How a 1950s and 60s collaboration between Yale and the University of Bombay opened a new path for research on development in India
When the University of Bombay asked American economists to help establish a program in monetary and international economics during the 1950s and 1960s, their collaboration brought new research methods and perspectives on economic growth.
By Adena Spingarn
After India won independence from the British in 1947, the government developed a series of Five-Year Plans that emphasized heavy industrialization and embraced state intervention in the economy in order to encourage growth. While many Indian economists supported this approach, which was spearheaded by P. C. Mahalanobis and rooted in the Soviet model of centralized economic planning, administrators at the University of Bombay (now the University of Mumbai) wanted to foster training and research in a more diverse set of strategies for growth. In addition to advocating greater investment in agriculture and consumer goods and not just heavy industry, Bombay economists also wanted to give greater attention to the role of monetary policy in economic growth; this could not only counter potential pitfalls of state intervention, but it could also draw support from Americans engaged in a Cold War cultural battle against Soviet influence on Indian hearts and minds.
“Bombay was a counterweight to India’s grand optimism about national planning,” said Niranjan Rajadhyaksha, an Indian economist and financial journalist who was a graduate student at the Mumbai School of Economics and Public Policy in the 1980s and later earned his PhD there. “Bombay people were aware that development plans have to embrace the monetary side as well as physical planning.”
In 1956, University of Bombay Vice Chancellor John Matthai approached the Ford Foundation about bringing an American monetary economist to Bombay. Matthai explained that despite funding from the Reserve Bank of India (RBI), efforts to create a program in Monetary and International Economics at Bombay had failed because the country lacked a supply of scholars trained in the field. Perhaps an American could visit for a few years to help establish the program.
Later that year, Ford offered to fund a program that would bring an American monetary economist to Bombay to teach, collaborate on research, and help train a Bombay economist to take on this position. This program, which would also send postgraduates from Bombay to study at an American institution for a year, would be overseen by an American university.
After discussions about the potential collaboration with economics professors at universities including Yale, Stanford, Wisconsin, Chicago, and Michigan, Alvin Hansen, a prominent monetary economist popularly known as the “the American Keynes,” agreed to become the program’s first visiting professor during the 1957-58 academic year. Although recently retired from Harvard, Hansen was, according to economist Kermit Gordon, “still vigorous enough to want to go on teaching and writing.”
Thanks largely to Yale economics professor and future EGC founder Lloyd Reynolds, who had worked as director of Ford’s economics program while on leave for the 1955-56 academic year, Yale took charge of the program. Reynolds saw the collaboration not only as a means of helping strengthen Bombay’s training and research in monetary economics, but also of opening up a pathway for research on India by American economists interested in the growth of developing nations. “I am personally very enthusiastic about this whole idea and only wish that I could claim enough money-’expertese’ [sic] to head off for Bombay myself,” he wrote to a Ford Foundation representative.
Alvin Hansen, who became the program’s first visiting professor during the 1957-58 academic year at the University of Bombay.
Americans in Bombay
Alvin Hansen and his wife arrived in Bombay in August 1957 and soon settled into a hotel that had an air-conditioned dining room and was a short walk from the university. Ford also provided Hansen with the use of an automobile, a Hindustan Landmaster that would be passed on to each visiting American professor and transferred to the university at the end of the collaboration.
“We were so excited when Professor Hansen came,” said S. A. Dave, a Bombay economics graduate student at the time who became the first chair of the Securities and Exchange Board of India. “All of the students had read his book on Keynes.”
In addition to teaching two lectures and one seminar per week, a load similar to his work at Harvard, Hansen also gave a series of public lectures so well-attended that the audience overflowed from the lecture hall to the surrounding gardens. “There was a public address system set up so we could hear him,” recalled Indian-born British politician and economist Meghnad Desai in his 2020 memoir Rebellious Lord.
High student interest in the program – especially in learning the new mathematical methods – persuaded Ford to increase the budget to include a junior professor as well. For the 1957-1958 academic year, recently appointed Yale assistant professor Richard Porter joined his senior colleague, Berkeley economist Howard Ellis, in Bombay. Subsequent visitors included Charles Whittlesey, Henry Bruton (who presented his research on “Constraints on Growth in India” at a 1963 EGC Workshop on Economic Growth), Alan Heston, Lester Chandler, Donald Hester, and future EGC director Hugh Patrick.
