00:07 So thank you all for being here.
00:09 My name is Indammeet Gill.
00:10 I'm the chief economist of the World Bank Group,
00:13 but it really doesn't matter because you're not here to talk,
00:16 uh,
00:16 you,
00:16 you,
00:16 you're not here to listen to me.
00:18 What you're here to listen to
00:20 is Professor Raguram Rajan.
00:22 Uh,
00:22 so who is
00:23 the Katherine Miller Distinguished Service Professor,
00:26 uh,
00:27 at,
00:28 uh,
00:29 UFC's,
00:30 uh,
00:31 Booth School,
00:32 the University of Chicago's Booth School.
00:34 So he was the 23rd governor of the Reserve Bank of India before that,
00:39 uh,
00:39 and uh he was also
00:42 the vice chairman of the board of the Bank for International Settlements.
00:46 Uh,
00:47 he was the chief economist and director of research at the IMF.
00:51 So he's done,
00:52 uh,
00:53 so he's done academics,
00:54 he's done government,
00:55 he's done international financial institutions,
00:58 and I think he's done all three of them brilliantly.
01:01 I don't know how brilliantly uh he has written this book though,
01:05 and so we're going to actually find out,
01:07 OK?
01:08 So he's gonna talk to us about this book.
01:10 It's called Breaking the Mold
01:11 India's Untraveled Path to Prosperity.
01:14 Rorotagu,
01:15 you get to speak for about
01:17 half an hour,
01:18 and then
01:19 we get to ask you questions.
01:21 Great.
01:22 Um,
01:22 can you hear me back there?
01:24 Thank you.
01:25 Well,
01:26 um,
01:26 as Monty Python would say,
01:28 now for something completely different from what you've,
01:31 uh,
01:31 been,
01:32 it's actually very much in the mold of,
01:35 uh,
01:36 of this conference,
01:37 what we do,
01:38 uh,
01:39 in this,
01:40 uh,
01:40 new era,
01:41 what,
01:42 what is the path for development.
01:43 So I'm gonna plunge into this.
01:46 The book is written for a broader audience,
01:50 but the theme is a very important one.
01:52 How do we grow
01:53 in this world with increasing protectionism,
01:56 increasing automation,
01:58 where the old path
02:00 is,
02:00 is a lot more difficult.
02:02 Sort of new path do we have?
02:04 It's set in the context of India,
02:06 but it is something which has much wider application,
02:09 uh,
02:10 for example,
02:10 to many of the countries in Latin America
02:13 but also to Africa.
02:15 So
02:16 with that in mind,
02:17 uh,
02:17 let's talk very quickly and and.
02:19 Again,
02:20 this is big picture,
02:21 uh
02:21 uh uh um
02:23 just to put the ideas on the table,
02:26 how did countries grow,
02:27 and the most successful
02:30 means of growth in the last,
02:31 uh,
02:32 uh,
02:32 you know,
02:32 half a century or so
02:34 is the East Asian path,
02:35 which is starting with.
02:37 Agricultural reforms
02:39 enhance productivity in agriculture,
02:41 generate surpluses,
02:42 and absorb surplus agricultural labor
02:47 in low skilled manufacturing assembly,
02:49 typically things like putting together electronic components into radios and.
02:54 And,
02:55 and phones,
02:56 but also textiles and so on.
02:58 And you focus on exports for scale,
03:02 uh,
03:03 because,
03:03 you know,
03:04 there's so many niche products,
03:05 but the global market is much bigger than your domestic market.
03:09 And as you know,
03:13 obtain,
03:14 you learn by doing,
03:16 as you invest
03:18 some of the profits the company makes in more capital
03:22 as a country invests some of the higher tax revenues in better infrastructure,
03:27 as people invest some of their salaries in
03:29 better schooling for themselves and their kids,
03:32 you move up the value chain.
03:33 And
03:34 of course the classic example of this in recent times is China,
03:38 which has moved
03:39 from uh essentially very,
03:41 very low skilled
03:42 manufacturing
03:43 into making EVs which are on par with the rest of the world today.
03:47 In fact,
03:48 probably a world leading
03:50 EVs,
03:50 so much so that countries have to
03:52 put huge tariffs to keep them out.
03:54 Um,
03:55 eventually,
03:56 you,
03:57 uh,
03:57 you know,
03:58 uh,
03:58 productivity in manufacturing grows to the point you need less workers
04:03 and labor moves to services
04:05 and manufacturing related services,
04:07 right?
04:07 So that's the successful growth path,
04:10 um.
04:11 And in this path,
04:12 China succeeded particularly while India didn't,
04:15 and so the big question is,
04:17 what happened?
04:18 Why did India,
04:19 you know,
04:19 India liberalized about 10 years after China,
04:22 why did India not pick up on manufacturing?
04:25 Uh,
04:26 and there are a bunch of reasons.
04:28 I'm picking a few here.
04:29 I mean,
04:29 uh,
04:30 of course,
04:30 we're in the realm of the six blind men picking the,
04:33 uh,
04:34 their reason,
04:35 uh,
04:35 you know,
04:36 uh,
04:36 their shape of the elephant,
04:38 uh,
04:38 but,
04:39 um.
04:40 One point that Ya Xing Huang from MIT emphasizes is China had much higher levels
04:47 of education when it liberalized.
04:49 Uh,
04:50 somehow communism did that for you.
04:52 Perhaps that's true of,
04:53 uh,
04:53 of Vietnam also,
04:55 maybe better to read the communist scriptures,
04:57 but,
04:58 uh,
04:59 somehow,
04:59 uh,
05:00 democratic India was far behind on education relative to China.
05:04 China had a much more skilled workforce.
05:05 This helped
05:07 both in creating
05:08 the,
05:08 uh.
05:09 Sort of human capital for even unskilled manufacturing,
05:12 which actually requires some skills,
05:15 but also in creating
05:17 entrepreneurship,
05:18 uh,
05:18 many of the town and village enterprises were set up
05:22 by workers who sort of learned enough on the job
05:25 then went out to make the bolts and nuts on their own outside the big factories.
05:30 Um,
05:30 so
05:31 that was very important for China.
05:33 The second important factor we rarely recognize
05:35 is that China is much more decentralized.
05:38 Than
05:38 you know,
05:39 the imagery of the country as uh you know,
05:41 with the Communist Party at the top
05:43 and governing everything,
05:46 uh,
05:46 at the local level,
05:47 uh there's a lot more empowerment of local officials,
05:51 the city mayor,
05:52 the town mayor,
05:53 uh,
05:53 the village head,
05:55 um,
05:55 and also incentivization that they benefit
06:00 if they grow their local economy.
06:02 that used to be the case.
06:04 They got promoted up the hierarchy faster.
06:07 And so,
06:07 uh,
06:08 what that did was,
06:10 um,
06:10 uh,
06:11 my colleague,
06:11 uh,
06:12 Chang Tai She points out,
06:14 uh,
06:14 that,
06:15 you know,
06:15 on the doing business indicators,
06:17 China doesn't look very good.
06:18 Uh,
06:19 not much,
06:19 you know,
06:20 approximately on par with India.
06:22 But what he says is at the local level,
06:25 the local officials managed to waive
06:27 whatever regulations were impeding growth for local champions
06:32 and essentially created a different business environment
06:35 at the local level
06:36 than what was set down in the bureaucratic norms at the center.
06:41 Uh,
06:42 now why did this not turn into cloying cronism?
06:45 Because there was competition between localities.
06:48 So Shanghai,
06:49 for example,
06:49 promoted their General Motors joint venture,
06:52 and it did that by requiring taxis in Shanghai
06:55 to be,
06:56 you know,
06:56 from General Motors.
06:57 But of course Beijing did it with its own local,
07:00 uh,
07:01 you know,
07:01 champion,
07:02 and so there was competition between uh
07:04 uh jurisdictions
07:06 and uh so I call this comparative cronyism,
07:09 but,
07:09 uh,
07:09 but it helped generate growth
07:11 and of course.
07:14 Until 2015 when in fact this
07:18 entrepreneurship by local officials was suppressed,
07:21 it exposed you
07:23 to corruption allegations,
07:24 etc.
07:25 and that was in my view,
07:27 uh,
07:27 probably part of the reason why,
07:29 why this this sort of died out.
07:31 Um,
07:32 also,
07:32 China suppressed market forces,
07:35 and democratic forces trying to,
07:37 um,
07:38 acquire land in India.
07:39 It's,
07:39 it's very,
07:40 very hard
07:41 because,
07:42 uh,
07:42 you know,
07:43 local politicians
07:45 see,
07:45 uh,
07:46 some,
07:47 uh,
07:47 some reason to oppose land acquisition
07:50 and to act as champions of,
07:51 of local people.
07:52 That's not a bad thing.
07:54 But it makes land acquisition much harder.
07:56 Uh,
07:57 you know,
07:57 we've,
07:58 we've tried in India to build a high-speed rail between
08:01 Mumbai and,
08:02 Ahmedabad.
08:03 Uh,
08:03 it's 10 years running.
08:04 And we're still not there.
08:06 Uh,
08:06 China built out a huge high-speed rail network,
08:10 uh,
08:10 in,
08:10 in,
08:11 in about that much time,
08:13 but,
08:13 uh,
08:14 but it,
08:14 it did it because it could acquire the land.
08:17 Uh,
08:18 very few people ask questions.
