Reimagining India's Economic Future with Dr. Raghuram Rajan & Rohit Lamba

[Music] thank you radika for that uh you know Wonderful uh uh introdu introductory remarks uh thank you Rohit and thank you Ragu for joining us here uh I know you've had a very busy day uh radika told me that you've been on interviews from 7 in the morning so thank you very much at the end of a late day uh you are in a hall full of uh people who are eagerly looking forward to this wonderful conversation so I'll start with my first question I've gone through the book uh in great detail I think it's a fabulous book uh I said that in my post too the first question I have for you and either of you could take it on rohita Ragu which is uh in the introduction you mentioned that India needs an irreverent diverse and argument M ative society that will change the world is there any parallel country small or big in the last 100 years that has achieved growth with such culture markers let me take the first stab at that I think they have but over a much longer period uh I think if you look at the United States um you know one of the Hallmarks of the United States is constantly Reinventing itself true and um if you remember you know in the 50 late 50s and early 60s uh they felt they were falling behind the Soviet Union the Sputnik moment so so to speak in the um ' 80s it was Japan Japan we're falling behind Japan in the 2010s it was China we're falling behind China and every time it has caused them to re-examine what they're doing and I think I think they've always been a little underconfidence about their greater strength which is their inventiveness their ability to attract a wide variety of people The Immigrant population but that's not the only thing and the the extreme hard work that many in their country put in uh constantly challenging the status quo I think that is their true strength it it is the center of it it is the heart of capitalism and it has served them very well but they grew into this over a long period what we have is the opportunity to follow that but in a much shorter period and that requires an enormous amount of work that's the bad news the good news is there are models around of how to do it for example one of the countries that is doing it right now is China not about the old style manufacturing that growth but new style ideasled the amount they've invested in improving their universities including getting back their diaspora to man those universities over the last 20 years you can see the rate of the citations you know is just taking off they are create this new um designed uh this chip that they've produced right now is astonishing the us because they've sort of implemented things that they didn't think they could implement the advantage we have over China is we are argumentative we are still open to debate to challenge and if we can adopt some of what they're doing well with our framework I think we can do better we can be much more like America than China to my mind one of the biggest constraints on China today is they have the government for manufacturing L growth not the government for ideas L growth and that's where we have an advantage you want to add anything to that Roy yeah I think uh um you know Ragu said it said it all you know we had this uh graph that we eventually didn't put in the book that you know if you plot um democracy index on the y axis and kind of GDP growth uh on the x-axes you see that basically the UK and the US are these slow crawling Lines Moving from the from of the origin towards the Northeast right they they grow slowly and they give freedom to their people very slowly I think we forget that the right to vote for the entire population came to these countries very late very India was remarkable you know in that that it just with a stroke of pen it gave the universal adult franchise and never went back on it and we were why we were remarkable is we were a consistent but poor democracy um and I think one can argue without taking a very strong moral view about it was this you know was this good for growth couldn't we have done this manufacturing juggernaut with you know if we were not a democracy and so on and you know and we can try to evaluate that with an impartial lens however given where we are today and the kind of path at least we are proposing in this book um you know what Ragu is suggesting is that we view this kind of scrawling line of the US and the UK and much part of Western Europe that can be condensed in the same way that the that Eastern uh East Asia condensed state in the first stage of development in the 20th century right they condensed you you could have asked the East Asian countries you know do you really think you can you can become go from poor to middle- inome Country in one generation they did it right so this was they were an outlier in that sense what we are thinking what we are saying is that we can be an outlier in being a consistent democracy and yet growing uh and pulling ourselves into a middle- inome country uh while being irreverent while being argumentative and in fact using using these as our strengths rather than weaknesses thank you on that uh you make you make a case for English being an advantage for India however only 12 to 133% of Indians can read and write English uh is this enough the Chinese and the Japanese have been successful in manufacturing and to a degree in Manufacturing Services uh without actually having that English Advantage so why do you believe India has that Advantage well the Chinese are trying to learn English they um certainly have done a reasonable job at it because partly that allows their students now to go to the US and benefit from the highquality universities and take back ideas um I think you know certainly our students can do it and you know 13% are those who speak you know really good English there are a lot who understand English and who with a little bit of training and education can improve on it uh one of the uh I think very interesting challenges that the country like Japan has is how do you provide Consulting Services when you speak only Japanese you can't talk to the other side we can and and so our sense is this is a foundation on which we can build even when you look at AI 60 over 60% of the um matter on the Internet is in English and so if you're trying to train your AI there's much more available in English than any other language and that's a handicap that the Chinese have because Chinese based AI there's much less material to train uh stuff on so this is an advantage now you know we can keep debating on whether you know we obviously we should know our mother tongue obviously we should learn to read and write and be able to speak there but let's also recognize we have this other language which can be a window to the world and and therefore can be a way that we essentially