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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: We welcome all of you across America and around the world,

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Speaker 2: and particularly all of you listening in India. Now to

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Speaker 2: that question, our Bloomberg Conversation of the Day on the

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Speaker 2: historic moment for the Indian people. Raga Rogen is at

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Speaker 2: Boo School. He's a Miller professor at Boo School. His

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Speaker 2: financial book on the Crisis of seven eight won every

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Speaker 2: award fault Lines. He is one of our great financial

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Speaker 2: professors and of course a former head of a Central

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Speaker 2: Bank of India. Far more importantly is always Rogin out front.

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Speaker 2: He has a book he is delivering, breaking the mold

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Speaker 2: on his India.

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Speaker 3: It will be a.

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Speaker 2: Definitive two hundred and seventy pages. Look for that from

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Speaker 2: Princeton University Press. Shortly, Ragu, thank you so much for

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Speaker 2: sending me the PDA for the book. I'm going to

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Speaker 2: cut to the Chase professor, the final sentence of your book.

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Speaker 2: They cannot have any more excuses. What are the excuses

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Speaker 2: Modi has now and what does he need to move

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Speaker 2: India to a new prosperity.

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Speaker 3: Well, we have an election.

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Speaker 1: The results have been coming out and I think it's

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Speaker 1: a splendid result because it tells the government it needs

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Speaker 1: to change course. The old course was unviable and we

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Speaker 1: can talk about that. Of course, markets seem to be disappointed.

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Speaker 1: We can talk about that also why markets are reacting negatively.

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Speaker 1: But I think what is happening today is really, in

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Speaker 1: the long run, really good for India because it forces

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Speaker 1: India to choose a different course from the one it

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Speaker 1: has been on, a course which has led to much

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Speaker 1: wider unemployment and distress than needed in the country.

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Speaker 2: Is this an election result that you see will bring

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Speaker 2: the technocratic in a lead South together with a more

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Speaker 2: emotional and historic north. Does it bring the polarity of

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Speaker 2: India together? Or do we have a more separate India

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Speaker 2: in twenty twenty six.

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Speaker 1: No, it's actually a win for democracy and that's good

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Speaker 1: for India because what democracy does is it allows the

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Speaker 1: different paths to essentially express themselves and to negotiate. The

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Speaker 1: problem earlier was India was trending towards a more autocratic country,

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Speaker 1: a country with one leader who was who are a

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Speaker 1: larger than like image, and that unfortunately meant that the

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Speaker 1: BJP leadership wasn't listening, wasn't listening to the economic news

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Speaker 1: on the ground that people were actually suffering hardship. Wasn't

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Speaker 1: listening to the broader sense that the weaponization of various

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Speaker 1: instruments of the government to put you know, opposition party

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Speaker 1: leaders in jail were simply not jelling and it would

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Speaker 1: have taken India down a course which was ruinous in

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Speaker 1: the longer run, maybe in the short run benefiti of

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Speaker 1: the big, big business groups, and that's why the market

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Speaker 1: is reacting adversely.

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Speaker 3: But I think this is good.

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Speaker 2: Rag and Rajen with us with MUSCO Chicago. We welcome

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Speaker 2: all of you on YouTube worldwide and particularly in South Asia.

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Speaker 2: My colleague Damien Sassar to Professor Rajin.

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Speaker 4: Professor Rajen, you have mentioned the concept of an authoritarian

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Speaker 4: democracy and how India is moving into that sort of bucket.

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Speaker 4: Talk to us a little bit about what this election

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Speaker 4: means for India and what it means for Narendra Modi

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Speaker 4: and some of his policies on labor and whatnot.

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Speaker 1: So I think the key number to look at in

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Speaker 1: this election is the BJP's own seats in Parliament. They

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Speaker 1: almost surely will fall short of a majority, which means

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Speaker 1: that they have to actually take the support of other

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Speaker 1: parties convinced them to stay on board, which means means

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Speaker 1: they have to be much more sensitive to a broad

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Speaker 1: based set of policies. Now, the BGP has done some

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Speaker 1: very good things during its stint in power. For example,

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Speaker 1: it has improved the investment in infrastructure and you can

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Speaker 1: see roads, airports, you know, highways becoming much better in India.