08:19 We've all seen that one household holding out against
08:23 developers in China,
08:24 but that's the exception that proves the rule,
08:26 easy to acquire land in it.
08:27 But China also suppressed wage bargaining.
08:30 It kept
08:32 wage growth below productivity growth,
08:34 and that helped companies
08:36 become more profitable.
08:37 It kept
08:39 the cost of capital low
08:40 by paying low amounts on deposits that was set at the national level
08:46 and of course.
08:47 That helped companies get cheap,
08:49 cheap capital.
08:50 So cheap capital,
08:51 cheap labor companies became more profitable,
08:53 grew fast,
08:54 and that helped.
08:56 It came on the backs of suppressing household consumption,
08:59 one of the problems China is still grappling with today.
09:02 But that
09:02 implied China did much better in manufacturing,
09:05 grew tremendously.
09:07 Uh,
09:07 India did relatively better in services.
09:11 Um,
09:11 if you look at
09:12 Indian manufacturing employment,
09:14 it's been stagnant since the 1980s,
09:17 but services employment expanded until 2019.
09:20 And of course,
09:21 um,
09:22 Danny Roderick has referred to this as premature deindustrialization.
09:27 But I think he's coming round to the view which
09:29 we express in this book that this may be a reflection
09:32 of India's comparative advantage,
09:35 that in fact India may be relatively better in services,
09:38 that's a good thing,
09:39 um.
09:40 But India today,
09:42 it's missed the manufacturing boat,
09:44 not entirely.
09:46 There are some areas where India is doing very well,
09:48 for example,
09:49 two wheelers.
09:49 India is the largest producer of two wheelers in the world.
09:53 It's,
09:53 you know,
09:54 generic pharmaceuticals business is strong,
09:57 but in general,
09:58 India hasn't sort of got a strong place in manufacturing
10:03 and.
10:04 Unemployment
10:06 is,
10:06 is very high,
10:07 uh,
10:08 disguised unemployment even higher,
10:09 of course.
10:10 Talk to Indian economists,
10:12 we're constantly debating what the unemployment numbers are.
10:15 We need better numbers,
10:17 uh,
10:17 but I think
10:18 it would,
10:19 none of the facts on this on this page
10:24 are beyond dispute.
10:25 Labor force participation,
10:26 we heard talk.
10:27 A little bit about it earlier in this conference
10:30 is low female labor force participation alarmingly so,
10:35 you know,
10:36 the
10:36 concrete evidence we have is for enormous
10:39 numbers of people applying for government jobs,
10:41 even low level government jobs.
10:43 1.2 million people applying for 6000 jobs as a local revenue officer.
10:51 In,
10:51 uh,
10:51 in Madhya Pradesh,
10:53 of those 1.2 million,
10:54 100,000 were uh MBAs,
10:57 80,000 were engineers,
10:58 and 4000 were PhDs.
11:01 That suggests two things one,
11:03 very few jobs.
11:04 Two,
11:05 perhaps the degrees we give our,
11:07 our,
11:07 our,
11:08 our young people aren't particularly good,
11:10 which is why
11:11 they have to compromise by looking for these kinds of jobs.
11:15 Even while all this is happening,
11:16 the capital intensity of manufacturing is increasing.
11:19 If you look at labor intensive
11:20 areas like textiles,
11:22 like leather,
11:23 those have been shrinking in India,
11:25 uh,
11:26 despite the government saying it's about manufacturing.
11:29 So
11:29 what's the bottom line?
11:30 The bottom line here is that
11:33 India.
11:34 Is talking
11:36 about going the manufacturing route,
11:39 about redoing it,
11:40 catching that manufacturing bus again,
11:43 and the question is,
11:44 you know,
11:45 we desperately need jobs,
11:46 so if it catches the manufacturing bus,
11:48 great,
11:49 but we have to accept the possibility
11:52 that it may not be that easy,
11:54 and I'll come to that in just a second,
11:56 um,
11:57 so,
11:57 um,
11:58 we have a big question should we turn back the
12:01 clock as the government wants and jump onto the.
12:04 Uh,
12:04 manufacturing bus and move up,
12:06 up the level,
12:07 maybe pick it up a little later in,
12:09 in,
12:09 in terms of moderate level skills rather than low level skills,
12:12 but pick up the manufacturing bus,
12:14 or should we,
12:15 you know,
12:16 stop a second and think in this new changed world,
12:19 what makes sense?
12:20 Does it make sense to go back to manufacturing
12:22 or do something else?
12:24 And of course this determines how India uses its resources
12:28 and uh and it's important to think carefully.
12:31 So
12:32 what's the case against,
12:34 you know,
12:34 a wholesale push on manufacturing,
12:36 and,
12:37 and by this I mean push.
12:39 If manufacturing jobs come to India,
12:41 that's wonderful,
12:42 but
12:43 should we put all our eggs in the manufacturing basket?
12:46 And here the worry is there is a backlash
12:49 against export-led growth that wasn't there when China embarked on it.
12:54 In fact,
12:54 it is there
12:55 almost precisely because China embarked on that path
12:58 and decimated manufacturing industries across the world.
13:02 So
13:02 we've heard uh Janet Yellen.
13:05 Actually a globalist
13:06 talking about near shoring and onshoring.
13:10 You know,
13:11 will there be room in the world for another China,
13:13 another 1.4 billion people?
13:15 Yes,
13:15 if it comes by substituting
13:17 the existing China,
13:19 but the existing China is going nowhere.
13:21 It's staying there.
13:22 It already does a lot of manufacturing,
13:24 so this is manufacturing plus,
13:25 is there room
13:27 both in terms of
13:29 export absorption by the rest of the world,
13:31 but also in terms of the environmental impact?
13:33 And the answer almost surely is no.
13:36 What about
13:37 uh
13:38 is that ladder available anymore?
13:41 You got onto the ladder because you competed with your cheap labor.
13:45 You were competing with expensive US workers,
13:48 with expensive European workers with cheap labor,
13:50 and you went up the ladder.
13:54 Today you're not competing with the US in many of those industries anymore.
13:58 You're competing with
13:59 Indonesia,
14:00 Mexico,
14:01 Vietnam,
14:01 China.
14:02 Many of them with a lot more capital than you have,
14:06 and
14:06 also when you're competing with the West,
14:08 you're not competing as much with
14:09 with workers as with robots.
14:11 I mean this is,
14:12 I'm,
14:13 I'm caricaturing this,
14:14 but what you're really dealing with
14:16 is much more automation,
14:17 much more capital intensity,
14:19 uh,
14:20 in,
14:20 in both in terms of the emerging market
14:23 competitors as well as developed country competitors.
14:26 So both politically as well as economically,
14:29 that manufacturing ladder is harder to climb up.
14:33 Um,
14:34 also,
14:35 there are potentially,
14:36 uh,
14:37 sort of new opportunities from global supply chains,
14:40 but think about what a global supply chain looks like.
14:42 I'm using,
14:43 uh,
14:44 Richard Baldwin's example of the smile curve,
14:46 uh,
14:47 um,
14:48 um.
14:49 Think of the iPhone.
14:51 The early stages of the iPhone,
14:53 so what's on the x-axis here,
14:55 it's stages of production in the supply chain,
14:58 and what's on the y axis is value added.
15:01 Think of the iPhone.
15:02 A lot of R&D and design done early on.
15:04 That's very high value added.
15:05 That's where Steve Jobs sort of captures value.
15:10 Go further
15:11 down,
15:11 you get to production.
15:13 The last physical item Apple produced was in 2004.
15:17 Since then it's outsourced much of it to people like Foxconn,
15:21 which produces across the world.
15:23 And then you go up,
15:25 so
15:26 that's at the bottom of the value chain.
15:28 That's because manufacturing has become really,
15:30 really competitive,
15:32 especially low skilled manufacturing.
15:33 Assembly is very,
15:34 very competitive,
15:35 and then you go back up the value chain when you think about the content in the iPhone,
15:40 the iTunes,
15:43 the marketing,
15:44 the fancy Apple stores,
15:45 the financing,
15:46 all that is also value added.
15:48 So at both ends of the value chain for the iPhone,
15:52 it's very high value added.
15:54 Typically services or services embedded in manufacturing.
15:59 The bottom end is manufacturing.
16:01 That's very low value added.
16:02 Now
16:03 you will immediately respond,
16:04 Well,
16:04 it's low value added because you're looking at component assembly.
16:09 Let's talk about chips.
16:10 That's where there's a lot of sophisticated manufacturing,
16:13 very high value added,
16:14 and that's absolutely true.
16:16 Foxconn on a good day is worth about $50 billion.
16:19 Apple on a good day is $3 trillion.
16:22 That reflects the value addition in Apple.
16:25 But of course when you look at chips.
16:28 TSMC is the top of the scale as far as chips go,
16:32 makes 90% of the chips involved in AI,
16:34 as I understand it.
16:36 TSMC on a good day is worth about $800 billion.
16:40 Nvidia,
16:41 which does the design,
16:43 is worth $3 trillion.
16:44 And Q Qualcomm,
16:46 uh,
16:46 you know,
16:47 again,
16:47 500,
16:47 Broadcom 500.
16:49 So again,
16:50 even when you look at chips.
16:52 The big part of value added is in the intellectual property in the services,
16:57 not in the actual manufacturing,
17:00 not to say that uh um
17:02 that's uh um
17:04 that's that's peanuts,
17:05 but it's not as big.
