The Economic Times , 18 November 2006
A 5% per annum rate of increase in real national income seems entirely feasible. The great untapped resource of technical and scientific knowledge available to India for the taking is the economic equivalent of the untapped continent available to the US 150 years ago.
The basic question is of the social and economic arrangements that will best promote the conversion of these potentialities into realities. The basic requisites are a steady and moderately expansionary monetary framework, greatly widened opportunities for education and training, improved facilities for transportation and communication, and an environment that gives maximum scope to the initiative and energy of farmers, businessmen, and traders." Milton Friedman advised in 1955.
The people of India, he said, were her greatest resource and if the government managed to provide them a decent education, the people would do the rest. "A memorandum to the Government of India, 1955," his comment on India's fateful Second Five Year Plan is still very much worth reading. He came back in 1963 and with the help of the Forum for Free Enterprise lectured around the country; unfortunately, no one listened.
He was the intellectual pillar of the Chicago School of thought that demonstrated through original theoretical and empirical studies the wonders of the free market. His monetary analysis overturned the conventional wisdom about the Great Depression:
It was caused not by laissez faire but by the blunders of the US central bank. It won him a Nobel Prize in 1976, though Indian students are still largely ignorant of the monetarist understanding of the Great Depression.
Building on professor Friedman's approach to economic and public policy analysis, Chicago has won the highest number of Nobel Prizes in economics. Friedman was the most original and outstanding economist of the 20th century. I consider FA Hayek more of a political philosopher.
What moved him and everyone who came in contact with him was the abiding faith in the power and the dignity of the individual and his untiring defence of individual liberty. His Capitalism and Freedom and Free to Choose have had profound impact on the course of our history.
Last time my wife Mana and I met Friedman was in June at the Atlas Foundation's anniversary dinner in San Francisco. I told him about the Plan panel's recommendation of education vouchers to improve access and quality of education in India. I still see the wry smile on his face alluding to the irony, may be remembering his first encounter in 1955. That smile captured the history of India and the world from the supremacy of the state to the primacy of the individual. He made it happen. Thank you.
The author is president Centre for Civil Society. He can be contacted at email@example.com