share a common set of beliefs. Economics, like all other social sciences, indeed differs fundamentally from the physical and biological sciences. The physical and biological sciences have gradually developed from facts and experimental evidences to theory, and from theory to further experiment and in turn, more general theories. Economics, on the other hand have developed through ideological conflicts and discussions. Some of the most important advances in economics have resulted from political arguments about social policy. Ideological systems, each with its supporting facts, assumptions, and body of theory, have created much that is valuable in economics.

Today economics has a body of theory which has gained almost general acceptance. It is true that still there are many differences of opinion among economists, but differences are not about the fundamental principles. They disagree on how to apply the principles, on what policies should be adopted in particular circumstances, and on judgements about the importance of various factors in particular situations. Economics has the distinction of being the only social science discipline for which a Noble Prize (Noble Memorial Prize in Economic Sciences) has been instituted in 1969 by the Central Bank of Sweden.

What are the contents of economics, which, as an academic discipline, is little more than 200 years old? Decades of controversies about the nature and appropriate boundaries of the discipline led the noted US economist Jacob Viner (1892-1979) to observe that “economics is what economists do”. There is, therefore, no better way than to look at the classification scheme used to classify articles published in economic journals world over in the Journal of Economic Literature. The scheme devised by the American Economic Association has 19 broad categories (See Annexure 1) and each category sub-divided into sub-categories, and in turn each sub-category further divided into a large number of topics.

Educational Opportunities

Economics as a subject is being taught in India almost since the inception of higher education. The subject is offered both at the first degree level as one of the combinations and at the Master’s degree level in almost all the universities which have Arts or Social Science Faculties. At the first degree level some universities offer honours courses leading to the award of B.A (Hons) or B.Sc (Hons). A small number of universities had introduced some of the specialised areas of economics as one of the combinations at the first degree level. At the Master’s degree level (M.A), the subject is offered by university departments or schools, schools of correspondence education or distance learning as well as by a large number of colleges affiliated to them. It is only in three universities, viz., Anna University, Birla Institute of Technology and Science and Chhatrapati Sahu Ji Maharaj University that the nomenclature of the award is M.Sc (Economics). Annexure 2 gives a state-wise illustrative list of universities.

There are two deemed universities in economics, viz., Gokhale Institute of Politics and Economics (Pune-411004), and Indira Gandhi Institute of Development Research (Mumbai-400065). Founded in 1930, Gokhale Institute is one of the oldest teaching and research institutions in economics in India. Till 1985, the Institute functioned as the Department of Economics of the Pune University. In 1993, it was accorded the status of a Deemed University. It offers only M.A and Ph.D courses. The Indira Gandhi Institute of Development Research (IGIDR) was established in 1987 by the Reserve Bank of India for the study of national and global issues relating to economics development. In 1995, it was declared Deemed University by the UGC. IGIDR offers M.Phil (Two years) and Ph.D (Four years) programmes in Development Studies covering economics, energy and environmental policy issues. Because of the inter-disciplinary nature of the programmes, the courses are open, besides holders of M.A (Economics) degree, to holders of M.B.A (having studied economics, engineering, and physical sciences at the Bachelor’s degree level), M.Sc in physical sciences, environmental science, M.Tech., and B.Tech., degrees.

Besides these two institutions, the universities which are widely perceived as centres of excellence, include Anna University (Madras School of Economics, Chennai-600025) Aligarh Muslim University, Andhra University, University of Calcutta, University of Delhi (Delhi School of Economics), University of Hyderabad, Indian Statistical Institute, Jadavpur University, Jawaharlal Nehru University, University of Lucknow, University of Madras, Madurai Kamaraj University, University of Mumbai, Punjab University, Pune University. The Indian Statistical Institute has pioneered to study of econometrics.

Economics is also a significant component in Business Management courses offered by business schools and management institutions.

Specialised Courses

Of late, there has been a spurt of Master’s degree courses in several branches of economics. There are as many as 14 branches in which courses are offered. They include such courses as Banking Economics, Environmental Economics, Home Economics, Indian Economy, Industrial Economics, which are offered only by one university each. Besides, the Departments of Economics of some universities have also introduced courses in International Business and Financial Control and Analysis. Annexure 3 gives a list of universities offering specialised courses both at the Master’s degree and Postgraduate diploma levels. A brief account of some of the important ones follows       

Business Economics: Business Economics deals with the analysis of the behaviour of firms in markets and industries and with determination of costs and prices. As such, it differs from the ways in which economics is most commonly used in business, which are concerned with descriptions and forecasts of behaviour in a macroeconomic environment. However, the university courses in the subject cover many other areas that are taught in the M.A (Economics) courses. Courses in business economics are at present offered by 13 universities leading to Master of Business Economics (M.B.E) or M.A (Business Economics) degrees.

Development Economics: Development economics is basically growth theory applied to the economic problems of developing countries. In a sense, it started with Adam Smith’s The Wealth of Nations (1776) which was concerned with an analysis of the causes of economic growth. But it boomed as a subject after the emergence of newly independent countries in Asia and Africa after the Second World War. Inspired by the economic management of the 1930s in the erstwhile Soviet Union, development economists began devising growth policies closely linked to central planning for less developed countries.