communicate in a way that you know China can't Korea cannot Japan cannot and that gives us a comparative advantage so what are the areas where that will you know help us exactly and so um I think this is an advantage yes more people need to learn English the less our politicians insist that all the teaching be done in the vernacular language while their own kids go to English medium schools I the more it will benefit the broader population you can see that poor people are taking their children one of the um uh entrepreneurs we met who run schools says where do I find schools to buy from the schools which are in the vernacular medium because nobody's sending their kids to those schools so we buy those schools shift them to this this uh new method and then we have uh you know a readymade demand for it from all the you know medium middle class people who want high quality education for their kids I think both the current number and the aspiration is important you know we've gone from you know I promote this here you know we've gone from you know English was you know centrally important in him being able to create a call center revolution in India you know at the turn of the century uh two you know we have an anecdote in the book where Ragu is talking to one of his friends and and she's telling him that you know uh we are now going to uh do front office work of our Consulting and Fin fincial and and and management consulting work in India uh and why is that is because you know basically pandemic changed our Notions of what is back office what is front office in a very big way what can be done from a distance um and I think English plays a huge role uh in in in in in EN enabling that um and I think we shouldn't shy away from it you know one of the examples that I I found amazing is there's a very prominent uh uh delit scholar and lighter if you haven't come across him I highly recommend you to read him andan Prasad G and Chandra ban Prasad G often says that my two heroes are mcau and Adam Smith right you know he say stop giving me all this other Gan you know these are the people who really helped uh you know many dalit people uh you know pull out of uh uh you know in one generation so so there are plenty of examples like this and and we're not and you're absolutely right that you know we at 133% but the aspiration should be that we you know we basically most Indians are bilingual in some way or the other is to make this bilingualism more sophisticated yeah um in every example in every case in this book you stress on quality over quantity be it education be it health be governance every single thing but unfortunately India's always had a Fascination for quantity over quality so how do you think we should change this well we need we need both uh because we have 1.4 billion people as we keep reiterating so we need quantity but having 1.4 billion trained at a very low level is not going to cut it the world demands more and more quality as we go forward how are you going to beat AI how are you going to beat um you know a robot you beat it by having more capability that you add to the AI uh and you beat it by adding to the robot they they you know uh person plus machine should beat machine alone or person alone and for that need high quality people so really the question that we ask in this book is how do you um you know uh create quality at scale and there are a lot of examples of how how you can do that right say take Health Care you know uh right from the early days uh we had a report which um drove our ideas of healthcare that was the bur committee report and uh what that said is you should have three tiers and that's a splendid design because the lowest tier will do the basic triage see okay what are your problems I can't figure it out I send it up if I can figure it out deal with it so most of the problems are dealt at the lowest level next go to the higher level and next go to the highest level the tertiary care uh hospitals 75 years after Independence we haven't implemented this pre-independence report in terms of the quantities of Health Care that we need at each level but there are easy fixes a lot of people go to unqualified medical practitioners who are these unqualified Med medical practitioners basically was a compounder uh or was a nurse when the doctor was giving advice they learned on the job and now they have set up shops separately and they you know a lot of people trust them they go so can we improve the quality of this layer by giving them all a big basic ability to recognize here are 18 problems that you need to be able to fix ranging from you know a twisted uh you know uh leg uh U septic wound to you know basic uh you know cough cold and recognize when it's beyond the capacity and move it up if you can train a a lower level at this just imagine how the quality of healthcare would improve these don't need to be doctors you just need to and give them a certificate let them have be able to show the certificate but check that they know what is in that cert there are a whole bunch of examples in our book of of places doing this but each one is doing it independently can we do it in a much more systematized way so we improve the quality of healthcare at the bottom right similarly on education everybody wants to send the kids to St Columbus or to dpsr we we both H from DPS arur it's the better School uh but everybody wants to do that it's very hard to create I mean DPS has franchised all over the place but there's only one DPS arip puram uh that you know a St Columbus develops its capabilities over many years well we talk about this entrepreneur in the in the book orchids uh which uh which basically is trying to systemate I high quality education and what do they do they do you know 30 40,000 lesson plans for each subject there are so many lesson plans which contain a video a here's what you say after that here's the example you give here's the problems that you you you offer here's how you check it everything you have micromanaged every teachers there's very little discretion allowed now some teachers I for example couldn't teach under such a system because I want discretion I want to be able to you know rant and Rave as I want in class but it improves the average quality significantly and they keep tabs are the teachers delivering this the students have a you know very high quality education may not be 99th percentile but is 95th percentile with moderate quality teachers that's about how we can scale quality and we need to scale at that level if we are to touch the you know huge number of kids that we have coming out into into high school so those are examples which tell us there is a way but you have to be appropriately willing to ex uh to experiment it was natural uh at you know in the beginning that we would uh Bank on quantity because quality was very hard to