The American visitors co-taught lecture courses with Bombay faculty and worked closely with Bombay students in tutorials and research seminars, bringing new perspectives on economic growth.
Although the program was officially intended to support research and training in monetary economics, in practice it supported a broader set of new perspectives and research strategies. Dave remembers the weekly seminars where Howard Ellis encouraged students to think more about agriculture. Porter introduced economics students to econometrics, a mathematically rigorous approach starting to be used by some younger economists in the United States but not yet popular in India. Bombay students were so enthusiastic about learning statistical methods that Yale prioritized it when selecting junior professors.
S. A. Dave, who graduated from the Bombay economics program in 1962, speaks at an event in Mumbai.
Bombay graduates at Yale
Ford’s program not only brought American professors to Bombay but also sent Bombay graduates Kersi Doodha, M. V. Khambadkone, M. S. Joshi, and G. L. Karkal to spend a postdoctoral year at Yale (and in Ranganath Bharadwaj’s case, Harvard) for further training and research collaboration in monetary economics. Coinciding with the birth of the EGC, these visits were among the earliest visits to Yale by Indian economists. The postdocs’ contributions to EGC seminars and workshops helped establish the Center as a place where international collaborations flourished, and after their return to India they all went on to successful careers in monetary economics.
Transition to Indian Leadership
In Bombay, the American visitors worked alongside economists C. N. Vakil, who retired in 1958, and P. R. Brahmananda, who would go on to lead the department for many years. In 1956, Vakil and Brahmananda had advanced the wage-goods thesis proposing that poverty and unemployment were caused by an undersupply of consumer goods such as food and clothing. This theory was contrary to the dominant economic thinking in India at the time, which favored a growth strategy of heavy investment in the production of capital goods such as factory machinery.
After Vakil’s retirement, Brahmananda was appointed Reader in Monetary Economics, a position roughly equivalent to an American junior professor. As the Yale-Bombay collaboration drew to a close, Brahmananda took increasing responsibility for teaching monetary economics, and with the 1963 departure of Donald Hester, the final visiting professor from the US, he was promoted to Professor. Brahmananda went on to lead the department for a decade and to become a key voice in Indian debates about inflation control during the 1970s and economic liberalization during the 1990s.
Evaluating the program’s effectiveness in 1968, the Ford Foundation noted that Bombay Economics Department head D. T. Lakdawala “believes that the program has produced some outstanding economists and useful research.” Moreover, the advanced, four-course study of monetary and international economics developed in collaboration with the American visitors was still part of the economics curriculum–and still popular with students.
Although the university was unable to maintain the funding level of Ford’s grant after it concluded, the Reserve Bank of India (RBI) soon stepped in to continue supporting research and teaching in monetary economics, and the number of PhDs in monetary economics in the department continued to increase. Today, monetary economics remains a core piece of the master’s curriculum at the Mumbai School of Economics and Public Policy, and RBI continues to fund the RBI Chair in Monetary Economics.
The connection between Yale economics and RBI has also continued. Former RBI Deputy Governor Rakesh Mohan served as Professor in the Practice of International Economics and Finance in the Yale School of Management and as Senior Fellow in the Jackson Institute for Global Affairs from 2010 to 2012. In 2019, the Yale Graduate School Alumni Association awarded the Wilbur Lucius Cross Medal for outstanding achievements and contribution to society to Urjit R. Patel (Ph.D. ‘90), who served as RBI Governor from 2016 to 2018 and was recently appointed Executive Director at the International Monetary Fund by the Indian Government. More recently, from 2023 to 2024, former RBI Governor Duvvuri Subbarao (2008-2013) served as Senior Fellow in the Jackson Institute for Global Affairs.
The Yale-Bombay collaboration remains a historical turning point in how Indian economists have thought about development. “Before this collaboration, the greatest influence on Indian thinking was by British economists,” said Dilip Nachane, who completed his MA and PhD in economics at Bombay in the decade following the collaboration and went on to a prominent career in academia and policy. “But after this collaboration, American economists—and economists all over the world—started exercising an influence. The collaboration opened their minds towards newer ideas which were coming from the West."