17:07 So
17:08 what I'm arguing for is we need to consider services
17:12 as
17:13 a potential way
17:15 for the leading edge of the economy.
17:16 I'm not talking for mass jobs.
17:18 I'm talking about the leading edge of the economy.
17:21 Because today
17:22 we can sell services across the globe which we weren't able to in the past.
17:27 Uh,
17:27 haircuts fixed in time and space,
17:28 the traditional service,
17:30 you can't do haircuts at a distance.
17:32 You can't scale up haircuts.
17:34 Barber cutting 5 people's hair would
17:37 have somewhat indifferent results,
17:40 so
17:41 that was.
17:42 Traditional,
17:43 but we moved from that
17:45 today,
17:46 for example,
17:46 a big part of services
17:48 is direct services.
17:50 A consultants sitting in in Bangalore
17:53 can provide that service in Chicago in the same way as
17:56 it used to be provided during the pandemic from Seattle.
17:59 If we can provide services at a distance within country,
18:01 we can provide it across countries.
18:03 Labor arbitrage today is in services,
18:06 not in manufacturing.
18:07 Because that consultant in India costs 40,000,
18:10 that consultant in the US is 200,000.
18:13 OK,
18:14 so,
18:14 um,
18:15 you know,
18:15 of course there's different expertise and all that,
18:17 but that can be acquired.
18:19 Direct services
18:20 expanding and exploding,
18:22 uh,
18:23 also
18:24 you can have services embedded in manufacturing
18:27 or embedded in other services.
18:29 Uh,
18:30 today
18:30 one of the fastest growing areas in India is what are called
18:33 global capability centers.
18:36 Uh,
18:36 when I last looked at it,
18:37 $120 billion in exports.
18:40 Uh,
18:40 what are these?
18:41 This is Goldman Sachs office in Bangalore
18:44 with 8000 people,
18:45 the second biggest office in Goldman Sachs outside
18:48 the US,
18:49 and what are these people doing?
18:51 It's not just back office anymore.
18:53 It's semi-front office or even front office work,
18:56 putting together models,
18:57 risk management models,
18:58 trading models,
18:59 and sometimes doing the actual trading themselves,
19:02 right?
19:03 So,
19:03 um,
19:04 services embedded in manufacturing
19:06 and of course there could be services
19:08 enabling manufacturing.
19:09 Here's some examples.
19:10 I'm gonna talk about only one,
19:12 just,
19:12 uh,
19:13 very quickly.
19:13 Tilfi is a sari,
19:15 um,
19:16 um,
19:17 um,
19:18 is a seller of Bernards saris.
19:20 What is very interesting
19:21 is
19:22 they go to the artisan in Benares
19:25 and they found the artisan was making the same stale designs again and again.
19:30 Why?
19:30 For two reasons the artisan.
19:32 Basically
19:34 had to take the risk of making the sari.
19:36 They owned the sari,
19:37 and of course when you own the sari,
19:39 you don't want to take risks by making new designs,
19:41 so they made the old design,
19:43 but that actually hurt them
19:45 because
19:46 they were tired
19:47 people,
19:48 but more important,
19:49 they were easily
19:50 replicable by the fake industry.
19:52 So those designs were plentiful
19:55 and as a result,
19:57 the artisan was going
19:59 further and further down.
20:00 What they did was took the risk of the artisan,
20:02 offered to pay for the sari write-off,
20:05 and then brought designers
20:08 with fresh designs to work with the artisan,
20:10 and,
20:11 and they have a store which sells across the world.
20:15 Feel free to look it up.
20:16 So that's an example
20:17 of changing the nature of manufacturing,
20:20 in this case,
20:20 artisan manufacturing.
20:22 But with with
20:24 acting at the right points,
20:25 Agnicool is a 3D
20:28 is a
20:28 manufacturer of rockets,
20:30 just sent its first rocket into space.
20:33 What's different about it?
20:35 Well,
20:35 again,
20:35 it emphasizes services.
20:37 It's all about design,
20:38 customized rockets
20:39 for the user,
20:41 20 ft rockets.
20:44 They get away from manufacturing by 3D printing everything.
20:48 The biggest
20:49 sort of part can't be more than 40 centimeters.
20:51 They're going to move upscale now.
20:53 They're gonna
20:53 buy bigger printers,
20:55 but it's 40 centimeters because that's how much the printer can take.
20:59 But what is interesting is they're emphasizing design.
21:01 They will customize your rocket
21:03 to your needs and send up
21:04 different satellites,
21:06 uh,
21:06 again,
21:07 a startup in India.
21:08 The third is,
21:08 is what I want to emphasize that,
21:11 you know,
21:11 I'm going to talk a lot about.
21:13 If India has to go down a path,
21:16 any path,
21:17 it needs to improve the quality of its healthcare,
21:20 education,
21:20 capability building much more,
21:22 and for that you need to scale up
21:24 because
21:25 what is important in India is quality today,
21:27 not quantity.
21:29 You need to scale quality up.
21:30 How do you scale quality?
21:31 That
21:32 is an example of how you scale quality.
21:34 Orchids International
21:36 basically has scripted
21:38 30,000 lesson plans
21:41 in every subject.
21:42 And what they've done is,
21:44 you know,
21:44 they tell the teacher,
21:45 here's your lesson,
21:47 uh,
21:47 minute 20,
21:48 you talk about,
21:49 uh,
21:50 uh,
21:51 you know,
21:51 um,
21:52 democracy.
21:53 M 25,
21:54 you give them examples from these,
21:55 these,
21:56 uh,
21:57 uh,
21:57 chapters in history,
21:59 uh,
22:00 exam,
22:00 uh,
22:01 minute 45,
22:01 you show them this video on the French Revolution,
22:03 etc.
22:04 The whole lesson is scripted,
22:06 and then you have feedback both,
22:08 uh,
22:08 for the student as well as for the teacher,
22:11 um.
22:12 What this does,
22:13 I would hate to teach in such a school.
22:16 I don't want my lesson scripted.
22:18 But
22:18 it does make a good teacher
22:21 a very good teacher or an average teacher a good teacher
22:25 because it gives them the entire gamut,
22:27 right?
22:28 Michael Kramer and his colleagues did some evaluations of scripted learning
22:33 at a lower level
22:34 and finds that actually makes a huge difference,
22:36 a huge positive difference.
22:38 What these guys are doing is they're making,
22:40 um,
22:41 you know,
22:41 average schools into good schools.
22:44 And India needs plenty of good schools,
22:46 so these people are teaching something like 70,000 students directly
22:51 and offering lesson plans to 350,000 more students.
22:55 That's scale.
22:56 You need scale for the kinds of uh actions that we're thinking about,
23:00 so.
23:02 Now the,
23:02 the misunderstanding when I talk about services is
23:05 people think I'm advocating only a service-based,
23:08 um,
23:09 method of growth,
23:10 especially advanced services.
23:11 No,
23:11 no,
23:11 no,
23:12 I'm not saying that.
23:14 What I'm saying is there are other alternatives
23:16 to manufacturing-led growth starting with low skilled manufacturing,
23:20 and countries today have to embrace these different growth paths
23:25 given the realities that are facing them.
23:27 What does that mean?
23:29 That means that you create the conditions
23:31 for the country to be able to pick
23:34 whatever path
23:35 works better,
23:36 and it may be an amalgamation of all this,
23:39 do a little bit of manufacturing there,
23:41 do a little bit of services.
23:42 But know that there are other parts,
23:44 don't fixate on only manufacturing.
23:47 That's the lesson I want to try and give our own government,
23:50 which seems to keep it thinking that manufacturing,
23:52 there's this kind of
23:53 manufacturing fetishism across the world.
23:56 Manufacturing is
23:58 the holy grail.
23:59 I'm saying,
24:00 well,
24:01 maybe not.
24:02 Um,
24:02 so what does this mean in practical terms?
24:05 Well,
24:05 it doesn't mean industrial policy.
24:06 It doesn't mean saying services is the new holy grail.
24:09 It means
24:10 let us focus on improving human capital
24:13 rather than focusing only on physical capital.
24:17 So how do we do education and healthcare differently?
24:20 Well,
24:20 one of the interesting things is that
24:23 decentralization seems to help in India.
24:25 The states that have done the best on healthcare and education.
24:29 Have decentralized more the classic example being Delhi,
24:32 which has improved the quality of its public schools
24:35 hugely over the last few years and is selling that
24:38 as a way to win elections
24:39 in more centralized states it's much harder to make a
24:43 difference because the parent doesn't see what is happening,
24:45 doesn't know who to complain to if the teacher doesn't show up
24:49 because there's no empowerment at the local level.
24:52 So
24:52 local level empowerment could help
24:55 decentralization.
24:56 Help
24:57 and we need to figure out how to do more of it in a better way to get better healthcare,
25:01 better education outcomes,
25:03 uh,
25:03 so that's one example.
25:04 If you say,
25:05 look,
25:06 I don't care whether you do services or manufacturing,
25:09 but in the new world
25:10 we absolutely need to build up people's capabilities,
25:13 and that's what we need to do.
25:15 So that,
25:15 that is one example
25:16 of what we would do differently
25:18 if you started
25:19 thinking about these other options.
25:22 Second.
25:23 We would try and prioritize.
