Mumbai School of Economics and Public Policy

The Mumbai School of Economics and Public Policy (MSEPP) in the University of Mumbai is the 21st-century version of the famous Bombay School of Economics of the last century. This autonomous department of the university, which turned 100 on 1 August 2021, is one of the oldest economics departments in the country and boasts of a rich legacy of scholars who shaped economic thinking and policymaking in the country.

The foundation of the Bombay School of Economics was laid by the famous four—C N Vakil, M L Dantwala, D T Lakdawala, and P R Brahmananda. These four pillars of the Bombay School were institutions in themselves. Each contributed greatly to different areas of economics and were quite different personalities. Vakil was the founder director of the department. He was like a “brown sahib” (Cambridge educated) who wore a three-piece suit, complete with a gold chain watch hanging from his waistcoat. He wrote on varied subjects, including on money and prices, and did many collaborative works, the most famous being his work with Brahmananda on the wage goods model. This was an indigenous model that looked straight into the development problem, namely wages and employment in an unskilled and shortage-driven economy. It was untouched by the neoclassical tenet of “efficiency as a total virtue” but was cast in a classical mould. It was informed perhaps by what the Marxian-leaning Kanta Ranadive was to teach us much later, namely that implicit in the choice of technique was the logic of distribution and hence were roots of poverty as well as inequality. The centrality of Delhi/Calcutta axis apart, it is strange that the model lost out to the Mahalanobis model. It is strange because the only way one could rationalise the alternate path towards the same goals was to believe in maximising growth through enhanced export-led strategy and then using the tax dividend through a tax transfer mechanism for appropriate social policy. The Mahalanobis model was used in an environment of almost closed economy with inward-looking policies when everyone else in Asia was looking outwards (this is somewhat akin to the argument that Ajit Karnik made in his article, “Look Back in Anguish,” Journal of Indian School of Political Economy, 1997). The wage goods model survives in discussions even now in quaint circles, certainly away from the mainstream, especially when contemplating on “what could have been.” Vakil’s work on the “falling rupee” forced the British government to undertake measures against inflation in the World War II period. C D Deshmukh has gone on record to say that it was this work that resulted in the public outcry against inflation and corrective measures were taken.