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Speaker 1: Welcome to Covid Time, a podcast series on markets and

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Speaker 1: economies from DBS group research. I'm Tamar Beck, chief economist

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Speaker 1: welcoming you to our 85th episode today we will talk

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Speaker 1: about India. Our guest is chief economist, Aditya birla Group,

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Speaker 1: An Indian multinational conglomerate that has been in operation for

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Speaker 1: 165 years earlier. L. A. was a professor at the

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Speaker 1: National Institute of Public Finance and Policy. She has also

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Speaker 1: served as principal economic adviser at the Indian Ministry of Finance.

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Speaker 1: L. A. Has altered numerous research paper in the field

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Speaker 1: of economics and finance and recently she did something unusual

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Speaker 1: for an economist. She co authored a book with the

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Speaker 1: serving union minister of India, Yadav. The book is called

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Speaker 1: the rise of the BJP the making of the world's

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Speaker 1: largest political party. Patnaik welcome to copy.

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Speaker 2: Thank you. Pleasure to be here. It's always a delight

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Speaker 2: to speak to

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Speaker 1: delight from my side as well. You know, we'll talk

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Speaker 1: about the book a bit later. First let's go over

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Speaker 1: a couple of issues on the matters of India economy

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Speaker 1: in general. So how are global inflation and interest rate

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Speaker 1: developments affecting India?

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Speaker 2: So currently primarily through the exchange rate because every time

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Speaker 2: the US Fed moves uh indian rupee gets heard, markets worry.

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Speaker 2: So at the moment I think you know, if you're

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Speaker 2: familiar with some of my work on business cycles and

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Speaker 2: the coupling and decoupling of

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Speaker 2: business cycles between the US cycles and indian cycles. We

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Speaker 2: typically see that they don't move perfectly in sync. So

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Speaker 2: first financial variables tend to move and then later real

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Speaker 2: variables tend to move. So you know currently the U. S.

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Speaker 2: Economy is maybe we can say overheating.

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Speaker 2: So India is also doing well. I think later we'll

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Speaker 2: get to see whether, you know if and when there

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Speaker 2: is a monetary policy induced recession, how that affects India

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Speaker 2: and how we slow down or not slowed down.

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Speaker 2: Not much. But currently it's mainly, you know, our exports

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Speaker 2: are doing well and if the and when the Fed

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Speaker 2: hikes rates and you know that's the dollar strength primarily

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Speaker 2: as the dollar is stronger, obviously there's pressure on the

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Speaker 2: rupee as well. So that's been,

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Speaker 1: so in terms of a broader set of financial market

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Speaker 1: variables like dollar spreads for indian companies wanting to borrow

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Speaker 1: in hard currency or the other sort of you know

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Speaker 1: liquidity indicators. You haven't seen the dollar strength spill over

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Speaker 1: into that.

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Speaker 2: I mean I think currently we are looking okay. So

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Speaker 2: India is in fact one of those uh the R. B.

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Speaker 2: I intervene, the repeat improve all that much. But uh

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Speaker 2: we've also been keeping up with the R. B. I.

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Speaker 2: Has been hiking rates do not as much as the

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Speaker 2: US Fed.

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Speaker 2: And I think currently in fact there seems to be

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Speaker 2: a lot of interest in India there seems to be

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Speaker 2: money coming in and uh things look pretty good at

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Speaker 2: the moment.

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Speaker 1: It is interesting in that because when I look at

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Speaker 1: year to date currency

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Speaker 2: movements,

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Speaker 1: the fragile five are nowhere to be seen whether it

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Speaker 1: is Indonesian rupee or indian rupee, they have all outperformed

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Speaker 1: their neighbors in the north. So Korea Taiwan Japan's currencies

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Speaker 1: have depreciated sharply. Um

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Speaker 2: but

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Speaker 1: I sort of worry that as the dollar cycle continues

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Speaker 1: and the deposition trends become more pronounced among the industrial

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Speaker 1: economies that it might spill over into,

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Speaker 2: you know,

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Speaker 1: emerging market economies. So looking at the last three months

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Speaker 1: of this year, do you have any concerns on the

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Speaker 1: currency side or you think that India has sufficient buffers

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Speaker 1: in place to deal with any possible

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Speaker 2: turbulence?

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Speaker 2: I would actually be happy to see the R. B.

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Speaker 2: I allow the rupee to depreciate a bit because that's

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Speaker 2: what will allow the adjustment to happen. So you know,

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Speaker 2: it'll make there will be a little more competitive if

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Speaker 2: they do allow us to depreciate. So, and I think

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Speaker 2: in the last 34 days, 34 trading days that has happened.

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Speaker 2: So the rupee did was allowed to move. And uh

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Speaker 2: you know, the economy needs an adjustment mechanism and the

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Speaker 2: rupee is the ideal one. I mean, you know, you

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Speaker 2: you hear all these demands for increasing custom duties for

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Speaker 2: anti dumping duties and because industry is hurting in many

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Speaker 2: ways and we

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Speaker 2: might think that, okay, one concern that has been there

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Speaker 2: is that we keep the price of oil low but

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Speaker 2: they know it is not the only thing whose price

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Speaker 2: remains low. Once you keep the rupee strong then other

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Speaker 2: uh imports coming

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Speaker 2: and then industry starts worrying about the competitiveness. So I

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Speaker 2: would think that to let the currency move is actually

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Speaker 2: much much much much better than to pick and choose

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Speaker 2: which industries get protection and which don't.

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Speaker 2: And overall, I mean maybe I'm coming from the last

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Speaker 2: you know 2030 40 years of indian industry when there

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Speaker 2: has often been uh there have often been policies to

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Speaker 2: pick and choose industries so we don't want that trend

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Speaker 2: to come back. And I think India would do better

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Speaker 2: with a more competitive exchange rate. So

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Speaker 1: of course more competitive exchange rate when other currencies are depreciating.

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Speaker 1: It could create some sort of bigger than neighbor type spiral.

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Speaker 1: But you are in favor of letting the market decide

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Speaker 1: on that. But what about balance sheet considerations, the risk

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Speaker 1: of you know, foreign currency mismatch among certain importers or

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Speaker 1: the substantial pickup in U. S. Dollar borrowing in recent years?

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Speaker 1: Do those indicators show any signs of concern

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Speaker 1: from your side?

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Speaker 2: Not really. Not really, no, no, not not this time around.