achieve and I think one of the things as you right point out we are trying to emphasize in the book that we must be obsessed with quality I think we are at a stage where the returns to being obsessed with quality will be seen in quantity so there's actually very good research uh a recent research that has shown that for every one high skilled uh job that you create in India four to five other low skilled jobs are produced along with the value added created by the high skilled job you know one example we give of uh uh in the book of uh you know entrepreneurs uh trying to kind of commercialize the art of banari saris uh til uh you know which we found very fascinating because a couple of things they told us uh you know the the co-founders Aditi Chan and you know they they said it with a you know very strong belief they said you know whenever you think of Indian arts and handicrafts you think of um you know U making you know somehow there's an image of Charity or you want to do good for someone who's doing work with their hands and they said this is just the wrong attitude I want you to view my worker as an artist and for that we need to create a brand why is it that when you buy a bag of Louis Vuitton or something like that you think of a certain price in your head but not of Indian Brands and and and you know and this is obsession with quality can and the one of the main problems is quality control can you ensure a quality by signaling it through a brand and I think once you ensure quality quantity will come directly or in many other ways this is kind of one of the messages we're trying to give you make a very important point in the book saying we must move from being a society of authority to a society of justification where senior leaders whether it's government institutions need to justify the actions that they are taking and why they're doing so so what are the steps involved for anybody to move here whether it's a private institution which a number of people are here or government or countries how do we move to a society of justification well we have been moving steadily right we we we do question a little more but we also move backwards um you know every leader at at whatever level uh should be subject to questions why did you do this why did you do that on what basis did you do this um you know the UK has a fantastic system of questioner where the prime minister is uh is subject to questioning and and it's available for everybody to see and and the Prime Minister has to give answers in Parliament has to show up every question are in Parliament and sometimes has asked the most you know um sensitive or even rude questions and it's basically saying that you are a Citizen First and you're not an emperor and we have to adopt that to all our officials right from the district collector up to the prime minister minister or the president you are an official of the people and the people have the right to ask you questions and you know part of it I I thought a a great um move was the right to information bill which uh manmon Dr manmon sik brought in I think that we need to examine its working because it was sometimes used by activists to push a certain angle without necessarily subject rejecting the authorities to the right questioning and then over time the authorities developed certain sort of f fallback positions or this we cannot disclose for this reason that we cannot disclose for that reason and then I think the process has become weakened over time we need to look into our experience with that how do we subject government departments to constant questioning about this and that without it being a way of of uh you know um uh yeah vindictiveness especially from people who have uh who feel that they were mistreated by the organization and so on uh but I also I think we need to have these structures by which authorities I mean I remember as a finance ministry official going before the Parliamentary committee on finance and being subject to very rude questioning by people who were in the opposition including Mr peush Goyle uh and others uh now that parliamentary committee on finance is led by uh you know one of the government's own uh MPS which seems like a vitiation of the process that parliamentary committee should have been holding government to task so we have these traditions we shouldn't go back on these Traditions uh it was I tell you pretty tough being grilled by ravish Shankar Prasad and uh and push go but that was a right thing in a democracy when we you know the UPA was in government they were grilling it when the uh BJP is in government the uh opposition should be able to grill but you know that requires a strengthening of the tradition I think you're exactly right by the way that phrase is uh that we use is uh is uh was I think first used by Gotham baa prominent uh legal writer who I recommend all of you guys to read um uh the the justification I think I think um it's not an easy process as you're rightly pointing out as a poity and a society to transition to but I think there's some easy fixes one is is is just really ruthlessly emphasizing uh greater information and data I think you have to make data available to people right that's why justification starts why did you do a why did you do B um and I think um one of the things that um you know as a society for instance as a citizen I would like to know is you know if we just look at the pandemic that we live all of us live through right um you know why is is it that uh we did so we did so poorly in the second wave uh you know many countries have instituted uh an inquiry into what happened right so if we were well prepared for the first wave what happened what were the signals given out you know why was our preparation so poor at the same time uh we are celebrating rightfully uh the fact that we did we did a fairly pretty good job uh at vaccinating our people there are lots of people in India and the government did it on a war footing and and so I think the the the there needs to be some justification for uh things that went wrong and I think that can only happen when the correct data is made available to people um you know were our death counts correct for example if that data is not correctly made available to people it's very hard for the citizenry as a whole to ask for justification so to Institute a culture of justification information data dissemination and broadly uh Institution checks uh which right to information provided uh for the citizens to be able to ask questions is very important you know sometimes in the absence of data you even fool yourself right one of the reasons why we were underprepared for the second wave was because we miscounted deaths in the first wave we thought we had substantially fewer deaths than actually happened and we thought Indians are immune to covid right I mean there's a