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D U Sastry: An Empirical Economist

 D U Sastry: An Empirical Economist K V Ramaswamy

COMMENTARY

and capital intensity. This is essentially

D U Sastry: An Empirical Economist

the idea of instrumental variable in modern econometrics parlance. In the 1970s he worked more on corporate investment be-K V Ramaswamy haviour including inventory investment in

“How is your work? What are you

working on these days?….Con

sider using jumps in the data series to break the periods. How is your institute doing? How is your little daughter?” These were a few of D U Sastry’s concerns when I last spoke to him a few months ago, though the little daughter he was referring to was already in pre-university.

D U Sastry, an empirical economist with an abiding interest in industry studies, industrial economics and economic measurement issues, passed away on 5 September 2011. His concerns expressed over the telephone to one of his students, whom he jointly guided more than 20 years ago, reflects the essence of his personality. Serious and rigorous when discussing academic issues, at the same time a generous, encouraging and affectionate well-wisher of all who came into contact with him.

Davangere Umapathy Sastry (1930-2011), did his MA in economics from Mysore University in the early 1950s. He was taught by V L D’Souza, M H Gopal and A P Srinivasamurthy among others (see “V L D’Souza, M H Gopal and Their Environs” by P R Bramhananda, Indian Economic Journal, 42(1), 1994, for a nice narrative of economics education at Maharaja’s College, where Economics (Hons) and MA programmes were held).

In September 1956, he proceeded to Amherst College in Massachusetts, the United States, as the Harold Johnson Scholar to pursue graduate studies. Due to personal problems he had to return to India. But Amherst College allowed him to use the fellowship grant in India. He was Amherst Fellow at the Gokhale Institute of Politics and Economics in Pune during 1957-59. He was associated with D R Gad gil. At Gokhale he met among others K Krishnamurthy, macroeconomist, who later became his colleague at the Institute of Economic Growth (ieg) and their academic collaboration, was very productive resulting in co-authored books and papers. Later he worked as an assistant professor at the Indian Institute of Economics, Hyderabad (1959-61) and moved to Delhi to work at the IEG in March 1961. He stayed at IEG until retirement in 1990. At IEG he had a circle of economist colleagues that included V K R V Rao, P N Dhar, K Krishnamurthy, and Ashish Bose among others. He had a long association with K L Krishna at Delhi School of Economics with whom he shared his strong interest in industrial economics and quantitative approach and jointly guided many PhD students. He was a visiting research fellow at the University of Pennsylvania during 1971-72 and was associated with Lawrence Klein. He attribu ted his inclination towards quantitative approach to the influence of L R Klein. He liked quantitative economics with an emphasis on careful measurement.

D U Sastry was the president of the Andhra Pradesh Economic Association and delivered the presidential address in 1987 at S K University in Anantapur. He made early empirical contributions in areas that have now become major areas of importance in empirical industrial economics and other areas of applied economics in India.

Sastry’s very early pieces of work appeared in Economic Weekly in the form of comments on two interesting topics

(1) “Economic Development and Income Distribution” (May 1962), (2) “The Optimum Firm and the Optimum Farm” (November 1962). Very early in his academic career he had developed an interest in industry specific studies as illustrated in his studies of the metallurgical industry (1961) and the sugar industry (1965). His work on the demand for energy, co-authored with P N Dhar in 1967 attempted to forecast the demand for energy in north-western India and was based on using observed input-out coefficients with the desired level of production in different sectors of the economy. He later examined inter-industry variations in manufacturing industry in a paper published in 1969 in EPW (co-authored with P N Dhar). This paper used industrial power consumption as an index of the relative degree of industrial development rather than using output or employment and argued that it reflects the degree of mechanisation collaboration with K Krishna murthy, using the accelerator model and emphasising the role of financial factors (Inventories in Indian Manufacturing (1970), Investment and Financing in the Corporate Sector in India (1975)).

Cotton Industry

In the late 1970s, he began his detailed study of the cotton mill industry in India that was completed in 1984 (The Cotton Mill Industry in India). The core chapter of this book was on capacity utilisation and an earlier version of this chapter had appeared in The Indian Economic Review in 1980. His work on capacity utilisation perhaps best illustrates his overall approach to empirical industrial economics. He presents an appraisal of six alternative measures of capacity utilisation including the well-known Wharton Index of Klein and Summers. The approach is that of first explaining the economic measure of capacity and then pointing out the limitations. Sastry’s work is an example of the importance of measurement issues in applied industrial economics. He was the first to respond to the issues of the single deflation method for the estimation of value added in the studies of total factor productivity (EPW, 14 January 1995). In that short note he made practical suggestions of how one could estimate the raw material price index for manufacturing industries. One needs to mention that when he wrote that note he had retired and settled down in Madanapalle in Chittoor district (Andhra Pradesh) and EPW was perhaps his only window to the economics journal papers available to him.

D U Sastry was meticulous in his research but he was much more careful when it came to drawing policy conclusions and perhaps never believed in overstepping the limits of one’s analysis. With his death the community of economics researchers in India has lost an important empirical economist, scholar and an excellent human being.

K V Ramaswamy (swamy@igidr.ac.in) is at the Indira Gandhi Institute of Development Research, Mumbai.

november 5, 2011 vol xlvI nos 44 & 45

EPW
Economic & Political Weekly

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