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Speaker 2: So last time around there were concerns but this time around,

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Speaker 2: you know, if you look at the last two years,

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Speaker 2: corporate balance sheets have improved and in fact bank balance

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Speaker 2: sheets have improved the bank's domestic banks, there really are

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Speaker 2: to learn to indian companies when they want to borrow

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Speaker 2: the concern about

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Speaker 2: about unhedged foreign currency exposure is not all that much

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Speaker 2: because companies have also learned in this last few years

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Speaker 2: that you know when there is trouble around the corner,

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Speaker 2: you can if you have a natural edge then you

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Speaker 2: take on currency exposure. Of course there may be a

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Speaker 2: couple of companies which may have gone taken more exposure.

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Speaker 2: But broadly,

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Speaker 2: uh this is not a time when we are worrying

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Speaker 2: as much about that, about about financial stability concerns arising

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Speaker 2: out of unhealthy dollar borrowing that we've not actually actually

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Speaker 2: the last two years have seen a lot of de leveraging.

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Speaker 2: So it's not as if indian companies have been borrowing

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Speaker 2: away and investing and growing and the entire pandemic period

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Speaker 2: was one where they be leveraged. So that's not a

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Speaker 2: primary concern, which is exactly why I'm balancing it out

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Speaker 2: and saying that maybe a time to let the ruby

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Speaker 2: move

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Speaker 2: and to let it depreciate. I mean there is pressure,

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Speaker 2: the pressure is already there and it may not make

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Speaker 2: a lot of sense to resist that pressure, which is

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Speaker 2: what R. B. I. Has been seen to be doing.

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Speaker 2: So I think overall balancing both things out, it's good

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Speaker 2: if we appreciate

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Speaker 2: with the market with the market. I mean, I'm certainly

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Speaker 2: not saying that, you know, we try to push it

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Speaker 2: into depreciation, but if there is pressure, we don't keep

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Speaker 2: losing reserves and trying to keep the rupees strong.

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Speaker 1: Right, right. You know, I've been talking to you about

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Speaker 1: exchange rate issues for a long time. So I know

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Speaker 1: exactly where you're coming from in that regard. And it's

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Speaker 1: good to hear that you feel that these vulnerability metrics

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Speaker 1: have gone in the right direction since the tape of

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Speaker 1: time from days of 2013.

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Speaker 1: Um you touched a bit on the pandemic. I that's

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Speaker 1: exactly where I wanted to go with my next question

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Speaker 1: um from a policy environment perspective, I mean, how do

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Speaker 1: you assess the indian government's policy response over these two

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Speaker 1: very challenging pandemic years?

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Speaker 2: So, I think we were very sensible uh in the beginning,

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Speaker 2: at the beginning of the pandemic, there was a lot

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Speaker 2: of pressure on the indian government to start spending more.

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Speaker 2: In fact, many, many economists said especially those in the

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Speaker 2: West said that

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Speaker 2: India should print money and do 10% of deficit as

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Speaker 2: uh you know, do transfers up to 10% of GDP,

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Speaker 2: so deficit the fiscal deficit could be allowed to go

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Speaker 2: to 10% or maybe even more

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Speaker 2: Now, all that was uh did appear to be very

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Speaker 2: attractive at that time because, you know, you thought the

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Speaker 2: world was going to end and this was just it.

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Speaker 2: And if you save it now then we're done. And

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Speaker 2: that it's almost as if there was only gonna be

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Speaker 2: one wave of covid and then you had to just

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Speaker 2: save the world. Now, the government did not take that advice.

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Speaker 2: What the government did was that it tried to do

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Speaker 2: structural reforms. So you, you know, you're familiar with that

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Speaker 2: admonition package that for five days, the Finance Minister announced

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Speaker 2: various kinds of reforms. Some went through, some didn't go through,

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Speaker 2: try to give credit support, try to give me any

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Speaker 2: food directly to households, but essentially not do the kind

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Speaker 2: of fiscal transfers which some of the countries, some other

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Speaker 2: countries like the US

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Speaker 2: and by not doing that today, we are not suffering

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Speaker 2: the kind of demand side inflationary pressures, the large, you know,

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Speaker 2: households with household having withdrawn from the market, the labor market,

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Speaker 2: the kind of stuff that we are seeing in the US.

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Speaker 2: So I we had a far more fiscally prudent, sensible

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Speaker 2: fiscal policy.

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Speaker 2: Now, I think that fundamentally there are two big reasons

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Speaker 2: why we could do that. So, you know, I'm not

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Speaker 2: trying to say that the others were wrong in doing

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Speaker 2: what they did, what they thought was best in their country,

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Speaker 2: but one is they didn't have that much physical space.

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Speaker 2: I mean, you know, once you, once you start borrowing

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Speaker 2: too much, you spill over onto the current account or

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Speaker 2: you start borrowing from abroad and nobody's gonna lend us

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Speaker 2: in rupees the way

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Speaker 2: the dollar borrowing can increase. So it's we didn't have

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Speaker 2: that much physical space, but on the other hand, we

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Speaker 2: did have space to do uh structural reforms, okay, there

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Speaker 2: are many things where markets still don't function in India

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Speaker 2: and one couldn't do many things. And I think there's

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Speaker 2: another social aspect of it which is that when say

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Speaker 2: someone in the US

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Speaker 2: loses a job, they lose health insurance, they lose their house.

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Speaker 2: Whereas you know the way our society still is you

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Speaker 2: the biggest crisis was migrants going back home, it was

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Speaker 2: not homelessness, they had homes and they wanted to walk

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Speaker 2: back and you know, they were not allowed to do that.

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Speaker 2: And that was seen as a very very very very

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Speaker 2: big crisis. But I'm just saying

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Speaker 2: that in contrast to some economies where people would have

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Speaker 2: you know, gone to hospital, lost all their savings in

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Speaker 2: life because there was just private healthcare and no government

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Speaker 2: healthcare or and and some of the U. S. Or

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Speaker 2: they would have also become homeless. So given that we

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Speaker 2: have a different kind of society

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Speaker 2: and given that our household balance sheets are very different

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Speaker 2: and family ties are very strong, our crisis was people

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Speaker 2: wanting to walk to go home and us not being

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Speaker 2: allowed to do that, which is a different kind of crisis.

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Speaker 2: So the way it was handled so one can always,

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Speaker 2: you know, one can always with the benefit of hindsight

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Speaker 2: criticize this was not done properly or that was not

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Speaker 2: done properly or what could have been done better. Sure

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Speaker 2: there are, you know, many things that can be said

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Speaker 2: about that, but I think fundamentally the fact that we

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Speaker 2: did not go overboard on fiscal expenditure.

