The government of India has named Cornell economist Kaushik Basu as its new chief economic adviser in the Ministry of Finance.

Basu, the C. Marks Professor of International Studies and the Donald C. Opatrny '74 Chair of the Department of Economics, hopes to use policy to improve the living standards of the some 200 million people living in poverty in India, while also steering one of the fastest growing economies in the world -- India's gross domestic product grew at an average rate of 9 percent annually from fiscal years 2003 to 2008 and clocked a 6.7 percent growth rate during fiscal year 2009, in spite of the current global recession.

The chief economic adviser post, once held by the current prime minister of India, Manmohan Singh, has usually gone to career bureaucrats, Basu said. "This is the first time that it is being offered to someone outside of government; it is a sign of India's growing self-confidence," he added.

Basu may begin his new position as early as mid-December and will be on leave from Cornell for two years while serving India's government.

"I am thinking of this as an interlude in my otherwise purely academic career," he said.

His theoretical background stems from "mainstream economics," which advocates for government interventions as needed, combined with "an intelligent free market," he said. "The mainstream very often gets associated with the very conservative policy thought that the government should shrink and vanish and leave it all to the market, but that's a misunderstanding of the economic theory of the mainstream," he said. "There's a lot the state needs to do."

Basu believes that both academic expertise and common sense are necessary for crafting policy. Though he has no government experience, during his first year in office he hopes to draw on the "huge amount of expertise already in the Indian government" and numerous international connections, he said.

Basu will have to hit the ground running, as his first duties will include assembling India's annual economic survey by February and helping with India's annual budget, which goes into effect April 1.

To address India's widespread poverty, Basu said the government must invest in free health care, basic education and financial support in the form of direct subsidies for the poorest people or such initiatives as employment programs and welfare support for the unemployed.

India's controversial national ID card system, which uses biological markers and other indicators, can help tackle corruption, he said, by identifying every Indian. "Whatever its cons -- and there are some -- it allows you to direct money to the poor, with less pilferage, because you know who the poor are," he said.

Basu also will help guide India's unprecedented economic growth, largely spurred by a robust services sector, including software, finance, communications and intellectual resources. Such Indian corporations as Tata, Infosys and Reliance have handled globalization with surprising sophistication, he noted.

Initially, Basu believes that India's growth can be increased even further simply "through the reorganization of economic governance and cutting down bureaucratic barriers to doing business."

While India and the United States have maintained a long-standing, mutually beneficial relationship, "India's and China's economic relationship is growing by leaps and bounds," which will create new challenges for India, he said.

Basu received his Ph.D. in 1976 from the London School of Economics, where his adviser was Nobel Prize-winning Indian economist Amartya Sen. He served as an economics professor at the Delhi School of Economics from 1985 to 1994, when he joined Cornell. In 2008 he was awarded one of the highest civilian awards, the Padma Bhushan, by the president of India, Pratibha Devisingh Patil.