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Since 1989 I have been working as Economic Adviser to the Finance Minister in the Government of India. Before that I was an adviser in the Planning Commission.

I was initially a professional working on the outside before I joined the government as an adviser. In India, we have very good experience of inter-linkages between research and policy planning in the Planning Commission, as we have in the Ministry of Finance. In fact, during the reforms period since 1991, we have been able to work closely with the development researchers in the institutions. The Ministry of Finance provides some of them with research grants from the endowments fund and have been able to utilise the major part of their research, particularly for reforms of foreign investment and the external sector.

One of the best examples was compatibility of the capital account. Both the International Monetary Fund and the World Bank, as well as bilateral donors, wanted compatibility of the capital account at the fastest possible speed, but our researchers outside the government and also we inside the government, wanted a cautious approach. In fact, initially we liberalised on the non-debt creating finance inflows. We do not have attendant obligations for debt-servicing. Then we liberalised the commercial bonds of longer maturity, so that it did not have an immediate impact on our balance of payments, either in the short or the medium term. Only now are we liberalising the short-term debt or other debt of short maturities. Our case study has now been hailed both by the World Bank and the International Monetary Fund as one of the good approaches for moving towards capital account compatibility, particularly in the context of East Asian financial crisis.

In terms of improving research and policy linkages, we need greater mobility of people between government and private research institutions. In India, the researchers from private research institutes can come and join the government for a short or medium length period. If they want to remain with the government they can do so. However, we do not have this mobility in the other direction. This means that once we take up permanent positions in the government, we do not have that mobility to work outside and in a way, we become really quite bonded as researchers in the government. I think that the government could introduce that kind of mobility, for instance in giving sabbatical leave to governmental researchers to work elsewhere. We have also noticed that the researchers outside are basically interested in theoretical work, in econometrics, mathematics, modern statistics and so on. Sometimes they forget the realities and socio-political constraints under which we in the government work. There needs to be a synergy between both the government and researchers.

Another kind of experience has been useful, particularly in India, and this is the setting up working groups and expert bodies where we inform professionals and experts in their field who do give their advice to government. Sometimes not all of their advice may be taken, but in most of the cases we have found that those kinds of inter-linkages between private researchers and government researchers or advisers are particularly useful for our policy planning.

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