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Speaker 2: Yeah. So that I think is what saves us today

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Speaker 2: and we are seeing far more macroeconomic stability post the

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Speaker 2: pandemic in India. And therefore India remains fundamentally attractive destination.

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Speaker 2: That which would not have been the case had we

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Speaker 2: gone overboard on our fiscal.

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Speaker 2: I'll

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Speaker 1: talk a bit about with you later on about the

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Speaker 1: informal sector in India and whether there was some scarring

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Speaker 1: around the pandemic. But I want to talk about something

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Speaker 1: else before that. Since we are just talking in terms

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Speaker 1: of policy response with respect to the pandemic, the government

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Speaker 1: did deliver some of the

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Speaker 1: emergency measures through the digital route and through some of

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Speaker 1: the new modes of delivery. And as you know, there's

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Speaker 1: been a lot of talk around the world about the

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Speaker 1: pandemic hastening digital adoption. So talk about that in the

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Speaker 1: context of India. I mean how fundamental has been that

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Speaker 1: transformation over the last few years.

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Speaker 2: I mean it's it's staggering actually. So we built uh

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Speaker 2: when when the system was built, the U. P. I.

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Speaker 2: Uh you know payment systems were built when Adar was

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Speaker 2: built

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Speaker 2: When the more accounts were opened where you know everybody

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Speaker 2: you the financial inclusion or bank accounts uh were about

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Speaker 2: about 50% people had bank accounts in 2014. So when

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Speaker 2: all that was done, it was not done with the

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Speaker 2: objective of uh

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Speaker 2: uh what we would do during the pandemic obviously because

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Speaker 2: nobody knew about the pandemic and it was done either for,

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Speaker 2: you know, financial inclusion or extend it suddenly uh increased

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Speaker 2: during post to monetization. Or it was made popular by,

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Speaker 2: you know, giving a

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Speaker 2: creating interoperability between different payment systems. And that was like,

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Speaker 2: you know, that was just done because it was good,

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Speaker 2: good economics, good principles, good regulatory principles, preventing monopolies. And

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Speaker 2: so you bring about interoperability. Interoperability was so important that

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Speaker 2: when we did it, I can, you know, because we

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Speaker 2: were all part of the ministry and we were working

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Speaker 2: on it. We did not understand how important this is

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Speaker 2: it is going to be to save millions of lives

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Speaker 2: and livelihoods which it happened to do during the pandemic.

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Speaker 2: Because now here, you know, there was a time when

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Speaker 2: uh

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Speaker 2: there was no way one could have gone out to

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Speaker 2: the market, paid somebody to do something, one would just

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Speaker 2: pay online and and things would move. And it was

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Speaker 2: just the, even today, you see that today behavior has shifted.

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Speaker 2: So when people go out, they use uh the they

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Speaker 2: use digital payments and they it's just, it's a different

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Speaker 2: country as if it's a different country.

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Speaker 1: Uh there's some data that showed that India's informal sector

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Speaker 1: has been struggling under pressure to formalize this is independent

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Speaker 1: of the pandemic. And but of course the pandemic also

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Speaker 1: brought in its share of challenges for the informal side

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Speaker 1: of the economy. So, I think some of the stuff

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Speaker 1: that we talked about in terms of the positive growth

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Speaker 1: momentum probably largely covers the the activity in the formal sector.

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Speaker 1: Talk a little bit about where the informal sector stands

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Speaker 2: in the informal sector. Uh There's a very large part

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Speaker 2: of India that is very low productive.

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Speaker 2: And when the G. S. T. Was introduced, actually, that

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Speaker 2: is the turning point because you think of somebody who's

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Speaker 2: uh let's say selling vegetables or even a carpenter, if

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Speaker 2: their value added is less than, let's say a carpenter

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Speaker 2: who makes furniture. If his value added, he was in

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Speaker 2: the informal sector, If his value added was less than

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Speaker 2: 12% and if 12% was the GST rate, then he

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Speaker 2: had to completely, he just made no sense to continue

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Speaker 2: to even continue his business if he was better off

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Speaker 2: selling his business, shutting that down, investing money, even putting

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Speaker 2: my bank in a savings account or investing it in

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Speaker 2: the stock market. So what happened uh

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Speaker 2: for the informal sector actually started much before started five

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Speaker 2: or six years ago, when the GST was introduced

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Speaker 2: now, was it? Good? Was it bad? I think all

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Speaker 2: economies are always trying to move towards reallocating resources towards

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Speaker 2: more productive businesses and slowly over time to push out

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Speaker 2: less productive businesses. I think the pandemic accelerated that. So

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Speaker 2: maybe some of that would have happened, but it would

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Speaker 2: have happened more slowly with the pandemic, the informal sector

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Speaker 2: got hit very sharply.

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Speaker 2: Uh And the formal sector recovered by the informal sector

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Speaker 2: didn't recover. And so you see that shift happening in

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Speaker 2: favor of the uh formal sector compared to the informal sector. So,

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Speaker 2: you know that

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Speaker 2: that's broadly, you know, it's a picture which is uh

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Speaker 2: in in some sense, not so bad, because this was

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Speaker 2: something that was going to happen, but it does feel

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Speaker 2: a little, oops, we didn't expect it to happen so fast.

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Speaker 1: And do we see that manifest in weak consumption dynamic

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Speaker 1: at the low end of the income spectrum?

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Speaker 2: Things are picking up for people. Uh So people are

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Speaker 2: coming back into the labor market, investment is picking up now,

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Speaker 2: there is a lot of skill mismatch that has happened.

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Speaker 2: So uh the jobs that are being created thanks to

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Speaker 2: the high growth of the formal sector

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Speaker 2: are not those that can be filled by the people

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Speaker 2: who lost their jobs. So that the the that's and

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Speaker 2: that's pretty clear that you see numbers of, let's say

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Speaker 2: female labor force participation has dropped sharply. I mean, in India,

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Speaker 2: you know, we don't measure unemployment

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Speaker 2: properly. So what we uh and we'll continue to do,

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Speaker 2: I think, look at things like female labor force participation

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Speaker 2: because a lot of the stuff that they might have

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Speaker 2: been doing, low skilled jobs, the jobs are no longer there,

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Speaker 2: they just drop out. They don't say that they're still

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Speaker 2: searching for a job, so they don't count as uh

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Speaker 2: part of

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Speaker 2: the labor force and they don't count as being unemployed

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Speaker 2: but actually they've lost their jobs and they are unemployed

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Speaker 2: but they can't be absorbed in these high skilled jobs

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Speaker 2: where there are vacancies. So for example you uh you

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Speaker 2: know hear about

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Speaker 2: soft software where I the I. T. Sector where people

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Speaker 2: are moonlighting where one person is doing four jobs where

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Speaker 2: all kinds of you know where wages are extremely high

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Speaker 2: uh wage growth is very high. People are happy to

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Speaker 2: just walk out of jobs and quit because then they

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Speaker 2: know that you know they just within a day they'll

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Speaker 2: find another job but there is a skill mismatch. So

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Speaker 2: you do see that that's a problem.

