Chief Economic Adviser Krishnamurthy Subramaniam invokes the concept of ‘Dharma’, urges socially optimal behavior
Indicating that the actions of some stakeholders are affecting the intended outcomes of the Insolvency and Bankruptcy Code (IBC), Chief Economic Adviser Krishnamurthy Subramaniam on Friday asked Indian industry to stop being “practical” and try to be “practical”. called for the concept of ‘religion’. Ideal’, instead.
The IBC regime, he said, helped India emerge from a ‘feudal system’, where a corporate debtor felt it was his ‘divine right’ to retain control, and shifted the focus to a ‘creditor in control’ regime .
Citing ancient literature from India, including the Bhagavad Gita, Mr Subramaniam said that problems arise when there is a gap between socially optimal behavior and conduct that is individually optimal for an economic agent.
“I think, in the case of IBC, you can clearly see that there are certain actions that each stakeholder can do, which would be optimal for the whole IBC system as a whole; clearly what each entity is doing. That’s basically the personal optimum for them. And this wedge is really leading to the preservation of this Nash equilibrium, where we’re stuck where we are,” he said.
“When you think about the concept of religion from an economic point of view, you begin to realize why it was such a powerful idea … (it means) a much greater goal … and in a sense, If you think from an economist’s point of view, religion is really this concept of aspiration for the socially optimal,” he said at the IBC’s CII meeting on Five Years, calling on industry captains to “me, me and myself”. Urged to think beyond perspective.
Noting that some listeners might think of him as a ‘young boy doing impractical things’, the CEA said he ‘absolutely disliked’ the word ‘pragmatic’ as it often becomes an excuse to compromise .
“On the contrary, the word that really inspires me a lot is ‘ideal.’ So why don’t we really think about ditching that word ‘practical,’ and stick to the word ‘ideal’ instead. And I think just one simple thing you can do is make a better world for us,” he said, emphasizing that the IBC’s detailed suggestions to fix ‘until this broader perspective of religion’ are not taken into account and acted upon, may not be sufficient.
“I am sure there will be progress going forward. And next time we’re really talking, maybe on the 10th anniversary of IBC, we can all congratulate ourselves on the amazing progress we’ve made over the next five years,” he concluded.
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