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Speaker 3: That's good. However, what it.

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Speaker 1: Has not articulated is a sensible policy for broad based employment,

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Speaker 1: and that almost surely requires policies on human capital, how

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Speaker 1: to skal up the workforce, how to bring you industry

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Speaker 1: together with universities and so on to get people jobs.

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Speaker 1: So the frustration with a BJP has been mass unemployment,

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Speaker 1: which is, you know, in an authority regime, they simply

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Speaker 1: don't even acknowledge the fact that unemployment has been growing

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Speaker 1: and is especially amongst the youth. So what this election

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Speaker 1: has done is essentially given them a cold shower of

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Speaker 1: reality that people are not happy with your policy and

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Speaker 1: that will force, you know, if the VJP does come

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Speaker 1: back to par with after negotiating with allies, it will

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Speaker 1: force policies which are broader, more inclusive and more sensitive

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Speaker 1: to the needs of the people.

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Speaker 3: That's a good thing.

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Speaker 2: This morning, an extended interview with rog and Roger the

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Speaker 2: Bous School, Chicago for those joining it in America. A

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Speaker 2: shock a result or beginning of results, I should say,

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Speaker 2: in a Delhi election assumed to be dominant for mister

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Speaker 2: Mody and it was decidedly less so my colleague Damian.

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Speaker 4: Sassar, Professor Roger, I want to take you back to

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Speaker 4: your former role as director of research at the IMF.

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Speaker 4: You're familiar with workers' remittances, the role they play in India.

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Speaker 4: I mean the role they play globally. Eight hundred and

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Speaker 4: sixty million of remittances in twenty twenty three, India is

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Speaker 4: fifteen percent of that. Talk to us about what this

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Speaker 4: election means for the diaspora outside of India, about the

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Speaker 4: flows of capital into India. Is that's going to change

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Speaker 4: things at all?

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Speaker 1: Well, I think it's It can actually be good news

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Speaker 1: both from the perspective. Remittances will continue regardless of who's

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Speaker 1: in power. This is more you know a lot of

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Speaker 1: money coming from the Middle East, some from the United

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Speaker 1: States and Europe for people to their families, and that

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Speaker 1: will continue that there's no reason why that would be disrupted.

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Speaker 1: What is interesting, however, is foreign direct investment has been

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Speaker 1: slowing into India over the last couple of years. Some

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Speaker 1: people argue that one of the reasons it has been

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Speaker 1: slowing is that, you know, people are worried about arbitrary

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Speaker 1: government policy, to the extent that a more democratic dispensation

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Speaker 1: at the center creates more stability about government policies, especially

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Speaker 1: it limits the weaponization of the tax authorities, of the

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Speaker 1: investigative authorities. Business actually will feel more comfortable, I hope,

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Speaker 1: and I think it is quite possible that private investment,

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Speaker 1: which has also been on the down as well as

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Speaker 1: foreign direct investment, could pick up slowly as it sees

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Speaker 1: policies emerge which are more comforting.

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Speaker 2: Professor, within your new book, Breaking the Mold, and I

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Speaker 2: guess the answer is for every central bank, the raging

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Speaker 2: vogue now is to pull climate change into some form

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Speaker 2: of monetary policy mandate from whatever the nation is. Climate

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Speaker 2: change is reality in India New Deli today, I believe

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Speaker 2: the high of one hundred and eleven, one hundred and fourteen,

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Speaker 2: fair night, who's counting, Professor? What does India do and

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Speaker 2: what does MODI do to immediately break the mold? On

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Speaker 2: a climate change out of control.

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Speaker 1: Well, this is precisely what the book is about. Can

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Speaker 1: India afford to become another China? Does the world have

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Speaker 1: room for another China becoming a manufacturing giant? And that

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Speaker 1: was the direction the Modi government was trying to go

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Speaker 1: in offering massive subsidies to capital intensive manufacturing and it

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Speaker 1: you know, the reality is that China is already there.

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Speaker 1: There is very little place for another manufacturing giant, especially

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Speaker 1: given the protectionism that's right in the world.