lot of talk that India is a special case we didn't correct for the fact we have a younger population and we were totally unprepared for the fact that when it hit us the second time it was virent but also you know the of course we uh didn't count the deaths presumably as as well in the second wave also most of the outside estimates are 10 times the estimates within India but we are in danger of fooling ourselves at second time which is if you look at the economic survey it says how wonderful our management was was covid of covid was why we had so few deaths in the second wave was because we had this total lockdown on uh you know uh which uh which happened soon after the pandemic hit so we are sort of making all sorts of judgments based on very poor data which eventually lead to bad policy down the line uh next time there's a pandemic we'll again have a total shutdown uh whether that was the right policy or not we'll never know um stepping back governments can no longer create jobs the way they did after World War II across the world so in a very fast changing world how do you see the role of any government what should government be focused on when things are changing almost you know almost every day well um I think almost surely a couple of roles of government are to prepare uh everyone to have a fair chance in the economy some people will have a fair chance because they already born into Rich families and uh they get all the Privileges that come with that some people need to be provided their a fair chance because they you know are born in underprivileged communities to underprivileged families and essentially need to be given a little bit of support early on so that they can uh get the same kinds of access that others have so that's one part create a Level Playing Field when they become adults it doesn't mean that constantly make sure everybody is the same which is socialism but at least ensure they get to that starting point pretty much as equal as possible otherwise you have get a very uh you you misuse your talent you also get a very frustrated population those who don't have a chance the other thing to do is to also provide a clear framework as to how you can succeed how you can create opportunities how you can make yourself uh wealthy in this environment um you know that that kind of framework I mean some of it is about protection of property rights you know Fair taxes transparent policies not everchanging uh you know uh tariffs and rules and regulations all that is is taken for granted there but that's an important important uh part of what uh what government has to do I think increasingly in the in the new uh era uh I think some uh support to the process of intellectual POC property creation is also sometimes warranted because sometimes uh that's an area with a huge amount of of spillovers where uh government money appropriately induced can be a good thing we were talking to a um you know Pharmaceuticals man manufacturer in India and we said why are you continuously manufacturing generics and this is one of the most uh uh you know YF Hamid uh of cipla one of the most uh Advanced and you know his contribution to the AIDS cocktail is is very well known but he said look I don't make the profits to make any kind of uh investment in in uh you know uh they have a term for that but but let say Innovative drugs he says in the US it's the government labs and the universities which create those Innovative drugs and then hand them over on a royalty basis to the pharmaceutical firms which then uh essentially sell them around the world exactly so how do you create that intellectual property maybe government has to play a role there also again not so much in an interventionist mode but in an enabling mode uh it's it's past time we had a national Research Foundation now how that National Research Foundation will give its grants is very important is going to be critical but need for that is is Paramount especially as we are entering uh you know competition on in areas like intellectual property I think there is a there is a it's an important question I think there is a Poverty of language uh in the way um government interacts with its citizens and citizens absorb what the government can do for them um in the sense that and you seeing this play out in in you know in the recent State elections and and now also it'll be interesting to see how it plays out in the general elections so you know the way we think about this is you know is that you know we have become a little bit of prisoners of our own instruments uh and the instruments have sadly boiled down to broadly two one is demand for greater reservations within government jobs and the second is some kind of uh demand in supply of freebies okay so so you cannot Li limit government to these two things in fact you shouldn't limit government to these things because going forward given the number of people who are joining the labor force in India the government cannot be the site of primary employment it has to be the private sector okay so when you ask what can the government do right it has to I mean either the impetus is going to come from Civil Society media you know intellectuals as to um kind of break this mold of poverty of language uh you know Pratap I don't know if he's here he had he had this amazing piece a few days ago where he said the opposition is literally has a problem of poverty of language that they are not being able to communicate uh you know what is an alternative Vision what is what do they have you know and he was basically arguing that the vote share is static in the recent elections and I think um the government should really actively being seen as a neighbor the greatest success story of government you know Ragu is being too humble to talk about it if we have it in the you know I forced him to put it in the book uh is is basically India stack story and you know and and and what we were able to build over it there the uh you know the government is an enabler it's not an inter and it's an amazing enaer and one of the things that they did when he was at the RBI and Nandan was spearheading the thing was to make this decision that that that the financial instruments that are built on top of it should not be limited to Banks today 95% of all transactions happening a non-bank i me it's it's you know so this is an amazing enabling framework totally publicly sponsored publicly owned so what we would like one of the things we suggest in in in the book is that we should be aspiring towards a similar Health stack Health stack right India the healthcare the bore committee stuff that we talked about you know is so fragmented and so it's such large uh um loss of information you know you buy a drug somewhere you meet a doctor somewhere else all this information is not connected it is not used in a Consolidated way this