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Speaker 1: Right right. Um Now when I saw you I think

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Speaker 1: three weeks ago I was telling you that when you

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Speaker 1: open a physical newspaper in India you can see every

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Speaker 1: day that the energy sector is expanding. Taking advantage of

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Speaker 1: the currency of political dynamic and

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Speaker 1: and securing you know cheaper energy supply from Russia. But

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Speaker 1: at the same time you read all these stories about

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Speaker 1: how european or american foreign direct investment is coming to

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Speaker 1: India part of the china plus one policy of course

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Speaker 1: all of those are facilitated by the improvement in infrastructure

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Speaker 1: as well. So

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Speaker 1: walk us through your view on this issue. I mean

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Speaker 1: does this mean that this coming decade

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Speaker 2: will be

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Speaker 1: the decade of manufacturing based pickup for India.

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Speaker 2: So uh let me first start with putting my biases

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Speaker 2: on the table because I the table a group is

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Speaker 2: largely a manufacturing group and we produce things like cement, aluminum.

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Speaker 2: Uh we're into textiles and many, many pains, chemicals, many

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Speaker 2: many other things and uh we see India growing and

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Speaker 2: we see uh the domestic market growing, we also see

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Speaker 2: uh

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Speaker 2: indian companies getting a bigger share of global markets thanks

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Speaker 2: to china plus one. So us as a multinational company

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Speaker 2: that also works in europe and America and we see

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Speaker 2: localization there, so we are more into inputs. Uh and

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Speaker 2: so we see companies turning to us compared to china

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Speaker 2: to

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Speaker 2: uh compared to china or chinese companies even a little bit. So,

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Speaker 2: you know, the share of the market is very, the

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Speaker 2: global market is very big and you know, India's share

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Speaker 2: in world trade is very small. So for us a

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Speaker 2: little more manufacturing is actually going to be very big.

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Speaker 2: So yes, I do see this coming decade as one

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Speaker 2: in which that sector in which manufacturing will grow. I

379
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Speaker 2: mean we've seen services grow very fast in the past,

380
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Speaker 2: but this increased realization and the you know, government at

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Speaker 2: least try

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Speaker 2: and to put a lot of effort into what can

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Speaker 2: be done to improve logistics, improve infrastructure and to help

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Speaker 2: manufacturing improve. I hope it'll all pay off,

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Speaker 1: let's expand on that a little bit more. So of course,

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Speaker 1: you know, as the china plus one strategy takes place

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Speaker 1: given India's large population

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Speaker 1: we are experiencing and will likely continue to experience seeing

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Speaker 1: substantial rise in foreign direct investment. So, to your point

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Speaker 1: that the government is making efforts to provide the right

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Speaker 1: logistics infrastructure, um, what is your sense of the state

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Speaker 1: of human capital and physical structure in India to absorb

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Speaker 2: a very sharp

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Speaker 1: pickup in FBI?

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Speaker 2: See a lot of the FBI is coming into the

396
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Speaker 2: domestic market because it is the most promising, most fastest

397
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Speaker 2: growing domestic market expected to be in the next decade

398
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Speaker 2: or so.

399
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Speaker 2: So you see uh, E commerce, you see, you know,

400
00:23:59,440 --> 00:24:03,060
Speaker 2: you see things people like amazon coming, you just uh,

401
00:24:03,070 --> 00:24:09,100
Speaker 2: there is uh, interest not merely in what, where china

402
00:24:09,100 --> 00:24:12,389
Speaker 2: would have got. So there, you know, you think of

403
00:24:12,400 --> 00:24:15,209
Speaker 2: uh hard

404
00:24:15,580 --> 00:24:22,149
Speaker 2: infrastructure and manufacturing, which where china attracted a lot of

405
00:24:22,150 --> 00:24:26,420
Speaker 2: foreign capital, I think what India is attracting today is

406
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Speaker 2: a lot of fun capital in things like,

407
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Speaker 2: as I said, for example, in e commerce, which is a,

408
00:24:35,450 --> 00:24:40,399
Speaker 2: which is a, which is service sector, which is very

409
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Speaker 2: different from uh that traditional sort of thinking that that's

410
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Speaker 2: where money is going to come.

411
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Speaker 2: I think that we have a huge capacity to absorb

412
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Speaker 2: that the capital coming in, it may or may not

413
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Speaker 2: come in into large Greenfield projects because that's where I

414
00:25:01,060 --> 00:25:05,730
Speaker 2: think India has had most difficulties, but when it is

415
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Speaker 2: into m and s so we are seeing money coming,

416
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Speaker 2: where we are seeing private equity coming.

417
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Speaker 2: Uh so the FBI, so I don't know how familiar

418
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Speaker 2: you are with the FBI definition and how that changed

419
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Speaker 2: a few years ago. So, you know anything about 10%

420
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Speaker 2: in a company is pretty much FBI because the O

421
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Speaker 2: E C. D definition used to be more than 10%

422
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Speaker 2: in a country then slowly we also change that. So,

423
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Speaker 2: you know, the F

424
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Speaker 2: FBI flows that are coming in a lot of private equity,

425
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Speaker 2: a lot of money coming into companies buying up companies

426
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Speaker 2: and in Mls. So yes, that is, I think we

427
00:25:43,800 --> 00:25:48,310
Speaker 2: do have the capacity to absorb coming, but but you

428
00:25:48,310 --> 00:25:50,209
Speaker 2: do know that, I don't think we're going to be

429
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Speaker 2: very comfortable to have capital flows beyond 3% or so

430
00:25:53,300 --> 00:25:57,640
Speaker 2: of GDP. So when we do want to attract foreign investment,

431
00:25:57,640 --> 00:25:59,179
Speaker 2: but ultimately,

432
00:26:00,859 --> 00:26:02,960
Speaker 2: there's, it won't be like

433
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Speaker 2: 10% of GDP or very large numbers. And if you're

434
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Speaker 2: talking 3, 4%, we have stopped at the city. And

435
00:26:11,590 --> 00:26:13,790
Speaker 2: that's the total amount of course.

