Home / Opinion / Online-views /  India will miss Raghuram Rajan as teacher more than as banker

The collective lament around the decision of Reserve Bank of India (RBI) governor Raghuram Rajan to go back to his academic roots after his term is over in September masks a far bigger tragedy, the loss of Rajan the teacher to India. Indeed, India’s loss could have been a gain, a gain so huge that it could have had cultural ripples benefitting the economy in multiple ways.

The lump of regret over Rajan’s exit actually lies at the feet of corporate India itself since it provided no academic platform for him to lay his expertise over. Given his desire to go back to academics, he could have seamlessly shifted to a university setting in India had the country’s business billionaires shared their resources in creating a Cambridge or a Chicago Booth right here. Across the seas the Chinese are investing unfettered in research hives insulated from their manufacturing penchant. But when we have had such a well fomented wham bam between myopic rulers and corporate India, all shooting arrows at low hanging votes and financial favours, it is too much to expect them to think of creating lasting institutions.

As RBI governor, Rajan may have stayed on for another term of two years. Unlike the US, where Federal Reserve chiefs have had long stints (Alan Greenspan was Fed chief for nearly 19 years, while Ben Bernanke headed it for eight years), in India central bank chiefs get a maximum of five years. It was therefore obvious that in five years, if not three, Rajan would go back to his first love—academics. The real loss is that there is no appropriate Indian academic institution that he could have even considered for pursuing that calling.

The University of Chicago where he came from and where he will go back come September is of course among the finest in the world. It is ranked the 10th best college in the world in the Times Higher Education’s World University Rankings for 2015-2016. As a current student there, you are likely to be taught by people like economists Robert E. Lucas, James J. Heckman, Roger Myerson, Lars Peter Hansen, Eugene Fama and physicist James Cronin, each of them a Nobel prize winner.

Yet it was set up in 1890, 33 years after the University of Calcutta which was once recognized among the best in Asia. Today, that crumbling edifice offers little to a teacher like Rajan.

More’s the pity. Rajan’s area of expertise—banking, corporate finance, and economic development, especially the role finance plays in it—is solely needed in India, which is on the cusp of a banking revolution with new models like payment banks, digital money looming large against the backdrop of the growing move towards a cashless economy.

For all the effects of liberalization on various aspects of India’s society, higher education has seen few gains. University rankings, research papers, international honours—not one parameter suggests we are world class. Rajan’s presence might have encouraged some more of the outstanding Indian teachers at colleges abroad to look at joining academics in India.

In the present set of UGC-dominated compensation structures, it isn’t possible to attract the best teachers. The government-appointed T.S.R. Subramanian committee report on education has recommended financial autonomy and a differential salary structure for the best educational institutions in India. The committee suggests that those who have received the highest accreditation must have the freedom to fix salaries without government interference. Currently, teachers in Indian universities earn much less than their US counterparts, who make on an average $100,087 as tenured professors according to a 2015 report by the College and University Professional Association for Human Resources. What’s more, the best known among them make millions. Men like David N. Silvers, clinical professor of dermatology and pathology laboratory at Columbia University, and Zev Rosenwaks, professor of obstetrics and gynecology at Cornell University, are said to earn millions, according to a blog post on bestschools.org.

No Indian professor gets or can get anything remotely close to those figures, given the strained financial resources of most of our universities and colleges. The gap can only be made up through corporate grants. That’s been the pattern at the top American colleges, setting the basis for the world’s best higher education system, which boasts 14 of the world’s top 20 universities, as per the Times Higher Education’s World University Rankings for 2015-2016.

Business tycoons have a rich tradition of contributing to the advancement of education in the US. Indeed, John Davison Rockefeller who set up Standard Oil and was the richest man in the world in his time gave a grant of $80 million to the University of Chicago, which went some way in building the world class institution it is today. Another American tycoon Andrew Carnegie gave $4 million between 1900 and 1902 to start the Carnegie Institute of Technology (CIT) at Pittsburgh. CIT, now known as Carnegie Mellon University after it merged with the Mellon Institute of Industrial Research, is now among the premier universities for scientific studies in the world.

Nor is such largesse a thing of the past. Just last year, Harvard alumnus John A. Paulson, founder and president of Paulson & Co., made the largest gift in the university’s history, a $400 million endowment to support the School of Engineering and Applied Sciences (SEAS), whose alumni include former Microsoft CEO Steve Ballmer, NASA astronaut Stephanie Wilson and Zappos CEO Tony Hsieh.

Sadly, India’s business billionaires haven’t been similarly generous, choosing to build greenfield monuments to themselves or their family members instead of supporting existing and pedigreed universities. If their interest in men like Rajan is to go beyond mere lip service, they need to look at emulating the Rockefellers and Carnegies and help build institutions that can be a magnet for teachers like Rajan.

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