would be a great Initiative for a government to try to enable a health stack for example rather than trying to micromanage Healthcare which they may not be able to do which they aren't being able to do in a very effective way so in your book you have mentioned a list of Institutions like ID Foods tiffi moglix lenscart cipla oit schools the India stack uh Delhi schools the Mahala clinics irin High Hospital CMC VOR agnikul and Tes as examples of what can be done in India despite all that is there in India what in your opinion are characteristic something common between all these great examples that you picked out so I I think the first thing to uh you know sometimes the reaction to this book is oh you have all these how how will we possibly do it well I think these examples are ways of saying that people are already doing it except it's in different ways in smaller Pockets I mean take uh Delhi government's Malla Clinic uh and and their you know uh uh focus on schools I mean that's been a big change in Delhi why could Delhi do it and why aren't other people doing it I think part of what we ascribe this to is Delhi is a small place it's like a big Village I mean it's much bigger than a village but it's like a district in terms of size and so it speaks to the power of decentralization that when the power is decentralized then the local government feels that if we actually improve the schools we'll get the credit for it and it will happen within the term that we have in office because in three or four years we can you know really clean up the schools clean up the toilets repaint the schools make schools worth going to we can site moala clinics where they actually come and this can all be done it doesn't have to take 20 years it it can be done in a few years and we get credit for it that was a Innovation til which we talked about this this outfit which is trying to sell banarasi sis around the world one of the important things they discovered was why is it that the Weaver uh just uh doesn't make any change it's the same boring pattern year after year because they Bear all the risk if they can't sell that's three months of Labor which is gone down the drain if they make a mistake or again 3 months labor gone down the drain you need somebody to take the risk from that Weaver and that's where tilfi comes in we will take the risk you make this the sorry and we will buy it you know no questions asked that allows the Weaver now to take risk that does two things one they can do more exciting patterns new patterns and tilfi can provide them them the design to do that second the me to who used to imitate those patterns and provide do them on the machine much faster they're now out of business because you are changing the pattern every time you're making it much more attractive and you have the til brand on it saying this is really handwoven banari salary so you're making a huge difference I think each one of the entrepreneurs you look at they're picking a problem they're saying we can solve it it and here's the Innovative way now obviously we picked those who are on their way to success uh you know um some of these lenscraft is a 5,000 CR company so they have done a lot of uh um you know they've had success but what again and again we heard was people who are unwilling to stay with the status quo we can make a change and we have to figure out how to and and you know in true entrepreneural fashion they tried they they tried again and then they succeeded and you we we need to instill that and what is amazing is there are so many who are doing this in India now we have to enable them and that's why I think with a little bit of help especially in terms of the creation of intellectual property we need to make a jump from you know me to products to new products somebody like agnik cool sending off 20 30 ft Rockets into space is one example of creating a new product but we need far more of that and there I think sort of focusing on research and development and enabling industry government and uh and uh Academia ties will I think help tremendously making us an Innovative creative Nation um yeah I think I think uh I mean I would just classify them in two categories one is sort of um uh somewhat Mission driven so CMC Valor I mean you Amazing Story uh arind CL you know so so so I think there I would emphasize that people who are driven by whatever it is their passions are they're allowed to do what they want to do without much intervention I think this is super important there's a lot of talent there's a lot of people doing wanting to do things with a mission mode and are they allowed to do those things to the best of their potential and capabilities you know whether it's entrepreneurship or medicine and so on and second I think yeah we cannot emphasize this enough decentralized decentralized decentralized you know the the way we like to put it in the books is at the level of funds functions and functionaries we need to devolve much more uh I think I think you know especially when it comes to health and education you know you utar Pradesh is the fifth largest country in the world you know you cannot govern it from LNO you know no matter how talented the IAS officers no matter how talented the chief minister you know whatever you know you have to is it to make especially you know because one of the things we're really emphasizing in part two of the book is is to build the human capital of the country which is really the biggest asset but also something that is going to hold us back to to to achieving our potential to do that you must decentralize decentralize and there is this you know famous or inFAMOUS saying right you everybody in the in the system wants to decentralize up to their level you know it's like you know like Federalism is okay till the state capital and you know so so so I think this is something we we we we at least found in a lot of the stories um that you know which which we found attractive and interesting is to is to really follow this principle so my last question before I open my last question before I open it up to the audience is uh your 13th chapter the wrong way is actually a great chapter what they've done is they've taken all the typical reader comments classified that and said okay this is what you could ask as a reader this is our response to it much like okay you can be the critic and this is our view to it and know opening up debate uh what led you to actually write this chapter I've never seen it in any book that I've read so far it's a very unique approach but I thought it was a fantastic approach uh well we had a uh really great Exemplar for this this is not our own idea H it was Mahatma Gandhi in hin swaraj he basically asks the question as a eager reader or in his what did he call reader and editor reader and editor editor he was the editor and we we sort of took