Born and brought up in Patna, Bihar, Prachi Mishra, Professor of Economics and Director and Head of the Isaac Center for Public Policy at Ashoka University, completed her PhD in Economics from Columbia University. She began her professional journey in Washington DC at the International Monetary Fund. Despite the global exposure, her drive to come back and contribute to India led her to work with the Indian Prime Minister’s Economic Advisory Council, the Ministry of Finance, and the Reserve Bank of India (RBI). She later broadened her experience in the private sector at Goldman Sachs.
One of her most rewarding projects during this time was, developing the intellectual framework and drafting the report of the Fiscal Responsibility and Budget Management (FRBM) Committee in 2017. This project addressed the changing global and domestic economic landscapes and the need to revise India’s fiscal rules to enhance transparency, flexibility, and credibility.
Historically, India had experienced periods of macroeconomic instability, often caused by unsustainable fiscal policies, such as in the 1980s and during the 1991 Balance of Payments crisis. The government had introduced the FRBM Law in 2003, but by 2017, the economic landscape had shifted. India was becoming more financially connected to the global economy, and new challenges like secular stagnation, uncertainties in the Eurozone, significant debt burdens, and changing fiscal rules worldwide made it clear that India needed to update its approach. Many countries had already adopted fiscal rules with built-in flexibility, transparency, and independent oversight. The time was opportune for a review of India’s fiscal framework.
“I enjoyed both the intellectual challenge of shaping a new fiscal framework for India and the process itself, which involved consultations with stakeholders and lively debates within the committee”, Prof. Prachi shared.
Another key initiative she enjoyed was collaborating with the Human Resource Department at the RBI to establish the Strategic Research Unit. This unit, staffed with both internal personnel and directly recruited PhD economists, was tasked with delivering high-quality research and analysis to address the operational challenges across various departments of the Bank. Human resource management in a large emerging economy like India is indeed significantly more complex compared to countries with more developed institutional frameworks and greater human capital.
At Ashoka, she is working on several research projects. One of them focuses on reducing high public debt and rising debt servicing costs, which are key concerns for policymakers in India and globally. In India, nearly 40% of government revenue goes towards debt servicing, compared to just 10% on average for emerging markets. This high spending on interest payments limits funds available for economic support during crises like COVID-19, as well as for crucial social investments in health and education, where India still spends significantly less than its peers.
In today’s interconnected global economy, decisions made in advanced economies often have significant effects on emerging markets. One of Prof. Prachi’s research areas focuses on how these policy shifts impact financial markets in emerging countries, a topic she has studied for nearly a decade. A key moment in this work occurred on May 22, 2013, when Fed Chairman Ben Bernanke hinted at “tapering” (or the reversal of quantitative easing policies by a central bank to stimulate economic growth). Emerging markets reacted sharply, and as part of India’s G20 delegation to Moscow, the collective concern was raised that while aggressive monetary easing could support recovery in the US, Europe, and Japan by increasing demand for exports, it also triggered “spillover” effects for emerging markets—widening interest rate differentials, increasing capital flows, appreciating currencies, and driving up stock and asset prices. This experience has been central to shaping her research agenda on spillovers.
Having worked in both academic and financial sectors, when asked about the key challenges of each and how to bridge the gap between academic research and practical policy making?
She states, “For academia, especially in India, the big challenge is to attract world class faculty. The intellectual ecosystem is dominated by the West, and all emerging economies face binding resource constraints.
Despite all challenges, engaging with Indian students and faculty is rewarding in several ways. Research and teaching in a large emerging market is way more interesting and challenging too, compared to the West.
The financial industry is very fast paced. The challenges there are different – limited bandwidth of clients, little time for academic rigour.
Engagement at all levels is crucial to bridge the gap between academic research, financial markets, and policy making. Academics need to boost research on policy relevant questions and proactively present the results to policymakers, enabling them to draw conclusions from evidence-based research.”
For Prof. Prachi, research and academia have always been her passion. When asked about her long term goals and how Ashoka University can contribute to her professional growth, she mentions, “ I aim to work with colleagues to provide innovative perspectives on key questions global economies face – high public debt, high inflation, monetary transmission, political economy issues, etc.”
Ashoka University and the newly established Isaac Center for Public Policy (ICPP) provide a unique chance to blend policy with academics, teaching, research, and engage with a large dynamic community of young students”
As a final piece of advice for those beginning their journey in economic research or policy, Prof. Prachi emphasises the importance of maintaining a critical mindset: as taught by her PhD thesis advisor “Summers’ Law (named after Larry Summers) states, ‘It takes just as much time to write an unimportant paper as an important one.’ Read, recognize contributions, but don’t be awed by them, question everything.” This guiding principle, drawn from her own extensive career, encourages aspiring economists to approach their work with a curious mind.
Interview conducted by Kangna Verma and Yukti Arora, Academic Communications, RDO, Ashoka University