436
00:26:13,810 --> 00:26:17,600
Speaker 1: And your point of, you know, not drawing a line

437
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Speaker 1: at the 3, 4% is that that would allow for

438
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Speaker 1: macroeconomic stability to be maintained. Not have overheating issues, not misallocation,

439
00:26:26,140 --> 00:26:28,939
Speaker 1: but still provide foundation for organics from growth.

440
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Speaker 2: Yeah,

441
00:26:29,460 --> 00:26:33,210
Speaker 2: yeah, yeah. To have to have macro stability to have.

442
00:26:33,220 --> 00:26:37,110
Speaker 2: I mean, I would not say that this is where

443
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Speaker 2: we should remain in the coming decades, This is a

444
00:26:40,510 --> 00:26:44,410
Speaker 2: number that can increase, but, you know, given our capacities,

445
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Speaker 2: given our institutional capacities, given the pace at which we

446
00:26:51,820 --> 00:26:55,250
Speaker 2: have been growing and how comfortable we are with

447
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Speaker 2: a certain level of rupee depreciation, a certain level of

448
00:26:58,510 --> 00:27:03,689
Speaker 2: interest rates, you know? So, so there is this uh

449
00:27:03,700 --> 00:27:07,070
Speaker 2: path dependence that we have. So given that that's what

450
00:27:07,070 --> 00:27:07,980
Speaker 2: I would expect.

451
00:27:07,990 --> 00:27:10,490
Speaker 1: So roughly speaking in dollar terms, that would be in

452
00:27:10,490 --> 00:27:12,869
Speaker 1: the range of 55-65 billion dollars a year in the

453
00:27:12,869 --> 00:27:15,369
Speaker 1: coming near near term years. Right, that's the kind of

454
00:27:15,369 --> 00:27:16,460
Speaker 1: number we have in mind.

455
00:27:16,820 --> 00:27:20,420
Speaker 1: Um Okay, uh

456
00:27:20,430 --> 00:27:20,810
Speaker 2: for

457
00:27:20,810 --> 00:27:22,439
Speaker 1: the longest time I've known you if you have been

458
00:27:22,440 --> 00:27:25,820
Speaker 1: working very, very hard on what is known in India

459
00:27:25,820 --> 00:27:27,860
Speaker 1: as FslR C so for the

460
00:27:28,020 --> 00:27:31,899
Speaker 1: benefit of the audience here. So this is the financial

461
00:27:31,900 --> 00:27:34,340
Speaker 1: sector legislative reforms commission, You've been a member of that

462
00:27:34,340 --> 00:27:37,310
Speaker 1: from the very beginning and I understand that, you know,

463
00:27:37,320 --> 00:27:40,359
Speaker 1: through these years of, you know, efforts made by you

464
00:27:40,359 --> 00:27:44,790
Speaker 1: and others, um we've had some landmark reforms implemented. So,

465
00:27:44,790 --> 00:27:47,140
Speaker 1: would you please share with us that journey that you've

466
00:27:47,140 --> 00:27:50,390
Speaker 1: had and where you see the financial sector reforms presently.

467
00:27:51,460 --> 00:27:54,720
Speaker 2: So, the journey first, let me correct you, I was

468
00:27:54,720 --> 00:27:57,670
Speaker 2: not a member of FslR, see I was only ca

469
00:27:57,670 --> 00:28:01,390
Speaker 2: leading the research team that supported official arson. So the

470
00:28:01,390 --> 00:28:09,830
Speaker 2: members were wise, uh senior justices and former governors and

471
00:28:09,830 --> 00:28:13,690
Speaker 2: so on. So we were the research team at. So

472
00:28:13,700 --> 00:28:15,070
Speaker 2: having said that,

473
00:28:15,210 --> 00:28:18,700
Speaker 2: let me just take a couple of minutes to talk

474
00:28:18,700 --> 00:28:22,550
Speaker 2: about what is typically the process through which reform happens

475
00:28:22,560 --> 00:28:28,470
Speaker 2: and that's very critical to FslR C and what was

476
00:28:28,470 --> 00:28:31,780
Speaker 2: done and what will be done uh in terms of

477
00:28:31,780 --> 00:28:33,899
Speaker 2: financial sector reforms. So, the

478
00:28:34,359 --> 00:28:38,450
Speaker 2: in general, if there's a problem, ok, then people kind

479
00:28:38,450 --> 00:28:43,500
Speaker 2: of look at government banks complain, various regulators complain, various

480
00:28:43,500 --> 00:28:46,920
Speaker 2: people complain public complaints. People write about, okay, this is

481
00:28:46,920 --> 00:28:50,910
Speaker 2: a problem. Research gets done. People make some noise and

482
00:28:50,910 --> 00:28:54,010
Speaker 2: then typically the government sets up a committee.

483
00:28:54,540 --> 00:28:55,170
Speaker 2: Mhm.

484
00:28:55,700 --> 00:28:59,380
Speaker 2: In particularly in the 2000s. I mean, this this is

485
00:28:59,380 --> 00:29:02,750
Speaker 2: something that started in the 1980s and there used to

486
00:29:02,750 --> 00:29:07,610
Speaker 2: be all these trade committees, and you know JJ Ahluwalia

487
00:29:07,620 --> 00:29:11,840
Speaker 2: would say that she was an expert on trade and

488
00:29:11,840 --> 00:29:13,420
Speaker 2: she would always say that

489
00:29:13,620 --> 00:29:17,560
Speaker 2: Most of what was done in 1991 had already been

490
00:29:17,560 --> 00:29:23,600
Speaker 2: written in various committees of the government of India. So

491
00:29:23,600 --> 00:29:27,040
Speaker 2: she and I have a joint paper together where we've

492
00:29:27,040 --> 00:29:29,890
Speaker 2: kind of outlined each of the things that had been

493
00:29:29,960 --> 00:29:34,280
Speaker 2: Recommended by communities, whether it was doing away with industrial

494
00:29:34,290 --> 00:29:42,040
Speaker 2: licensing or trade, import licensing rupee depreciation. So, a lot

495
00:29:42,040 --> 00:29:46,310
Speaker 2: of what was recommend what was done in 91

496
00:29:46,450 --> 00:29:50,850
Speaker 2: Under the ages of the IMF infrastructure, uh just the

497
00:29:50,850 --> 00:29:55,080
Speaker 2: loan and so on, had actually already been recommended by

498
00:29:55,080 --> 00:30:01,190
Speaker 2: committees and and that committee process allows for consensus to develop. Now,

499
00:30:01,200 --> 00:30:06,580
Speaker 2: coming to financial sector reforms. A number of committees all

500
00:30:06,580 --> 00:30:12,210
Speaker 2: the way from beginning in the 90s to uh during

501
00:30:12,210 --> 00:30:15,480
Speaker 2: the financial crisis. So these were committees on

502
00:30:16,180 --> 00:30:20,500
Speaker 2: you're familiar with the Raghuram rajan committee on banking. Uh

503
00:30:20,510 --> 00:30:23,740
Speaker 2: There was a person mystery committee on making making Mumbai's

504
00:30:23,740 --> 00:30:29,850
Speaker 2: an international financial center. Then there were various many Rangarajan committees.