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Speaker 3: But India has a card up its leave.

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Speaker 1: It actually is doing far better in services exports, which

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Speaker 1: is much greener, much more sustainable, and you're seeing a

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Speaker 1: huge growth in skilled services exported to the rest of them,

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Speaker 1: whether it's telemedicine, consulting, chip design, lots of new areas

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Speaker 1: opening up. India accounts for five percent of global trade there.

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Speaker 3: That's good.

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Speaker 2: How do you unify a nation with over twenty languages?

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Speaker 2: We in the United States are in a panic. I mean,

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Speaker 2: there's two languages in Chicago, the Cubs in a white Sox.

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Speaker 2: That's a different story. But ragu how do you unify

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Speaker 2: towards a new India around twenty disparate languages.

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Speaker 3: Tom it's more than that.

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Speaker 1: It's twenty official languages, which means they have enough people

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Speaker 1: speaking it, but there are six hundred additional dialects and languages.

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Speaker 1: It's a vast complicated country and the only way it's

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Speaker 1: unified is through democracy, because democracy allows each community a voice.

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Speaker 1: You talked about twenty twenty six in India, that's when

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Speaker 1: the parliamentary seats get reapportioned, when you know there will

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Speaker 1: be a move to have new seats in parliament for

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Speaker 1: the more populous areas. That has to be done by consensus.

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Speaker 1: And what I'm so glad about is that it will

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Speaker 1: be done by consensus because democracy has re established itself

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Speaker 1: in India and they will have to negotiate how that

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Speaker 1: reapportionment helps. So India is more politically stable as a

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Speaker 1: result of this election, is also going to be a

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Speaker 1: greater friend for the democracies of the world.

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Speaker 2: Yeah, Damian, I know one of your focuses is on Russia,

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Speaker 2: and of course it goes back to Nehror's visit in

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Speaker 2: nineteen fifty five to Russia and all the responses through

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Speaker 2: the sixties of James John, Kenneth Gilberys and Kennedy trying

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Speaker 2: to reaffirm an American presence from a distance.

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Speaker 4: That's absolutely right. And Professor Rajan, I'd really like to

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Speaker 4: hear your opinion on the relationship between India and Russia. Obviously,

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Speaker 4: they've been a big consumer of Russian barrels of Russian

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Speaker 4: oil and if you look at the tenure and the

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Speaker 4: correlation between the Indian tenure and BRENTKRW, it is pretty

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Speaker 4: strong and has been since two thousand. So talk to

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Speaker 4: us a little bit about that relationship India and Russia.

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Speaker 1: Well, India sort of tilted towards Russia and the US

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Speaker 1: tilted away from India. India and the United States were

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Speaker 1: quite friendly in the sixties, but then you know, as

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Speaker 1: the Bangladesh situation developed, the US tilted away from India

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Speaker 1: and that's when Russia.

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Speaker 3: Moved towards India.

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Speaker 1: There was a strong friendship through the sixties, seventies, eighties.

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Speaker 1: India buys a lot of military hardware from Russia, so

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Speaker 1: it has been attended that has changed. India increasingly is

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Speaker 1: buying from the West, you know, from France, from the

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Speaker 1: United States, and that relationship is strengthening. So this is

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Speaker 1: a work in process. India understands increasingly, Russia is going

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Speaker 1: to be dependent on China, which is unfortunately. At this point,

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Speaker 1: the relationship between India and China is one antagonistm So.

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Speaker 2: Mago, I've got time for one more question. I have

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Speaker 2: to interrupt and be rude. If you are called upon

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Speaker 2: by mister Modi, will you serve the Indian people within

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Speaker 2: his new government?

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Speaker 1: Well, I think that's an unlikely prospect. You know, my

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Speaker 1: sort of inclination is whenever there's a government I can

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Speaker 1: agree with, I'm happy to work with them.

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Speaker 3: I've always been open with advice. Let's see what happens.

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Speaker 2: Thank you so much. We're really anticipating breaking the mold.

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Speaker 2: Two hundred and seventy pages from Princeton University Press, looking

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Speaker 2: for that from Professor Rogin to bou School at Chicago