the uh idea from that actually we wanted to write the whole book that way and radika persuaded us very correctly that that was a silly idea but uh but we thought that you know at the end look we didn't want to make this a criticism of of you know where we are and where we going we wanted first so a plan has to be beaten by a plan you can't beat a plan with no plan I think that is exactly what Pratap said a few few days ago and we first wanted to lay out the plan what is the plan and then we said why is this better than the existing plan chapter 13 is the existing plan in some parts of it not the economic side but the social side and we said look what is the problem with this this and why is it going to be detrimental to India going forward and we were ask arguing with somebody who was firmly convinced that that was the right plan now obviously both words are from us both the uh both the critic both the questioner and the answer and uh we just wanted to anticipate some of what would be what would be argued but uh but I you know I I I think that putting it there was the right place because first we showed you what the vision was on this side and then said let's go up against the existing vision and say why there is a problem with with the existing Vision uh I don't know if it'll but you know hopefully we provided some data and some some arguments I I took macro in graduate school with Thomas Sergeant who won to win the Nobel Prize so Tom you always used to say uh you know don't tell me why a model is wrong it takes a model to beat a model you know so if you want to critique a model give me a model you know and I and I and I really respect that view and so uh Ragu and I debated as he said you know at the beginning you know I was super excited about writing hints swaj for the 21st century or something we even had the title like that and so we wanted the whole book to be like this you know conversation this argument um uh we had the material for it and I think uh you know as you rightly pointed out radika knocked some sense into her head the whole book cannot be like that it'll lose the kind of punch you know so and then so we wrote that and then we kind of debated should it be at the front or at the end of the book and and as Ragu said we decided eventually it should be end of the book because we first lay out our vision and uh and yeah a lot of people are actually liking that chapter so we we're quite happy with it uh yeah so thank you very much a big round of applause to both of them lots of hands up yes for okay okay uh for starters I like to humbly state that I'm from St Columbus school and and in class 11 I went to AR for 4 days and and I came back to my to Columbus I I you made the wrong uh decision but well what I would like to read a book which is authored by an economist and an economist so that we keep talking about GDP and valuations and growth mostly in financial terms how does the popular narrative and a whole thinking process also includes environmental GDP cultural GDP and social GDP so everything is actually interl and not working in silos I think till we don't have that till you don't allow economists to sit in on this platform I think all this growth is eventually self-defeating okay uh look I I I'll say that we we're not preventing anybody from sitting on this platform uh you know I don't see any barriers we are erecting but but you have a good point which is that we need to think about growth in a holistic fashion now obviously uh you know some of what we were trying to say was where do we generate the GDP from but you clearly make the point which is very important that for India the environment is hugely important and so there is a chapter in the book which talks about how we should change our views on on on the environment what you know right from the moment uh the time of Dr Manan Singh and even before we've been saying is you know we promise never to reach your per capita level of of emissions and that certainly is a fair thing you already are there you know we won't uh you know you shouldn't stop us but increasingly we should recognize that we are going to be facing the brunt of climate change in South Asia you know we are one of the most exposed areas in the world and so we cannot be a bystander on what is happening on the environment we should be leading the charge you know not just our own uh you know efforts but other countries we should be pushing them to make greater efforts because the fact is it will this is sort of the first place environmental change is going to create Havoc we've already seen it happening in Pakistan uh we see climate change already happening uh affecting agriculture in India it is going to get worse so uh we cannot you know uh take a back position uh back seat on this we have to be leading the charge and and I think that uh we have the intellectual capital in India to add support to many of the developing countries and emerging markets that are trying to make the case but again we should be pushing the developed world to move faster uh than uh you know constantly focusing on just the fairness fairness is important but if debate about fairness means no action then it is going to hurt us much more and so we need action also somebody that there yeah please go ahead uh good evening uh my name is balinder actually uh really um U really honored to be part of the event so sir actually the question is on the comment which you have just made on environment change and cl climate change so the entire world is seeing us uh by 2030 we are positioning ourselves to be the third largest economy in fact yesterday only I was reading a news I guess some of the some one of the cabinet ministers has said that by 2025 will be the third largest economy I don't know how but that was the comment made and the prime minister is having a vision of making India the developed World developed country by 2047 so what are the key short-term uh steps which the government as well as the private sector needs to take to make sure that at least you know climate change can reduce the impact or at least not make us in a position that that we it still becomes a vision or dream for us so what are the things which we should do as a as a private sector or as well as Government sector even anything so I I let Ru respond to that question he knows much more about climate change but just just on the point of uh uh size of our economy I you know just I think all of us here should should should have this mental exercise that every time we tell ourselves that we are the fifth largest economy or whatever we we we we do a number in our head about what our per capita GDP is and what is our ranking in terms of per capita GDP not that not that Euphoria and and and optimism is not important it is super important both for investor sentiments and for the morale of the country