505
00:30:29,850 --> 00:30:32,729
Speaker 2: There was a Tarapur committee on capital account, There was

506
00:30:32,730 --> 00:30:39,850
Speaker 2: a U. K. Sinha committee on uh rationalizing capital uh

507
00:30:39,860 --> 00:30:44,910
Speaker 2: capital controls. There were committees on

508
00:30:45,160 --> 00:30:49,810
Speaker 2: the debt management office, Jahangir Aziz committee on the debt

509
00:30:49,810 --> 00:30:53,870
Speaker 2: management office. Now, all of them were saying that something

510
00:30:53,870 --> 00:30:59,330
Speaker 2: is wrong with the uh indian financial system. There's lack

511
00:30:59,330 --> 00:31:07,120
Speaker 2: of financial inclusion credit hardly reaches small businesses unless

512
00:31:07,310 --> 00:31:12,520
Speaker 2: There are too many mandates. There's two arbitrariness by regulators,

513
00:31:12,520 --> 00:31:16,959
Speaker 2: the regulation making process is broken, you know, appeals mechanism

514
00:31:16,960 --> 00:31:19,140
Speaker 2: other than said he had an appeals mechanism, but the

515
00:31:19,140 --> 00:31:24,110
Speaker 2: other regulators didn't have appeal mechanisms in, you know, insurance

516
00:31:24,110 --> 00:31:27,660
Speaker 2: penetration is barely 3% and it's not increasing because of

517
00:31:27,670 --> 00:31:29,450
Speaker 2: various difficulties and so on.

518
00:31:29,810 --> 00:31:33,140
Speaker 2: So now all of this put together was suggesting that

519
00:31:33,150 --> 00:31:37,420
Speaker 2: India needs many, many, many reforms. And then it was

520
00:31:37,420 --> 00:31:40,090
Speaker 2: understood and that's where we were also part of the

521
00:31:40,090 --> 00:31:44,070
Speaker 2: research team that was supporting the Department of Economic Analysis

522
00:31:44,070 --> 00:31:47,360
Speaker 2: at the Ministry of Finance that time. It was understood

523
00:31:47,370 --> 00:31:47,990
Speaker 2: that it

524
00:31:48,010 --> 00:31:52,720
Speaker 2: needs legislative reforms. So you can't just keep tinkering tinkering

525
00:31:52,720 --> 00:31:58,890
Speaker 2: away at regulations, because regulations are made under certain powers

526
00:31:58,900 --> 00:32:01,800
Speaker 2: that are, that are given to regulators to make those

527
00:32:01,800 --> 00:32:07,410
Speaker 2: regulations and reforms are required beyond that. So the government

528
00:32:07,410 --> 00:32:08,610
Speaker 2: set up

529
00:32:08,620 --> 00:32:14,670
Speaker 1: the landmark efforts you see in the pipeline and the

530
00:32:14,680 --> 00:32:16,390
Speaker 1: coming this year or the next.

531
00:32:16,850 --> 00:32:21,020
Speaker 2: So I think the effort to do the uh F. R. D. I.

532
00:32:21,030 --> 00:32:26,830
Speaker 2: The resolution authority, uh it went up to standing committee

533
00:32:26,840 --> 00:32:30,260
Speaker 2: and I think that will come back because, I mean,

534
00:32:30,260 --> 00:32:32,520
Speaker 2: you do need to, you know, if you allow private

535
00:32:32,520 --> 00:32:35,420
Speaker 2: banks to come in, you do need to have a

536
00:32:35,420 --> 00:32:40,230
Speaker 2: mechanism where if they fail any bank fails, then it's

537
00:32:40,230 --> 00:32:41,620
Speaker 2: an orderly mechanism.

538
00:32:42,010 --> 00:32:45,960
Speaker 2: And for that. Uh It was just, it went to

539
00:32:45,960 --> 00:32:51,890
Speaker 2: the last stage and I always see some murmur somewhere

540
00:32:51,890 --> 00:32:54,330
Speaker 2: or the other where there is an attempt to bring

541
00:32:54,330 --> 00:32:59,600
Speaker 2: it back and talk about it, especially after I. B. C,

542
00:32:59,610 --> 00:33:02,520
Speaker 2: which is for non financial firms, primarily, it's been working

543
00:33:02,520 --> 00:33:06,430
Speaker 2: for the insolvency and bankruptcy.

544
00:33:06,630 --> 00:33:09,730
Speaker 2: It's been working for non financial firms. So after that,

545
00:33:09,730 --> 00:33:13,240
Speaker 2: there has been this sense that, yes, you do also

546
00:33:13,240 --> 00:33:17,140
Speaker 2: want to allow banks to have a mechanism through which

547
00:33:17,140 --> 00:33:20,550
Speaker 2: they can be already resolution if they are on the

548
00:33:20,550 --> 00:33:24,380
Speaker 2: brink of bankruptcy rather than to just allow, you know,

549
00:33:24,390 --> 00:33:27,710
Speaker 2: so we don't, we we have typically had the R. B. I.

550
00:33:27,710 --> 00:33:30,860
Speaker 2: Buy up, made somebody buy up a bank.

551
00:33:31,140 --> 00:33:34,190
Speaker 2: Uh so, you know, you can't keep doing that, especially

552
00:33:34,190 --> 00:33:35,950
Speaker 2: if you're going to allow more banks to come in,

553
00:33:35,960 --> 00:33:39,210
Speaker 2: or you can't you don't allow banks to come in

554
00:33:39,210 --> 00:33:43,660
Speaker 2: and then you're, again, in the situation where barely 4-6%

555
00:33:43,660 --> 00:33:49,810
Speaker 2: of bank credit goes to small companies, which is really

556
00:33:49,810 --> 00:33:53,690
Speaker 2: not the optimal uh way to grow for a country.

