Shunned by Indian planners and economists for his radical views on India’s development trajectory, Shenoy found a home among the small and closely knit free-market advocacy group in India and the vigorous transnational network of neoliberal intellectuals active mostly in the West.

Bellikoth Raghunath Shenoy, the monetary economist turned public intellectual in the decades of 1950s-60s, faced marginalization in his life and a prophetic revival in the afterlife. Shunned by Indian planners and economists for his radical views on India’s development trajectory, Shenoy found a home among the small and closely knit free-market advocacy group in India and the vigorous transnational network of neoliberal intellectuals active mostly in the West. The recent revival of interest in Shenoy has undoubtedly been enabled by India’s post-liberalization moment which seemingly saw economic growth enabled by policies advocated by Shenoy years earlier. Mostly espoused by Indian neoliberals, this revival undoubtedly has a vindictive streak tinged with a sense of loss of wasted decades when Shenoy’s policy prescriptions remained marginalized.    

Born in the town of Bellikoth, Shenoy turned to the Gandhian non-cooperation movement in his early youth days. During his jail stint, he met nationalist and Hindu revivalist leader Madan Mohan Malaviya and went on to join the Banaras Hindu University for higher education. Historian Aditya Balasubramanian points out Shenoy’s neoliberal tendency was shaped at BHU only as he studied for an MA degree under Professor Pran Nath. Professor Nath held a Ph.D. from Vienna where Austrian economics ruled the roost. Shenoy specialized in monetary economics as he proceeded to the LSE in late 1930. At LSE, he studied mostly under Philip Barrett Whale and Theodore Gregory and graduated with an MSc thesis on central banking in India. It was at LSE that Shenoy came in contact with Friedrich Hayek who was there to deliver lectures in the wake of the Great Depression of 1929. In the great economic debate on tackling the economic slump, Hayek’s influence on Shenoy was visible in two papers that he published in the prestigious Quarterly Journal of Economics. The influence translated into Shenoy’s advocacy of price theory and market efficiency.     

After his stint at LSE from where he would fail to get a Ph.D. degree, historian Aditya Balasubramanian argues that Shenoy went on to have a peripatetic career as an economist. His employers would include Rajaram College in Kolhapur; the Ceylon University College and Board of Commissioners of Ceylon Currency in Colombo; SLD Arts College in Ahmedabad; the Reserve Bank of India in Bombay; the India Mission of the IMF in Washington. In his later role as a Cold War public intellectual, he would join the prestigious neoliberal Mont Pelerin Society; contribute to the Times of India, the Wall Street Journal, Swarajya; dispense advice to Swatantra Party on economic matters; run his own think-tank for a while. His published writings would advance a distinctly neoliberal position which saw him ignored at home but gained him recognition in the western neoliberal circle.      

The turning point probably came with his Note of Dissent to the Second Five-Year Plan Frame which he submitted as part of the Panel of Economists working on the Frame. Shenoy took a dislike to the proposed financing measures to build the industrial capacity in India. His Note argued that a high degree of deficit financing would lead to uncontrolled inflation and it would be difficult for a democratic government to usurp a large part of domestic savings. The Note happened to receive the attention of economist Peter Bauer who inducted Shenoy into the 1959 annual meeting of the MPS at Oxford. Shenoy’s charged speech on the danger of Indian planning turning into a communist specter entrenched his position firmly in the neoliberal circles. Shenoy’s cautionary vision of Indian planning, though, did not have much traction in his time as most anti-communist and statist economists and policy-makers in the US saw Indian planning as a model case of state-led development under a democratic framework. To these influential statist opinion-makers, the Indian story seemed to follow the path of American capitalism which was nurtured by the largesse of state intervention. In any case, Shenoy’s strident posturing brought him membership to MPS; effusive praise from the likes of Milton Friedman, Friedrich Hayek, Peter Bauer, Henry Hazlitt; earned him a column space in The Wall Street Journal; visiting professorship to LSE and fellowship to the Hoover Institute. In the last few years of his life, Shenoy ran the think-tank called Economics Research Centre.               

Apart from the fiscal profligacy-induced horror of inflation, Shenoy’s other pet peeve was the strident opposition to foreign aid to India which he saw as a wasteful distortion allowing Indian policymakers to get away with faulty economic policy. He had an unswerving commitment to a balanced budget, rupee devaluation and export promotion, direct cash transfer, privatization of public enterprises, lower taxation rates, abolition of gold control measures, and a general approach of minimal state intervention. As a public intellectual, Shenoy’s trope to make the case for free-market involved contrasting the postwar economic experience of the West and East Germany under two different economic systems. Shenoy’s influence on Indian economic policy, though, remained minimal in his own lifetime. Interestingly, in a book review article, economist Jagdish Bhagwati dismissed Shenoy’s ‘strong ideology of the Friedmannite variety’ and saw his opposition to foreign aid as an ‘unfortunate tendency’. Further, Bhagwati argued that Shenoy’s ‘overall view of Indian economic policies is flawed seriously by his antipathy to planning per se.’ Published in 1969, Bhagwati’s remarks make for an interesting read today in the context of his consistent free-market advocacy and appreciation of Milton Friedman. Based on declassified records, though, we now know Shenoy’s views on the wasteful impact of foreign aid had some hearing in the US. A Wall Street Journal article of September 18, 1959, discussing Shenoy’s Mont Pelerin speech was taken up by the National Security Council’s Planning Board for consideration on September 30. The WSJ article was circulated to the Planning Board members. It was of no use however as by 1961 the Eisenhower administration came up with an emergency aid package to India and the MPS lost the public battle in the US. Peter Bauer’s tribute to Shenoy recalled the prevailing hostility to Shenoy’s ideas in the Delhi School of Economics and the National Council of Applied Economic Research.

However, after his death, Shenoy’s daughter, a formidable economist in her own right, received a moving letter from Henry Hazlitt. Peter Bauer, of course, was and remained an admirer. Jagdish Bhagwati has tuned out to be a forceful proponent of India’s integration with the global economy. Aditya Balasubramanian, the leftist historian of Indian neoliberalism, has published a comprehensive assessment of Shenoy’s career. Lastly, the contemporary admirers of B R Shenoy could be found in India’s small but influential neoliberal circle.