but you know what really matters is per capita GDP and we should really keep this in mind but I'll let you take the climate uh the other point is I I think sometimes politicians make these as aspirational statements if you pass them there's absolutely no chance we'll hit a fight trillion economy by the end of 2025 that's 2 years from now and we are at this point you know three and a half give or take uh depending on where the exchange rate is 3 and a half trillion that means we want to increase uh do the math right by about 30 uh you know 20 25% over 2 years 12 1 half% GDP growth come on uh you know smell the coffee it's uh it's simply not possible from where we are will it be possible maybe but you know the politicians also should be careful about making these statements we constantly saying we're going to be this and we're going to be that focus on the homework we need to do okay last point on on climate change I think one of the big concerns is you know talk all you want about mitigation we are going to blow through 2% maybe even 3% uh by sometime this Century 3 % additional warming since pre-industrial times the kind of calamities that might happen in this country as a result we don't know but we should be prepared for it it can be pretty disastrous and so the first thing we need to think about is also adaptation what do we need to change in our processes so that we become better adapted right you know we just saw floods in Chennai again I mean Chennai is is like like concrete paved over a lot so that we can't absorb the moisture that is coming and so what is you know once in a century uh downpour is going to become once every 3 years downpour uh how do we adapt to that uh farming you know uh Punjab is blessed uh with both rainfed as well as river water how do we make best use of it is rice farming still the best use we need to move away from rice farming what is a plan to do that you know uh we need to put that in place I mean it'll also help the stubble that creates the the smog in Delhi but going to better crops is going to help nutrition is going to help uh conservation of water uh we can't be a water short country and exporting rice uh doesn't make any sense so these are the things we can do to adapt we we can adapt agriculture uh we can can go to more uh resistant uh you know drought resistant or um you know water resistant crops but this requires planning on a big scale and and we need to do it sooner rather than later because it is going to hit us much more yeah uh Professor I'm n Chandra and uh both of you have been talking about the change and uh uh India has a huge base of Youth and massive Workforce in rural India we are seeing some changes and that is uh in most of the elections are contested with loads of freees by all the political organizations now do you see this as um a system of uh you know breaking the backbone of the youth or the workforce or is it uh there's something progressiveness in this well I I think targeted transfers can be a a good thing if it helps the poorest invest more in nutrition in schooling in health care Etc right uh they can be a good thing but Mass transfers uh without targeting uh is you know can be sheer populism and that soort of undermines your ability to invest uh on the things that people need really need better schools Better Health Care uh you know uh better roads Bridges security and those kinds of things so I mean one of the upsides to the direct benefit transfer is it limits leakage one of the downsides to D direct benefit transfers is it's made it much more efficient to give these transfers and to put your photo on the transfer to say this is my transfer so everybody thinks they're getting it directly from that particular chief minister or prime minister this is this is a direct gift and that increases the popularity of that particular politician and so you you emphasize that much more so we have to be careful about it um you know what's the right way can we ban can we Define and ban freebies I think it's very hard um you know as we joke you know uh my uh giveaway is essential for people's development your giveaway is a freebie uh that's how politicians divine define freebies and so it's going to be very hard what I think we can do is try and build build more awareness in people that you know they need to spend more time thinking about the totality of a of a you know promises that are made in elections maybe we need an independent body like in there are in many countries to evaluate the promise to see how much it'll break the budget uh and so somebody just promising the moon this way that way said this is what it'll mean for your public debt for your ability to spend on other things but we need to think about Creative Solutions to change the dialogue but that said some is okay too much is problematic it limits the ability of government to do more sorry just one second I always believe that data and intentions are symbotic to each other and when we talk about about growth how can we precipitate growth well our qualitative and quantitative energies are not put into the right direction this is one part of my question the second part of my question is when we talk about 2047 which is a vision which it is 5 trillion or 7 trillion but the thing is how prosperous we can be when we still do not have a right data of 3.5 trillion so when we talk about growth in the way China and other countries are growing with changing the model practically 100% for a new world how can we create a new India order in the absence of data and intentions leading to a precipitated defunct growth on a paper which is visible and which is substantiative of a fact that we can ask this question whether it's right or wrong see this is a a very important question in terms of uh defining policy right we already gave one example that if you count deaths wrong then uh you will go end up with a wrong policy of for example of managing the pandemic right so so that's one example already in front of you I think uh there are two issues here one is the direct issue which is just direct measurement are you measuring growth in the right way okay and this is open to debate you know people uh you know Ragu co-author and both of our coauthor Arin subaman has has written a lot about this and I think it's a healthy debate a debate that should be had and and I think the government should try to be as transparent as possible about how the industries are exactly being constructed and so on I think beyond measurement there is also an issue of interpretation which I think is as important as direct measurement so what do I mean by that right like so you can look at the public Labor uh public uh plfs public labor force survey and interpret their unemployment figures in India are coming down and and be and become very happy about it right but there is a sense I'm sure sure