25:26 When the whole world is investing in chip manufacturing,
25:30 when the chip industry goes from,
25:32 you know,
25:32 famine to feast,
25:35 it's a very cyclical industry.
25:37 We're now,
25:38 uh,
25:38 you know,
25:39 going to experience a glut because everybody's getting into chip chip building.
25:43 When
25:43 even
25:44 you know
25:46 generation chips,
25:47 which are 3 or 4 generations behind the frontier,
25:50 cost $10 billion for a factory to be set up,
25:53 doesn't make any sense for India to invest
25:56 in chip manufacturing with huge subsidies today.
25:58 Somebody wants to set up chip manufacturing in India,
26:01 be our guest,
26:03 but don't
26:04 put
26:04 $10 billion into that.
26:07 When $10 billion could build you 20 universities of very high caliber,
26:11 could build you something like 2000 good schools
26:14 of very high quality,
26:16 or 20,000 primary schools,
26:18 uh,
26:18 I mean,
26:19 think about how you use resources,
26:22 and of course what you want to do,
26:23 uh,
26:24 more broadly
26:25 is sort of energize people,
26:27 um,
26:28 you know,
26:28 entrepreneurship,
26:29 uh,
26:30 creativity.
26:31 Innovation is the way to go.
26:33 Um,
26:33 you know,
26:34 I,
26:34 I read this paper by Danny Roderick,
26:36 uh,
26:36 and a co-author,
26:38 uh,
26:38 which I think makes a lot of sense that
26:40 this is not,
26:41 and,
26:41 and this is the point I want to come to,
26:43 uh,
26:44 um,
26:44 uh,
26:45 will this create enough jobs?
26:47 This is not just about creating jobs at the high end.
26:50 It is creating jobs across the spectrum.
26:53 If you want to create more manufacturing jobs,
26:55 we need more skilled people.
26:57 If you want to create jobs in education and in healthcare,
26:59 there are ways of creating jobs,
27:02 uh,
27:02 with a little bit more extra skilling.
27:04 So
27:04 the need of the R is more jobs.
27:07 How do we do that?
27:09 We can do it in two ways,
27:11 actually 3 ways.
27:13 The first is
27:14 let's try and upskill people for the jobs that are available.
27:17 So there are,
27:18 you know,
27:19 we have tons of
27:21 engineers who graduate with a degree in computer science but who know nothing
27:25 about how to write,
27:28 uh,
27:28 you know,
27:28 a decent AI algorithm
27:30 or machine learning.
27:30 Can we train them a little bit?
27:32 We have 300,000 chip designers,
27:35 many of them trained up
27:37 from the basics.
27:37 Can we do that last mile remedial training?
27:40 So that's one
27:41 way to do it.
27:42 Second,
27:42 we can also create jobs for the skills people have
27:46 by being a little more clever about it.
27:48 So Danny talks about,
27:50 for example,
27:51 training,
27:52 you know,
27:52 Ola and Uber,
27:55 training up
27:56 people to drive rickshaw.
27:58 To drive two wheelers,
27:59 there's a huge demand for transport in Indian cities.
28:02 If you could train up people with just a little bit more,
28:06 um,
28:06 you know,
28:06 you could,
28:07 you could
28:08 get them so jobs for the skills people have
28:10 and a little bit of extra skilling
28:12 for the jobs that could become available.
28:15 And then you have the longer term.
28:16 We need to focus much more deeply on healthcare and education.
28:20 India doesn't have one university in the top 100.
28:23 But if we need to get a vibrant pharmaceutical industry,
28:26 we need to spend much more time investing in those areas,
28:30 investing in education,
28:31 healthcare.
28:32 And of course jobs will emerge once you do the right kinds of investment.
28:35 If you get a lot of skilled people,
28:37 you know,
28:38 working for the rest of the world,
28:40 they themselves create a number of jobs directly.
28:43 Drivers,
28:43 cooks,
28:44 security guards,
28:44 etc.
28:46 they're people who are employed in cities.
28:47 Their kids go to better schools.
28:49 The kids then
28:50 become
28:51 really,
28:51 uh,
28:51 uh,
28:52 you know,
28:52 uh,
28:52 they skip a generation in terms of uh of capabilities.
28:56 When I was at the RBI,
28:57 I,
28:58 we used to invite a class for employees.
29:00 Those are at the bottom
29:01 end
29:03 of uh of the uh workers in the RBI.
29:07 Their kids
29:08 had all gone to decent schools.
29:10 And they were now managers in Infosys,
29:13 managers of banks,
29:14 etc.
29:15 They had basically gone from lower middle class
29:17 to upper middle class in one generation.
29:19 And
29:20 I think that's possible,
29:21 so we should see this as a program
29:24 which will generate the kinds of capabilities that we need.
29:27 And and of course there are lots of other,
29:30 you know,
29:30 ways we can create jobs,
29:32 and I think we should just be ambitious about it.
29:35 It can happen.
29:37 But
29:38 what I am saying is
29:40 there's a possibility
29:41 that
29:42 we could create a leading edge sector
29:45 which is not low skill manufacturing.
29:47 But could be high skilled services,
29:49 and behind that,
29:51 we get a lot more job creation in many other ways,
29:54 and that requires uh some thinking,
29:56 some effort.
29:57 So,
29:58 um,
29:59 what I want to do is uh basically say there's another way,
30:03 and,
30:03 uh,
30:04 you know,
30:06 we should recognize that other ways starts with,
30:08 you know,
30:09 to some extent recognizing that the old paths have changed.
30:13 There are potentially new paths,
30:15 but that requires
30:17 much more focus
30:18 on how to
30:19 embark on those new paths,
30:21 and certainly India could be an example,
30:24 and
30:24 if it is an example,
30:26 it could be very beneficial
30:29 for development
30:30 in many parts of the world.
30:31 Let me stop there.
30:32 Thank you.
30:40 Ragu,
30:40 excellent.
30:41 Um,
30:42 so,
30:42 uh,
30:43 I
30:44 know that people have lots of questions,
30:45 but I have one observation and 11 question.
30:49 So,
30:49 you know,
30:50 the,
30:50 uh,
30:51 so part of the criticism I heard about the book was that,
30:55 that,
30:56 uh,
30:57 that,
31:00 that you're talking about,
31:01 don't focus on,
31:03 don't focus on industry or manufacturing,
31:05 focus instead on services,
31:08 OK?
31:09 But from my conversations with you,
31:11 that's not what you intended.
31:13 What you really intended was
31:15 don't think so vertically about.
31:17 The economy think more horizontally,
31:20 right?
31:21 But the,
31:22 but the way that you presented it,
31:23 I can see why
31:25 people think that you're saying
31:27 don't think industry
31:29 thinks services
31:30 because I thought that maybe what you would end up doing was you would end up saying,
31:34 you know,
31:35 you've got agriculture too,
31:36 but the only bullet point you had on agriculture was one that was incomplete
31:41 there,
31:41 right?
31:42 So I think in some sense part of the thing.
31:45 Has to be that when
31:47 you actually talk about this you either talk about either you go uh
31:52 you
31:52 you you go horizontal immediately and say look it's education,
31:55 it is competition,
31:56 it is trade,
31:57 things like that,
31:58 those are the things that you need to do,
32:00 or you do or you complete the third vertical
32:03 which is the agro-based industry and so on
32:05 because there's obviously a huge potential there too,
32:07 right?
32:07 So,
32:08 so that that that that was my observation and you can react to it in a bit.
32:11 But
32:12 in terms of,
32:13 in terms of,
32:14 uh,
32:14 in terms of my question
32:15 to you,
32:16 because you're from the South and I'm from the North,
32:19 and,
32:19 and I wanted to ask you,
32:20 if you had not written one book,
32:22 but written two.
32:24 How would
32:25 they have,
32:26 how would they have ended differently?
32:28 I,
32:28 I guess
32:29 this is the question that,
32:30 that you also got from Siddharth when we were talking outside.
32:34 How would these two books be different?
32:36 You mean for the south and the north?
32:37 Yes,
32:37 OK,
32:38 let me start with the first,
32:40 um.
32:41 You know,
32:41 it was Daniel Burnham at uh uh uh a famous Chicago architect,
32:47 uh,
32:48 who said,
32:49 uh,
32:49 don't think,
32:50 I mean,
32:50 I'm paraphrasing,
32:51 don't think small thoughts,
32:52 they don't have the
32:53 power to,
32:54 to,
32:55 uh,
32:55 energize people.
32:57 Uh,
32:58 what we're trying to do initially is offer an alternative path which is actually,
33:04 uh,
33:04 pretty big in its scope.
33:06 Which has the potential
33:08 of uh of getting
33:10 to development in a in in a generation.
33:14 If done well,
33:15 and typically it'll take more,
33:16 but still offers that possibility of escape,
33:20 and new technologies
33:22 have permitted that path.
33:24 So what we want to say is,
33:27 There is an alternative.
33:29 And to emphasize that
33:31 we start the book by talking about that alternative,
33:34 right?
33:36 That is not to say shut down your manufacturing,
33:39 you know,
33:39 don't do this,
33:40 don't do that.
33:41 I mean we could write that.
33:44 You know,
33:45 assimilate,
33:46 uh,
33:46 put together
33:47 the,
33:47 the hundreds of thousands of reports on what India should do
33:50 and,
33:51 and write that down.