557
00:33:54,270 --> 00:33:57,570
Speaker 1: Right, okay, well, we'll look forward to that. Let's talk

558
00:33:57,570 --> 00:33:57,890
Speaker 1: about your

559
00:33:57,890 --> 00:33:59,050
Speaker 2: book, how do you

560
00:33:59,050 --> 00:34:03,000
Speaker 1: come up and how does an economist collaborate with a politician?

561
00:34:03,970 --> 00:34:09,959
Speaker 2: So, it was a very interesting story after the 2019 election.

562
00:34:10,100 --> 00:34:13,160
Speaker 2: I was I used to be writing columns at the

563
00:34:13,160 --> 00:34:18,469
Speaker 2: print and I was looking at, so why did they,

564
00:34:18,480 --> 00:34:22,469
Speaker 2: why did the BJP win more, more seats than expected?

565
00:34:22,469 --> 00:34:25,460
Speaker 2: So most people had expected them to win, but by

566
00:34:25,460 --> 00:34:30,279
Speaker 2: fewer seats. And uh you know, so I used to

567
00:34:30,280 --> 00:34:34,220
Speaker 2: write columns at the print and Shekhar Gupta uh turn

568
00:34:34,219 --> 00:34:36,319
Speaker 2: around to me and said, well, why don't you work

569
00:34:36,330 --> 00:34:38,989
Speaker 2: on it? And I knew uh

570
00:34:39,290 --> 00:34:43,839
Speaker 2: uh Mr Yadav, who then was General Secretary of the BJP,

571
00:34:43,850 --> 00:34:47,650
Speaker 2: but on a lot of the standing committees. So, for example,

572
00:34:47,650 --> 00:34:49,810
Speaker 2: for the F. R. G. I. Bill, he was on

573
00:34:49,810 --> 00:34:51,960
Speaker 2: the standing committee, he was the chairman of the standing

574
00:34:51,960 --> 00:34:58,030
Speaker 2: committee in Parliament. So I used to be working with

575
00:34:58,040 --> 00:35:01,080
Speaker 2: uh you know, on these bills and that's why I

576
00:35:01,080 --> 00:35:03,640
Speaker 2: knew him already. So I turned to him and I

577
00:35:03,640 --> 00:35:05,500
Speaker 2: asked him to explain to me

578
00:35:05,700 --> 00:35:11,650
Speaker 2: why what had happened with the elections, and he had

579
00:35:11,660 --> 00:35:14,810
Speaker 2: always seemed confident that they would get so many seats.

580
00:35:15,110 --> 00:35:19,430
Speaker 2: And, you know, my, my angle, because I'm not I

581
00:35:19,440 --> 00:35:25,100
Speaker 2: don't understand too much of politics and I don't follow politics. That,

582
00:35:25,110 --> 00:35:27,600
Speaker 2: I mean, as as an indian, of course, we all

583
00:35:27,600 --> 00:35:33,680
Speaker 2: follow politics, you know, but not in great detail. So, uh,

584
00:35:33,690 --> 00:35:37,290
Speaker 2: my question was, what was the role that what you

585
00:35:37,290 --> 00:35:39,189
Speaker 2: did uh

586
00:35:39,750 --> 00:35:42,860
Speaker 2: on the economics, what role did that have to play?

587
00:35:42,870 --> 00:35:45,569
Speaker 2: And what I found out was that it had a,

588
00:35:45,580 --> 00:35:49,050
Speaker 2: you know, the welfare schemes, how the party reached out

589
00:35:49,050 --> 00:35:51,010
Speaker 2: and so on, had a very big role to play

590
00:35:51,210 --> 00:35:54,589
Speaker 2: when we started. So we said, okay, let's write, I

591
00:35:54,590 --> 00:35:57,170
Speaker 2: started writing about it, wrote a couple of columns. Then

592
00:35:57,170 --> 00:36:00,770
Speaker 2: we decided we write that into a book. And when

593
00:36:00,770 --> 00:36:03,790
Speaker 2: we started writing that into a book, we realized, you

594
00:36:03,790 --> 00:36:05,420
Speaker 2: can't do that without the history.

595
00:36:05,760 --> 00:36:08,990
Speaker 2: So, you know, then it's half a story. So then

596
00:36:08,989 --> 00:36:12,520
Speaker 2: we also worked on the history. So we had these

597
00:36:12,530 --> 00:36:16,690
Speaker 2: covid happened at that time. So, I think we also

598
00:36:16,690 --> 00:36:20,620
Speaker 2: had time when one couldn't travel, one couldn't do other things.

599
00:36:20,630 --> 00:36:24,200
Speaker 2: I of course used it was a huge learning opportunity

600
00:36:24,200 --> 00:36:26,189
Speaker 2: for me to wonder. And

601
00:36:26,200 --> 00:36:29,790
Speaker 2: I feel that it helps, you know, looking at the

602
00:36:29,790 --> 00:36:33,370
Speaker 2: history and so we look both at the full history

603
00:36:33,370 --> 00:36:35,920
Speaker 2: and at the recent history in the book and a

604
00:36:35,920 --> 00:36:38,860
Speaker 2: lot of people have told me that having read the book,

605
00:36:38,860 --> 00:36:43,990
Speaker 2: they understand today's politics and BJP's politics. And because BJP

606
00:36:43,989 --> 00:36:46,629
Speaker 2: is today at the center of indian politics. So,

607
00:36:46,640 --> 00:36:51,029
Speaker 2: you know, everything is either BJP or against. So many

608
00:36:51,030 --> 00:36:56,220
Speaker 2: people feel that it helps them to understand reality today's

609
00:36:56,219 --> 00:36:59,839
Speaker 2: politics and economics, but as it did for me, so

610
00:36:59,840 --> 00:37:03,259
Speaker 2: that's how and then he became minister when the book

611
00:37:03,260 --> 00:37:06,220
Speaker 2: was going into publication. So he was not the minister

612
00:37:06,219 --> 00:37:07,760
Speaker 2: at that time. Okay,

613
00:37:07,760 --> 00:37:10,960
Speaker 1: so talk about this politics of welfare program. I mean,

614
00:37:10,960 --> 00:37:14,120
Speaker 1: how do you see it working out in India right now?

615
00:37:15,000 --> 00:37:21,250
Speaker 2: So uh see we had had 70 audios or as

616
00:37:21,250 --> 00:37:25,230
Speaker 2: many as they were till 2014 when we would say,

617
00:37:25,239 --> 00:37:28,649
Speaker 2: oh we have all these schemes and the planning commission

618
00:37:28,660 --> 00:37:30,779
Speaker 2: in the previous 10 years during the U. P. A.