everybody in this room that jobs you know it's not this the number there is there is a deep you travel you you know you see the coverage by various uh news organization that took the care took the pain of actually going to the people during the state elections people after people interview after interview you see people worried about jobs so when you're reporting this direct measurement assuming that it's correct like let's take it even though there's disagreement between let's say cm and plfs on what exactly is the unemployment number how do you interpret the number is very important right let's look at the num look look at the employment data India anecdotally speaking and and from our own experience of interpreting this data has a deep crisis of disguised unemployment what does that mean if five people if two people are sufficient to till a field and six people are working on it there is a massive loss of productivity that is not getting counted in this measurement right you might still look at now jobs situation but actual in in in reality what really matters is productivity per person you go to a Starbucks and there's seven people standing behind the counter where two will be sufficient to do the job that is being done this is disguised unemployment right so this I'm just trying to differentiate direct measurement from interpretation I think both of them uh uh uh need uh an honest careful uh uh thinking and I think along these lines we should seriously start thinking about institutional Independence you know you know Ragu worked at the RBI he can speak more about it the some of the data collection institutions need autonomy they should not be sensitive to who is in government you know you cannot suppress consumption data just because it is showing you that consumption has gone down even even even I think we should be celebrating that India's GDP numbers have come out well but if you look at private investment and private consumption it is low right so consumption is not picking up but we don't have actually good consumption data so so yeah so so I I think intention is very important but you cannot leave as Citizens we cannot leave data collections to the intention of the government of the day they needs to be institutional Arrangement that Safeguard data collection from who who is in power at that time last question you you had a question yeah please go ahead is the last question for the day ladies and gentlemen prmod we give that to here M coming thank you thank you very much good to have you here Ragu good to have you here Rohit it's pleasure welcome to ggam by the way because this is our our home for many of us Delhi is a suburb of gurang Delhi will recognize that one of these days and that's how we treat it and so it's a joy to have you here um couple of questions U or or one one overall question you know bureaucratic uh bureaucracy remains a nightmare the control that they have and the power that is exercised by the way of bureaucracy remains extremely difficult and has a huge impact on ease of doing business so while we will grow at 62 6.5 or 7% whatever the GDP rate that we come out with at this point in time we could easily surpass that by a percentage point or two percentage point if we were able to unclog the systems that we have Etc my question is more open-ended to you both how should we do that how should we think about it and what will it take to really get rid of the strangle hold that a lot of the Bure bureaucracy perhaps there are bureaucrats here who are going to kill me later on but um how do we get get away from that because no country and we also work in an atmosphere of distrust you know the default answer if I may refer to you Alma uh RBI the default answer is fill a form fill 20 forms and but no economy can survive that way no economy can survive without trust without a contract between people of understanding U would love your thoughts on that I know it's very open-ended but love your thoughts look this this has been an old problem right and uh uh we need to keep tackling it and and we need to find new ways to tackle it because the old ways run out of steam at some point uh you know this is not in the book but I was once uh told by by a bureaucrat about the sting of the Scorpion which is you uh deal with a reform you make it really quite liberal you open up everything and that's when the bureaucrat who's in charge has this wonderful idea how to negate everything with one sub Clause number 45 uh rule number 33 which completely Vates the whole whole reform that's the bureaucrat complaining uh and and we we go back to square one and again and again what you see is you have to constantly hit your head against that and keep saying no no don't put this in take it out uh and and you need a little bit of risk Tolerance on the bureau bureaucracy I there are some very good Bureau bureaucrats who want to move towards that but it also requires some risk tolerance so that you will not be blamed for what happens down the line in in case something something bad happens why not cover your backside and make sure nothing happens because you're not blamed for nothing happening but you're blamed for something bad happening um you know that's that's that's a constant uh I think one possibility that we suggest I mean look uh that's an issue which we don't tackle head on but one possibility we suggest in the book is decentralization you know uh when you have competition between the states which are trying and the doesn't control who who gets to do what then you have States sort of competing for investment and making it easier for certain businesses and then others can look at that did they do reasonably well or did they attract the wrong kind of investment and they can also point to that as a precedent those guys did it so I did it it gives you some bureaucratic cover right so I think we need much more competition not just at the at the state level but at the district level we give the example of China CH where a lot of pows were decentralized to the local level and those officials it was in their benefit to make the right changes for their favored candidates because they were evaluated on growth and so once that happened they eased the bureaucratic path no problem was a problem I think now unfortunately with the centralization under shei they're backing off from that but we should try it maybe it will create the night the right kind of mix between bureaucratic conservatism but competition between sort of jurisdictions to generate the kind of new ideas that will generate growth so certainly worth trying so thank you Rohit thank you Ragu for an outstanding one hour a big round of applause ladies and gentlemen for [Applause] both

Channel: The Quorum

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Length: 61min 53sec (3713 seconds)

Published: Wed Dec 13 2023