33:54 That would put
33:55 the reader to sleep.
33:57 Not if you wrote the book.
33:59 Uh,
34:00 no,
34:00 it would,
34:00 especially if I wrote the book.
34:02 But,
34:03 so
34:04 this was an attempt to get at the broader reader and say,
34:07 look,
34:08 there is hope,
34:10 there is
34:11 an imagery of a successful India.
34:15 One of the points I skipped over in this talk was
34:18 one of the motivations for writing this was this also required a democratic India.
34:23 And I thought the two went together,
34:26 a hopeful India and a democratic India,
34:28 because
34:29 we wrote this
34:30 in,
34:30 in December
34:31 in the lead up to the election saying democracy is really important,
34:34 don't lose it.
34:36 And it's important you work on that.
34:37 So that,
34:37 that was,
34:38 that was why we emphasize services,
34:41 but then we back off,
34:43 uh,
34:43 even in the introduction and say.
34:46 It might sound like industrial policy.
34:48 Let's pick services.
34:49 No,
34:49 no,
34:49 no.
34:50 What we're saying is there's an option.
34:52 You don't have to put all your eggs in the manufacturing basket.
34:55 The fact that we missed the manufacturing
34:57 bus doesn't necessarily matter at this point.
35:00 Bygones be bygones.
35:02 Let's think of what we can do next,
35:04 and that could mean higher skilled manufacturing.
35:06 That could mean higher skilled services.
35:08 It also could mean lower skilled services,
35:10 which is where we've been generating
35:11 all our jobs in the past.
35:13 What is true is this government's
35:17 Jobs program is not working.
35:20 When it says manufacturing,
35:22 you look at the labor intensive parts of manufacturing.
35:25 We've been shrinking there.
35:27 Look at textiles,
35:28 look at leather.
35:30 So
35:30 to say that we're about manufacturing because it's about jobs
35:34 is actually not consistent with the data.
35:37 And so
35:39 what we're saying is there are alternatives.
35:41 And for God's sake,
35:42 don't put 10 billion into chips
35:45 when you don't have enough funding for your universities.
35:48 I mean,
35:48 what are you thinking of?
35:49 This goes back to the old shiny
35:51 white elephant projects.
35:53 You have no capabilities in chips.
35:56 But you want
35:57 a chip industry because you say it's good for security.
36:01 In um
36:03 sort of classic Hindi phrase,
36:04 I'm saying Ganta,
36:05 it's going to be good for security.
36:07 Yeah,
36:08 right,
36:09 uh,
36:09 I mean,
36:10 you're gonna be dependent on ASML for machines,
36:12 you're gonna be dependent on for,
36:14 you know,
36:15 chemicals across the world.
36:17 You're gonna be dependent on wafers elsewhere.
36:19 You're gonna be dependent on technology from elsewhere.
36:22 How on earth are you claiming you will get independence in chips,
36:26 not
36:26 in the next 10 to 15 years,
36:29 which is the really most important part
36:32 of Indian development.
36:34 Because
36:34 this is the time we still have our population dividend,
36:37 it's going away.
36:39 India doesn't have much immigration.
36:41 India will get old.
36:42 That's almost assured
36:44 with a little bit of development.
36:46 So we need desperately
36:48 to get those kids educated,
36:50 those kids,
36:51 you know,
36:51 35% malnutrition.
36:53 What are you talking about becoming a developed country
36:55 if you have 35% malnutrition.
36:57 Again,
36:58 we'll have a lot of debate about what the precise numbers are.
37:01 Oh,
37:01 Indians are smaller,
37:02 therefore malnutrition is.
37:06 I see,
37:06 I see that,
37:07 you know,
37:07 but the thing is,
37:08 again,
37:08 to,
37:08 to go back to the critique,
37:09 right,
37:10 which is again you,
37:11 but you're still talking in vertical terms,
37:13 right,
37:14 because you could have instead said that look,
37:16 actually
37:17 there's no evidence that,
37:19 that we have done that,
37:20 you know,
37:21 India has done vertical policies well,
37:23 but there is evidence that we've done horizontal policies well.
37:27 Infrastructure digitalization,
37:29 whatever,
37:29 why don't you do another horizontal one
37:32 which will actually give you this,
37:33 build it up like
37:34 this instead of like this,
37:36 right?
37:37 The next one you build up is education,
37:40 right?
37:40 So that's,
37:40 that's the second half of the book,
37:41 right,
37:42 which is
37:43 about education,
37:44 about healthcare
37:45 again,
37:45 we're not prescribing because we don't know
37:48 and so we offer a bunch of examples of things that have worked on education,
37:52 things that have worked on healthcare.
37:54 Uh,
37:54 the overriding prescription,
37:56 if there's a new one,
37:56 is let's decentralize more.
37:59 The state of Uttar Pradesh,
38:00 240 million people governed from Lucknow,
38:03 it's too centralized.
38:05 We need to decentralize more so that,
38:07 you know,
38:08 there's more local empowerment.
38:10 Local empowerment will mean better public services at the local level,
38:14 and that can only be a good thing.
38:16 And that's where again democracy helps having local,
38:19 uh,
38:20 you know,
38:20 strong democracy helps local empower.
38:22 So the bottom line is I have no objection to
38:25 your framing
38:27 the issue.
38:28 All I'm saying is
38:29 the first part was about hope.
38:32 The second part is about practicality,
38:34 but we're trying to offer that practicality without going to the,
38:38 you know,
38:38 as I said,
38:39 many,
38:39 many reports on what India should do,
38:42 uh.
38:43 I'm,
38:43 you know,
38:44 where it makes sense,
38:45 I'm,
38:45 I'm happy with all those reports,
38:46 but I don't want to,
38:48 uh,
38:48 replay them.
38:49 I think what is really,
38:50 you know,
38:51 if you take
38:52 three things we're saying,
38:53 there are alternative paths.
38:56 We need to build human capital.
38:57 That's India's
38:59 prime
39:00 sort of
39:01 need of the hour,
39:03 and
39:04 it cannot be government driven.
39:07 You need to
39:08 expand the scope for innovation at the local level,
39:11 at the village level,
39:13 at the national level.
39:14 Innovation and creativity will be how
39:17 we
39:17 grow much faster
39:19 over the limited time we have before we grow old.
39:22 So if India's going to grow rich before it grows old.
39:25 It needs to up the pace of growth tremendously,
39:28 and let's not keep patting ourselves on the back for being the fastest growing
39:32 economy in the G20.
39:33 We're also the poorest economy in the G20,
39:35 and let's remember that
39:36 and therefore we have a long way to go.
39:38 And the other thing that I know that in a previous conversation you also said.
39:42 Was that while there is the excuse that Indians make that
39:46 we can't grow at the same pace that China did
39:49 back in the 2000s because the world was different and
39:51 the global economy was much more benign and so on,
39:54 it's not,
39:55 but what you also,
39:56 I think what you pointed out that at least internally.
39:59 India is at its peak potential right now in terms of in
40:03 terms of the age structure of the labor force and so absolutely and
40:07 and so you know some of those numbers,
40:09 uh,
40:10 Santosh Mehrotra,
40:11 um,
40:12 you know,
40:12 who works on labor in India,
40:14 just
40:14 put out an alarming number
40:16 100 million people in India.
40:19 Have become discouraged
40:21 from working.
40:22 I mean,
40:23 think about that,
40:23 100 million people are not contributing.
40:26 To
40:27 growth,
40:29 right?
40:29 And this is when,
40:30 you know,
40:31 as I said,
40:31 we have a limited window for the population dividend.
40:34 So we really have to think
40:36 on how we employ people
40:38 and that means killing that means uh I mean so many other things we need to do but
40:43 uh I mean what I'm encouraged by
40:45 is the fact that uh the government is starting to
40:49 start think about how it does better on skilling.
40:51 I'm
40:52 told that the next budget,
40:54 given
40:55 what happened in the elections may contain
40:57 a lot more
40:58 on on that,
40:59 but let's see.
41:00 So hold the question about the south and the north part first.
41:04 Why don't we get some questions first,
41:05 Danny?
41:07 And then you,
41:08 and then Nancy,
41:09 of course,
41:10 she owns this place,
41:11 so she gets to have.
41:13 Hierarchy,
41:14 thank you for the presentation,
41:15 fascinating.
41:16 You've told us about how the original problem you began with
41:20 was to think about growth in a world with,
41:22 uh,
41:23 where,
41:23 where windows are closing.
41:25 There is increasing protectionism,
41:27 increasing automation,
41:28 and you are compelling
41:30 on how India and other countries should not think about
41:33 the choice being either manufacturing
41:35 or services.
41:36 We should be open to things.
41:38 What is your
41:40 narrative
41:42 on how we should think about the choice on exports
41:46 when a 1.5 billion economy exports,
41:50 whatever it exports is going to shift relative prices,
41:53 the real prices shift,
41:55 someone somewhere is gonna feel
41:57 disturbed.
41:59 What is your story on India and exports?
42:02 Thank you very much.
42:05 23.
42:07 Number 2 and then Nancy,
42:09 yes ma'am,
42:10 please,
42:10 yes,
42:10 my name is Juliet Adams,
42:12 and I'm also an educator,
42:15 so I fully embraced what you said.