In India, the planning process which dominated the national economic scene since the establishment of the Planning Commission and State Planning Boards in 1950s, led to the establishment of a large number of institutions for development studies, some at the initiative of many distinguished Indian economists, such as Prof. V.K.R.V.Rao. Prof. K.N.Raj, Dr. Malcolm Adiseshiah. Some of them have been doing pioneering research on various socio-economic issues. Some also offer M.Phil courses in economics. Annexure 5 gives a list of some development institutes. Although development economics is included in the syllabuses of many universities, the subject is offered at the Master’s degree level by six universities only.

Rural Economics and Rural Development: Closely linked to the planning process is the socio-economic development of rural areas. Like development institutes, institutes of rural development were also established in many States. At the national level, the National institute of Rural Development (Hyderabad-500003) was set up by the Ministry of Rural Development. These developments prompted several universities to introduce Master’s degree programmes in rural economy and rural development. More than 12 universities now offer the course. The subject in variant forms is also offered by a number of universities as one of the combinations at the Bachelor degree level. Besides, postgraduate diploma courses are available in some universities.

Econometrics: Econometrics is one of the significant specialised branches of economics which combines economic theory expressed in mathematical form with statistical methods. It was inseparable from mathematics and statistics as an academic discipline until the foundation of the Econometric Society in 1931. It is also often referred to as mathematical or quantitative economics. Using models, econometricians seek to measure and correlate the relationships among various economic variables. They are constructed of equations that describe relationships among such variables as prices, wages, output, employment and capital investment in different sectors of the economy.

Econometrics as a subject is included in the Master’s degree syllabuses of many universities. It is only recently that it is offered as a specialised course at the Master’s degree level. At present the subject is available only in four universities, vis., University of Madras, Pondicherry University, Rani Durgavati Vishwavidyalaya, Sri Venkateshwara University and the Indian Statistical Institute. The MS course in Quantitative Economics offered by the Indian Statistical Institute (ISI) has international reputation. Postgraduate diploma courses are also available in three universities.

Research Studies: M.Phil and Ph.D courses are available in a large number of universities which offer Master’s degree programme. Mention has already been made about the programmes of IGIDR (Mumbai) and the Gokhale Institute. Indian Statistical Institute offers Junior Research Fellowships to candidates strong in Mathematical Economics for undertaking doctoral research. Indian Council of Social Science Research offers doctoral fellowships for doing research in social science including economics. (See Annexure 2 of Chapter 12 – Scholarships, Fellowships and Educational loans). Many of the development institutes listed in Annexure 5 are recognised by universities as research study centres for M.Phil and Ph.D programmes. Well-known among them are the Centre for Development Studies, Centre of Economic and Social Studies, Centre for Studies in Social Sciences, Institute for Social and Economic Change, and Institute of Economic Growth.

Distance Learning: As many as 20 universities have introduced M.A course in Economics through distance learning mode. A list of these universities is given in Annexure 4.

Career Opportunities

Among all the branches of social sciences, it is economics which offers a wide variety of career options. This is because, “economy” is the key to the survival of any system of government. The political agenda of all nations, therefore, mainly comprise economic issues. As has been observed by the economics Noble Laureate Paul Samuelson in his famous textbook Economics “….. the nineteenth century was the time of the clergy and that the first of the twentieth century government was dominated by lawyers. Today economists often are in the middle of political analysis, debate and execution”. Economists have in recent years become advisers of presidents and prime ministers of many nations. For example, in the USA during the presidency of Jimmy Carter, as many as five professional economists held cabinet rank.

The economists moved to the centre stage of national and international economic scene in the wake of the post-world was reconstruction activities. Teaching and research continue to offer satisfying career opportunities. Perhaps, of all the social science faculties in universities, the single largest number of teachers is in the economics departments. With the establishment of a large number of management institutions (including university departments of management studies) the demand for teachers of economics is increasing. Teaching positions in universities need clearing the UGC – National Education Test (NET). Opportunities for a teaching career are not limited to Indian universities. Many distinguished teachers of economics of Indian Universities are to be found in a large number of foreign universities particularly in the USA.

As regards research career, apart from the development institutes referred to earlier, there are several institutions, such as the National Council of Applied Economic Research (New Delhi-110002), and Institute of Applied Manpower Research (New Delhi-110002), which offer research positions. The Department of Economic Analysis and Policy of the Reserve Bank of India also recruits research economists through its Recruitment Board. When organisations like the World Bank and Organisation for European Economic Commission (now OECD), were established the economists also started playing important roles in the process of social and economic reconstruction of the newly independent countries in Asia and Africa supported by the World Bank and other Development Banks. The list of contributors to the annual World Development Report of the World Bank is a veritable “Who’s Who” of internationally acclaimed economists which includes a great number of Indian economists also.

In India, the high tide of the role of economists in government came with the establishment of the Planning Commission and the introduction of the planning process. The Union Public Service Commission conducts an annual competitive examination to recruit economists for the Indian Economic Service. Now it is only in the governments that economists are employed. Economists occupy vantage positions in all types of banks (including Reserve Bank of India), insurance companies, and financial institution. The economic liberalisation has also opened up more avenues for economists in business and industry.

With the proliferation of economic and business journals and magazines and newspapers, economic journalism has emerged as a potential area of career opportunity. A degree in economics followed by a degree in journalism and mass communication would open up such opportunities not only in the print media but also in television.

And finally, the ultimate destination of well-qualified economists could be the multi-lateral development banks and aid agencies.