42:19 You spoke very eloquently,
42:20 but there was a word that
42:23 is threaded through your,
42:25 through your remarks,
42:26 through your presentation that you didn't mention,
42:29 and that word is leadership.
42:31 The need for leadership.
42:33 How can we
42:35 get leadership to embrace that innovation and creativity?
42:39 Because as you know,
42:41 Martin Luther King is the experience in India
42:44 that made that rippling change in the US.
42:48 We have
42:49 Katherine Johnson
42:51 who was responsible.
42:54 Who was responsible for
42:56 getting the first
42:58 um
42:59 astronaut into space.
43:01 She created what didn't exist
43:04 in math.
43:05 So how can we create that environment
43:08 if India has to be the leader?
43:11 Well,
43:12 so be it,
43:13 but we need that type of environment,
43:14 especially when you spoke about,
43:16 um,
43:17 innovation and creativity at the local level.
43:19 There must be that environment.
43:21 You have to get thinkers and leaders.
43:24 Please share.
43:24 I think you got the question,
43:26 OK.
43:27 Uh,
43:28 uh,
43:29 uh,
43:30 next to Nancy and then said that
43:32 actually let me
43:33 take 3,
43:33 otherwise I'll 333,
43:35 OK.
43:37 Africa
43:38 I couldn't help thinking.
43:41 In what you're saying on the great incoherence,
43:43 I mean,
43:43 it's true across the developing world.
43:46 From
43:47 Indonesia to Nigeria to Ethiopia,
43:50 where.
43:52 In the case of Africa,
43:53 I think the human capital issues are even greater.
43:58 Although my colleague Barbara Bruns would know more about that.
44:01 Um,
44:03 Right,
44:04 is that your next book,
44:05 maybe?
44:07 Or do you have any,
44:09 I mean this goes back to the point that Danny Roderick was making for,
44:12 for most of the developing world,
44:14 what to do
44:16 and it's very nice,
44:17 it's very encouraging to hear.
44:19 Your emphasis on human capital,
44:21 on education and health,
44:22 and I think India is in a much better position to go that direction
44:26 than too many of the other developing countries.
44:29 So any thoughts?
44:30 Thank you.
44:30 OK,
44:31 take this.
44:31 OK,
44:32 so let me start with Danny.
44:33 Uh,
44:33 great question.
44:34 Look,
44:35 um.
44:37 There's a lot of
44:39 potential.
44:40 I mean,
44:40 1.4 billion people means,
44:42 you know,
44:43 many things that require scale.
44:44 Uh,
44:45 you provide some of that,
44:46 not,
44:46 not entirely.
44:47 I mean,
44:47 we
44:48 have
44:49 you know 4 million cars.
44:51 That's not big enough,
44:52 uh,
44:53 relative to,
44:54 but it,
44:55 it's in,
44:55 uh,
44:56 you know,
44:56 on especially on services.
44:58 I mean,
44:58 think about the healthcare needs.
45:00 That's a huge market in India itself.
45:03 Think of education needs,
45:04 huge market.
45:05 So,
45:06 um.
45:07 Focusing on the domestic market offers you a lot of
45:10 possibilities today which weren't there when India was much poorer.
45:14 So
45:15 in the span of 3 or 4 years
45:18 at India's pace of growth,
45:19 we'll be the 3rd largest economy in the world.
45:21 That's just numbers.
45:24 That's a big,
45:25 reasonably big market,
45:27 um.
45:28 Where I think
45:29 you do exports,
45:31 uh,
45:32 where it's going to be
45:33 potentially easier
45:35 is on the leading edge,
45:36 where
45:37 in fact the problem to some extent is that's where in the West
45:42 you both have the greatest inequality,
45:45 um,
45:45 that also means they're the most powerful entities
45:48 in terms of pushing back,
45:50 but it's also where the West exports the most.
45:52 I mean the biggest service exporter to the world is the US.
45:55 And it's services like
45:57 legal,
45:58 uh,
45:58 financial,
45:59 etc.
46:00 etc.
46:01 and so to my mind
46:03 if there is an area which is relatively more protected from protectionism,
46:08 uh,
46:08 because it's a uh a mutual
46:11 assured destruction situation,
46:13 it's gonna be high skilled services,
46:15 but that's also where some of the,
46:17 I mean,
46:18 look,
46:18 I can't get an appointment to see a doctor in Chicago for 3 months.
46:22 Uh,
46:23 maybe telemedicine
46:25 with the appropriate structures.
46:26 Cleveland Clinic providing the front end,
46:28 Indian doctors providing the back end.
46:31 Could that be a structure which alleviates some of the,
46:34 uh,
46:35 sort of pressures on medicine in this country,
46:38 or now you have to combat vested interests who will say this is competition,
46:41 etc.
46:42 but on the other hand.
46:44 really felt need for some of this stuff,
46:45 so we need to think more carefully,
46:48 but I'm hopeful that at least for a while services will be less subject
46:52 because it's the upper end,
46:54 it's the elite,
46:56 and of course I'm not talking about mass services,
47:00 but I think the domestic economy can provide more of a market for mass services.
47:04 And
47:05 of course there might still be a market for manufacturing
47:08 on,
47:09 on leadership.
47:09 I mean,
47:10 look,
47:11 one of the reasons I think decentralization would be a good thing
47:15 is to learn from each other,
47:18 you know,
47:18 allowing
47:19 in Mao's terms 1000 flowers to bloom.
47:22 But learning from each other,
47:24 you know,
47:24 what works,
47:25 what doesn't work,
47:25 having 1000 experiments
47:27 in the,
47:28 you know,
47:28 uh,
47:29 in the 600+ districts that India has,
47:32 rather than confining the experiments to the state level.
47:36 So,
47:36 um,
47:37 my sense is,
47:39 uh,
47:39 you know,
47:39 we will get
47:40 a whole bunch of different leaders.
47:42 Uh,
47:43 if the local authorities are empowered,
47:45 but we'll get a lot more experiments
47:47 which we can learn from
47:49 on what works and what doesn't,
47:52 and,
47:52 and I think that's,
47:52 that's critical,
47:53 uh,
47:54 so
47:54 not just the change in incentives that I talked about,
47:58 but also change in,
47:59 in,
47:59 in,
48:00 in,
48:00 in sort of experiments
48:02 which then allows for us to learn from each.
48:04 So I think that would be useful
48:05 and what India learns can be transferred,
48:08 uh,
48:09 so
48:09 uh I mean
48:10 I think there's lots of experiments going on in the
48:12 rest of the world which can be transferred to India.
48:14 We have to learn,
48:15 for example,
48:16 uh,
48:17 about some of the entrepreneurship experiments that are being run in,
48:20 in,
48:20 in Africa
48:21 and,
48:21 and see what we can take in to encourage mass entrepreneurship.
48:25 But I,
48:26 I,
48:26 I think this,
48:27 there's,
48:27 there's,
48:27 there's,
48:28 there's the ability to pick up from,
48:30 uh,
48:30 from each other.
48:31 Um,
48:32 Nancy,
48:32 I mean,
48:33 I,
48:33 I think that's,
48:34 you know,
48:34 to some extent,
48:35 uh,
48:36 I think we all need Africa to succeed,
48:39 and,
48:39 and to some extent,
48:41 uh,
48:41 I,
48:42 I think,
48:43 you know,
48:44 you know,
48:44 uh,
48:45 there is hope,
48:46 uh,
48:47 I think we.
48:49 Um,
48:51 I think you're right that the,
48:52 uh,
48:52 the same problems that India faces translates,
48:56 um,
48:57 and some,
48:57 but,
48:58 but sometimes with a difference in resources and,
49:00 and,
49:00 and,
49:00 and,
49:02 and,
49:02 and capabilities,
49:03 but we were talking just before this this program about
49:07 you know how India's digital infrastructure could be transferred,
49:11 uh,
49:12 you know,
49:12 the kind of model that uh that London has built.
49:16 Uh,
49:17 you know,
49:17 could you transfer that kind of platform elsewhere?
49:19 There's a,
49:20 uh,
49:20 uh,
49:21 there's an
49:22 organization meant to do that,
49:23 MSI,
49:24 but could we do that?
49:25 But also encourage
49:26 the,
49:27 you know,
49:27 people to get skilled,
49:29 uh,
49:29 for,
49:30 for example,
49:30 an education intervention which works in
49:32 India by combining technology with people,
49:35 uh,
49:35 with teachers in the right way
49:37 and,
49:37 uh,
49:37 which can deliver,
49:39 uh,
49:39 learning to remote areas,
49:41 uh,
49:41 once we work that out.
49:43 Can we transfer it
49:46 through the same sort of
49:49 method
49:50 but also simply learn from such experiments elsewhere?
49:53 I think
49:54 it's easy to become dejected
49:57 about the pace of progress and development and all the
49:59 challenges that are coming with climate and so on,
50:02 but I think it's also
50:03 easy to be hopeful
50:05 that in this new in this
50:08 era of new technology with the integration that's happening.
50:11 Maybe we learn from the many,
50:13 many,
50:13 uh,
50:14 experiments that are going on across the world
50:16 and we absorb them.
50:17 We just have to make it possible to do that kind of cross-border fertilization which
50:22 conference like this does.
50:24 OK,
50:24 Professor Rajan has only 10 more minutes
50:27 and,
50:27 uh,
50:27 so if you are going to ask a long question,
50:30 I'm gonna cut you off.
50:31 So you should,
50:31 uh,
50:32 make sure that your question is no longer than than 3 short sentences.
50:36 OK,
50:36 uh,
50:38 first Maira and then Sidd and then.
50:41 Thank you for a wonderful presentation.
50:44 What to do about jobs for women?
50:47 I mean,
50:47 for your
50:48 vision to succeed,
50:50 women will have to go into the labor market.
50:52 Good question.
50:53 So that.
50:54 Hi,
50:55 uh,
50:55 I have a question on decentralization coming from UP.
50:58 So you say.
50:59 Decentralize the issue of governance in GUP.
51:01 So what do you mean?
51:02 At what level should it be to district level,
51:05 or should we copy the European of like city level or go to the village,
51:09 the Panchat level?
51:10 And having seen the mess at the Panchat level and Grand Pradhans,
51:13 I'm pretty skeptical of going that below below.
51:16 So what is your level?
51:18 Or should UP be split again?
51:20 Yeah,
51:21 uh,
51:21 yes,
51:22 yeah,
51:22 yeah.
51:23 Yes,
51:24 you
51:24 go ahead.
51:25 Introduce us.
51:27 Hi,
51:27 my name.
51:28 My name is Samira,
51:29 and,
51:30 um,
51:30 I am,
51:31 I actually worked with Professor Roderick on the paper that you just mentioned.
51:34 And the um
51:36 examples that he had mentioned in the paper,
51:38 the example,
51:40 the human example,
51:40 these are all innovative grassroot level examples
51:44 which have not succeeded at scale.
51:45 So how do you transfer,
51:47 uh,
51:48 these grassroots level services to like expand to a level because,
51:52 um,
51:53 maybe like,
51:53 uh,
51:54 Nandanelekani's technology is transferable,
51:56 but it,
51:57 how,
51:57 how do you,
51:58 how do you reconcile that?
52:00 Do we take one more question?
52:02 Can you remember the constraint is my remembering which ones.
52:05 OK,
52:06 start job for women
52:08 and then decentralization.
52:09 So,
52:10 uh,
52:10 I mean there are
52:11 people who are far more expert on women's employment
52:15 here and what the constraints are
52:18 uh
52:18 than
52:19 uh than I am.
52:20 So I'm not going to.
52:23 I'm not going to try and
52:24 second guess the expertise other than saying it's extremely important.
52:29 Uh,
52:30 I do think
52:31 that
52:32 there are,
52:33 you know,
52:33 cultural aspects,
52:34 there are security aspects,
52:36 uh,
52:36 both in the workplace and getting to the workplace,
52:39 uh,
52:40 and,
52:40 uh,
52:41 I mean,
52:41 the,
52:42 the,
52:42 there's also good news in the sense that women are,
52:46 as elsewhere,
52:47 uh,
52:47 in the forefront of getting educational capabilities.
52:50 What is,
52:50 what is sad is that,
52:52 uh,
52:53 you know,
52:53 you see an
52:54 inversion of the participation with education,
52:57 at least according to some of the.
52:59 Data that I have seen,
53:01 it has,
53:01 it has to be a priority.
53:03 We can't have half the workforce
53:07 essentially
53:08 not participating to full,
53:10 full,
53:10 full measure,
53:11 and of course it should be their choice,
53:13 but,
53:14 but
53:14 if I were to paraphrase Ashwini,
53:16 what she basically.
53:17 Said you create enough jobs
53:19 and you'll create jobs for women.
53:20 We're just not creating enough jobs.
53:21 That's that,
53:22 that may,
53:23 may well be part of it.
53:25 I mean,
53:25 I,
53:26 I,
53:26 I'm not gonna,
53:27 uh,
53:28 let,
53:28 let me leave it at that.
53:29 Uh,
53:30 I,
53:30 I,
53:30 I think certainly we need many more jobs.
53:33 Um,
53:34 OK,
53:34 now I'm already forgetting the second question.
53:35 The second question was decentralization.
53:38 You know,
53:39 this has always been the complaint about decentralization,
53:41 so I'm gonna be a little skeptical about it.
53:44 It's always been in the in the US it is
53:47 oh they'll if you decentralize they'll they'll teach creationism,
53:51 right?
53:51 So let's not decentralize education down to the local level.
53:55 Yes,
53:56 mistakes will be made.
53:57 Yes,
53:58 today you have goons
54:00 occupying those places,
54:02 but you're sort of assuming that the change in empowerment will not,
54:06 uh,
54:06 commensurately result in a change in the people applying for those positions,
54:11 right?
54:11 If those positions are powerless,
54:13 then the goons go in.
54:14 I mean,
54:15 do you know the name of anybody in the
54:17 Mumbai Municipal Committee?
54:19 And
54:20 you know,
54:20 uh,
54:21 people constantly talk about whatever little powers they have
54:24 are are misused,
54:26 but of course if you empower them more,
54:28 if the city mayor was
54:30 a politician of the
54:31 sort that the New York City mayor is or or the Chicago city mayor is,
54:36 maybe there'll be more competition and more talent will come out so.
54:40 I recognize what you're saying is a problem.
54:43 But I don't want to say it's going to be permanent.
54:46 I also don't want to say that new methods of control.
54:51 Better information
54:52 at the local level,
54:54 but also light monitoring above
54:57 in terms of flow of funds where it's going,
54:59 what it's being spent on,
55:01 and transparency about that to the local level
55:04 that that combination cannot
55:06 solve a problem which
55:07 since time immemorial,
55:08 I mean you could also have said
55:10 the local elites will capture the local government that's another issue,
55:14 absolutely,
55:14 and this is one reason Ambedkar was opposed to local government,
55:17 right?
55:18 Uh,
55:18 what is the village but a den of iniquity.
55:21 Uh,
55:21 yes,
55:22 but the world changes,
55:24 and
55:24 again I'm not saying let's experiment more,
55:27 uh,
55:27 you know,
55:28 casual empiricism suggests the southern states which have more decentralization
55:32 are the ones that are doing better on social provision of,
55:35 uh,
55:35 of public goods.
55:36 So maybe,
55:37 uh,
55:38 but I would say if we can experiment,
55:40 give a few,
55:40 uh,
55:41 you know,
55:41 municipalities in,
55:42 in,
55:43 uh,
55:43 Uttar Pradesh power,
55:44 give a few panchayas power over the local teachers,
55:46 see what happens.
55:47 Let's not do it at a mass scale.
55:49 Let's experiment.
55:50 Um,
55:51 uh,
55:52 scaling up,
55:53 going to,
55:54 I mean,
55:54 how do you take these stories that Samira said?
55:57 Maybe,
55:58 uh,
55:58 maybe there is no scaling up.
56:01 Maybe
56:02 experiments
56:04 apply to a particular area.
56:06 We learn from them and say,
56:07 OK,
56:07 let me apply it in my area,
56:09 but I'll do it a little differently.
56:11 So,
56:12 in other words,
56:12 maybe there's not one experiment.
56:14 So the Ola cabs,
56:15 uh,
56:15 by the way,
56:16 sorry for not mentioning your name,
56:17 uh,
56:18 uh,
56:19 uh,
56:19 uh,
56:19 on the paper,
56:20 but,
56:21 uh,
56:22 the Ola cabs example where they train up
56:25 drivers.
56:26 Now that to my mind could be scaled up across,
56:28 it doesn't have to be only Haryana,
56:30 it can be across the country.
56:31 Uh,
56:32 but
56:33 there are other examples,
56:34 entrepreneurship,
56:36 uh,
56:36 you know,
56:37 that's why I'm saying let,
56:38 let
56:38 people experiment and they'll pick up,
56:40 OK,
56:40 that seemed to work there,
56:42 maybe it'll work here,
56:43 but I don't think that other
56:45 feature will work here.
56:46 That's why local empowerment makes a lot of sense
56:49 because the local government can then bring in
56:52 pieces
56:53 that they think work
56:55 elsewhere but apply to the local.
56:57 And that's really the beauty about local empowerment that you can,
57:01 you can,
57:01 uh,
57:02 sort of make it contingent on local,
57:04 um,
57:05 sort of strengths
57:07 and weaknesses.
57:08 I think we can take one more round if you
57:11 do it quickly,
57:11 those three there.
57:13 Your you,
57:14 sir,
57:14 first,
57:15 you next,
57:16 and you next,
57:17 please.
57:21 Did you,
57:22 I want.
57:25 Yeah,
57:25 hi,
57:25 sorry,
57:26 my name is Vijayndra Rao.
57:27 I'm with the World Bank Research Department.
57:29 Question on,
57:30 uh,
57:30 basis on,
57:31 on his anecdote in a UP village that decentralization doesn't,
57:34 doesn't work
57:35 should be based on data.
57:36 We've just done a review called 250,000 Democracies.
57:39 I would suggest you read that.
57:40 It's based on an extensive review of the
57:42 actual evidence and then make your conclusions clear.
57:44 Thank you.
57:45 I'd love to see that.
57:46 I'm happy
57:47 to send it to you.
57:48 I'll send it to you.
57:48 It's a good paper,
57:49 yep.
57:51 I will send it to you.
57:52 Hi,
57:52 I'm Mana Singh.
57:53 Um,
57:54 I understand that you have not completely discarded manufacturing.
57:57 So given that India is now focused on make in India for a while and
58:01 the global competencies in low skilled manufacturing,
58:04 which sectors do you think should India focus on?
58:07 It
58:09 One more question and then I uh stand like Hover.
58:11 A few years ago,
58:12 Indian farmers protested.
58:14 They didn't want to be upskilled.
58:16 The government initially resisted but then capitulated.
58:20 What do you do with upskilling if you have
58:23 so many people who simply refuse to be upskilled?
58:27 So,
58:27 uh,
58:28 the,
58:28 the,
58:28 the,
58:28 there were actually only two questions because Bijo didn't ask you a question.
58:31 So we,
58:31 we,
58:32 we can take one question from this side.
58:33 Yes,
58:33 ma'am.
58:34 Yeah,
58:34 so yes,
58:35 please.
58:36 Just one question.
58:40 So,
58:40 uh,
58:41 I,
58:41 I completely agree with the education,
58:43 uh,
58:43 focus on education,
58:45 but do you think,
58:46 and I'm not sure,
58:46 I've not read your book yet,
58:47 but
58:48 do you think the nature of education
58:50 and the nature of jobs
58:52 are going to transform
58:54 significantly due to automation and AI?
58:57 And,
58:57 and have you touched on this,
59:00 uh,
59:00 it's not typical education that needs to be scaled
59:03 it's a
59:04 new form of education that has to come up,
59:07 um,
59:07 so let me start backwards,
59:08 uh,
59:09 uh,
59:09 you're basically saying what does AI do to all this,
59:12 and the answer is nobody knows.
59:13 uh,
59:14 could AI kill manufacturing?
59:15 It could,
59:16 uh,
59:17 a better robot could kill a lot of the routine
59:19 sort of low skill stuff,
59:20 right?
59:22 But it could also kill low skilled services
59:25 almost surely,
59:25 and I know Daron doesn't agree with this,
59:27 but
59:28 almost surely
59:30 there will be room for creativity
59:32 because AI is based on past data.
59:35 Yeah,
59:35 we've seen some of those things put together,
59:37 but I,
59:38 I think there will still,
59:39 if there's a last bastion
59:40 for human
59:42 capability,
59:42 it'll be
59:43 the most creative parts,
59:45 and that's why I think building up human capability is almost surely
59:49 the.
59:49 Only thing we can do in the face of AI,
59:51 which is which is transforming,
59:53 and I think it would take a lot more time for AI to transform than
59:56 than reflected in the evaluations of these companies.
59:59 It's gonna take time.
1:00:00 It's it's not going to happen instantaneously.
1:00:02 We'll all have jobs next year
1:00:04 and for a few years more,
1:00:07 um,
1:00:08 so I I I I
1:00:09 I I think this means the quality of education has to improve
1:00:14 and it has focused much more on innovation and creativity.
1:00:17 Uh,
1:00:18 of course we can say that.
1:00:19 What does that mean?
1:00:20 Well,
1:00:20 it means certainly
1:00:22 improving the basics
1:00:24 right from
1:00:25 primary to,
1:00:26 uh,
1:00:26 to upper
1:00:27 education,
1:00:28 but you know we have a national education policy which should be implemented
1:00:31 which talks about improving the quality of our colleges,
1:00:34 etc.
1:00:34 We need to do that.
1:00:36 Second question was
1:00:38 on the farmers.
1:00:40 You know that's a complicated thing.
1:00:42 I know that some of my friends who are experts on agriculture basically
1:00:47 say that what they were protesting against was one size fits all,
1:00:51 and that if you actually talk to the farmers in Punjab,
1:00:54 they desperately want to get away from rice cultivation,
1:00:57 which they know is a dead end,
1:00:59 which is going to be environmentally very bad and
1:01:02 it's going to be subject to climate volatility.
1:01:05 They want to get away,
1:01:06 but the way the government did it
1:01:08 didn't
1:01:09 take into account
1:01:10 their concerns,
1:01:11 their interests.
1:01:12 Maybe
1:01:13 they were
1:01:14 worried about minimum support prices or whatever,
1:01:16 but maybe a dialogue would have helped,
1:01:18 and I think that is what we need going forward,
1:01:21 a dialogue,
1:01:22 but which is also decentralized across states
1:01:25 because different states have different requirements on agriculture
1:01:28 and so you need to respect the.
1:01:29 You know,
1:01:30 the differences,
1:01:32 I think that that is,
1:01:33 but I'm not an agricultural expert,
1:01:35 so I won't say I have the full answer to your question.
1:01:37 Uh,
1:01:39 the third question which services sectors,
1:01:41 or which sectors,
1:01:43 uh,
1:01:43 manufact sectors in manufacturing,
1:01:44 you know,
1:01:45 I would say let's,
1:01:46 let's,
1:01:47 if we are,
1:01:47 uh,
1:01:48 let's at least make sure
1:01:51 that our labor intensive manufacturing has access to,
1:01:55 uh,
1:01:55 uh,
1:01:55 you know,
1:01:56 um,
1:01:57 uh,
1:01:57 productively improving technologies.
1:01:59 To consulting
1:02:01 and potentially to uh
1:02:03 you know to credit
1:02:05 but also
1:02:06 remove any impediments in their way.
1:02:09 I mean what I find tragic about India is having so many people,
1:02:13 the labor intensive parts of manufacturing are shrinking.
1:02:16 So
1:02:16 at the very least let's remove the impediments.
1:02:18 I'm not again saying industrial policy,
1:02:20 let's subsidize
1:02:21 maybe that
1:02:22 you know we don't have a competitive advantage there,
1:02:24 but let's help Tiruppur
1:02:26 get back.
1:02:28 In its exports and figure out what's missing.
1:02:31 What do those guys say?
1:02:32 And there are some places where we've shot ourselves in the foot
1:02:35 in trying to help some big industries.
1:02:37 We've killed the small guys.
1:02:39 We talk about one such example in the book,
1:02:41 uh,
1:02:41 you know,
1:02:41 tariffs on TPA,
1:02:43 for example,
1:02:43 which is
1:02:45 very important input
1:02:47 for the kinds of uh of cloth that some of these small guys work on,
1:02:52 but they've been priced out of the market.
1:02:54 So
1:02:56 I,
1:02:56 I would say we need to talk to them.
1:02:58 But I would say less of an emphasis on shiny manufacturing.
1:03:01 The private sector may want to do it,
1:03:03 and certainly we have defense manufacturing needs,
1:03:06 but
1:03:07 let's focus on the labor intensive parts also and remove impediments again.
1:03:12 Let's encourage more entrepreneurship there,
1:03:14 more high value added,
1:03:16 uh,
1:03:16 you know,
1:03:16 cloth and,
1:03:17 and textiles and so on
1:03:19 if we can.
1:03:19 So you're already running a little late,
1:03:21 like about 4 minutes late,
1:03:22 so you're almost done.
1:03:23 Wait a second,
1:03:24 wait a second.
1:03:24 So,
1:03:25 so I wanted to ask you a question.
1:03:28 Are you an optimist about India or a pessimist?
1:03:31 Are you more of an optimist today than 3 months ago or less of an?
1:03:35 Uh,
1:03:36 I'm a huge optimist.
1:03:37 I'm also
1:03:38 much more.
1:03:40 Uh,
1:03:40 I wouldn't say much more.
1:03:41 I would say,
1:03:42 uh,
1:03:43 I thought,
1:03:44 um,
1:03:45 India would react the way it did.
1:03:47 Uh,
1:03:48 I,
1:03:48 I,
1:03:49 I said that in,
1:03:50 in some public fora,
1:03:52 but I'm happy that,
1:03:54 that the system
1:03:55 allowed it to react,
1:03:57 and,
1:03:57 uh,
1:03:58 I'm,
1:03:58 uh,
1:03:58 I think,
1:03:59 uh,
1:03:59 democracy is very good for India.
1:04:01 Uh,
1:04:02 I think if we wanna be a creative economy,
1:04:04 if we want public services for the broader
1:04:06 public,
1:04:07 we need to focus on that.
1:04:09 Uh,
1:04:09 and I think uh what happened in the elections
1:04:12 enables that
1:04:14 uh India needs a strong opposition,
1:04:15 whatever its color,
1:04:16 whatever it's it's character,
1:04:18 it needs a strong opposition.
1:04:19 I think we have that now
1:04:21 and hopefully going forward,
1:04:23 uh,
1:04:23 we will have much more of a debate
1:04:25 about where India needs to go,
1:04:27 uh,
1:04:27 and I think that's critical for India.
1:04:29 It cannot go in a,
1:04:30 you know,
1:04:31 one man knows everything way.
1:04:33 It has to encourage debate.
1:04:35 Rahu,
1:04:36 thank you very much on behalf of both CGD.
1:04:39 And the World Bank,
1:04:40 thank you very,
1:04:40 very much.
1:04:41 Thank you.
1:04:42 I think,
1:04:43 I think you're,
1:04:44 I think that you're working on a very important,
1:04:47 I mean,
1:04:47 uh,
1:04:48 uh,
1:04:48 perhaps one of the most important stories in the world today,
1:04:51 which is India,
1:04:52 and it's really a good coincidence that one of the most important minds
1:04:55 is working on one of the most important stories kind of you.
1:04:58 If any of you read the book,
1:04:59 do put some comments on Amazon.
1:05:01 We're trying to sell the book actually.
1:05:02 Thank you.
1:05:05 Thank you so much.
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