619
00:37:30,780 --> 00:37:33,360
Speaker 2: Period had tried to

620
00:37:33,380 --> 00:37:38,090
Speaker 2: consolidate the schemes, had tried to reduce leakages. Had also

621
00:37:38,090 --> 00:37:44,419
Speaker 2: initiated the uh your idea, I had tried to you know,

622
00:37:44,430 --> 00:37:47,100
Speaker 2: either do some things or not to them, but there

623
00:37:47,100 --> 00:37:51,760
Speaker 2: was no radical big effort to actually

624
00:37:52,170 --> 00:37:56,880
Speaker 2: cut out all the corruption and cut out those schemes

625
00:37:56,880 --> 00:38:00,020
Speaker 2: focus on a few and get at least the SDG

626
00:38:00,020 --> 00:38:04,020
Speaker 2: eagles done. You know, because I mean, you you know,

627
00:38:04,020 --> 00:38:06,569
Speaker 2: you've been fast growing this that and the other

628
00:38:06,950 --> 00:38:12,570
Speaker 2: now I think BJP came into it from two ends.

629
00:38:12,580 --> 00:38:18,489
Speaker 2: The first of course is that uh they realized that

630
00:38:18,489 --> 00:38:24,050
Speaker 2: growth has to be growth with people's participation.

631
00:38:25,340 --> 00:38:31,900
Speaker 2: Remember the 24, election in the 2004 election BJP had

632
00:38:31,900 --> 00:38:35,540
Speaker 2: come in within India shining program.

633
00:38:35,780 --> 00:38:38,710
Speaker 2: And at that time they thought that, you know, getting

634
00:38:38,710 --> 00:38:42,339
Speaker 2: growth was enough and realized and you know, that's there

635
00:38:42,340 --> 00:38:44,730
Speaker 2: in our book also we talked about and that how

636
00:38:44,739 --> 00:38:48,069
Speaker 2: the party says that they realize that it's not enough

637
00:38:48,070 --> 00:38:51,380
Speaker 2: to get growth, but you also need to get is

638
00:38:51,390 --> 00:38:56,880
Speaker 2: growth down to the last man in the my last

639
00:38:56,890 --> 00:39:00,070
Speaker 2: and so there that is to the poorest in the

640
00:39:00,070 --> 00:39:02,810
Speaker 2: remotest area, you have to get growth.

641
00:39:03,300 --> 00:39:07,739
Speaker 2: So when they came in, I'm saying politically that was

642
00:39:07,739 --> 00:39:11,440
Speaker 2: the experience. And here the effort was that we're gonna

643
00:39:11,440 --> 00:39:17,040
Speaker 2: hit the ground running from day one that 2014, the

644
00:39:17,040 --> 00:39:20,450
Speaker 2: day they come in, it actually starts they start doing

645
00:39:20,450 --> 00:39:25,710
Speaker 2: all those programs. I think the first thing you

646
00:39:26,070 --> 00:39:29,720
Speaker 2: because I was in government at that time uh within

647
00:39:29,719 --> 00:39:35,610
Speaker 2: a month, the uh and the decision to open bank

648
00:39:35,610 --> 00:39:40,350
Speaker 2: accounts for the entire population. Those that decision came from

649
00:39:40,350 --> 00:39:44,240
Speaker 2: the Prime Minister and it seemed impossible. I mean, I

650
00:39:44,239 --> 00:39:46,600
Speaker 2: can I can tell you that many of us would

651
00:39:46,600 --> 00:39:50,160
Speaker 2: sit there, hold our heads in north block and say

652
00:39:51,040 --> 00:39:53,860
Speaker 2: no, we won't be able to do this. I mean,

653
00:39:53,860 --> 00:39:57,770
Speaker 2: how do you say 70 years for 50% of the

654
00:39:57,770 --> 00:40:00,980
Speaker 2: population and then he said do it in two months. Okay,

655
00:40:00,989 --> 00:40:04,440
Speaker 2: just just just do it, just go do it a

656
00:40:04,440 --> 00:40:08,870
Speaker 2: beyond july go into mission mode. Don't just sit back,

657
00:40:08,880 --> 00:40:12,270
Speaker 2: just do it, find ways and go and you know,

658
00:40:12,270 --> 00:40:17,910
Speaker 2: start at least give people back accounts. So the way

659
00:40:17,920 --> 00:40:20,770
Speaker 2: the energy with which

660
00:40:21,120 --> 00:40:25,130
Speaker 2: just the basics and what are the basics today? Bank

661
00:40:25,130 --> 00:40:30,120
Speaker 2: account is basic, right? The basics are an identity card.

662
00:40:30,120 --> 00:40:34,410
Speaker 2: Me and identity. The other identity was required for because

663
00:40:34,410 --> 00:40:37,799
Speaker 2: it was Janja and Arthur are so they were linked together.

664
00:40:37,810 --> 00:40:42,029
Speaker 2: So that was also done in campaign mode. So when

665
00:40:42,070 --> 00:40:43,580
Speaker 2: that was being done

666
00:40:44,660 --> 00:40:49,489
Speaker 2: first, it didn't feel but did not realize that that

667
00:40:49,489 --> 00:40:54,380
Speaker 2: was these were the foundations for the world's biggest DBT.

668
00:40:54,969 --> 00:40:58,319
Speaker 2: I mean, what actually got done was that then it

669
00:40:58,320 --> 00:41:02,080
Speaker 2: wasn't that the government was going to go around, you know,

670
00:41:02,090 --> 00:41:05,930
Speaker 2: providing gas cylinders to everybody, most of what has been

671
00:41:05,930 --> 00:41:08,900
Speaker 2: done is that that infrastructure got created

672
00:41:09,130 --> 00:41:14,790
Speaker 2: and on that infrastructure have run very, very big direct

673
00:41:14,790 --> 00:41:16,540
Speaker 2: benefit schemes

674
00:41:17,080 --> 00:41:21,230
Speaker 2: where money has flown through too many accounts. So the

675
00:41:21,230 --> 00:41:27,120
Speaker 2: gas uh, connection. Now, if you look at SDG goals,

676
00:41:27,130 --> 00:41:31,640
Speaker 2: internal air pollution is actually very big. So that air

677
00:41:31,640 --> 00:41:37,330
Speaker 2: inside the house hurts women and Children and until then,

678
00:41:37,340 --> 00:41:41,440
Speaker 2: almost nothing has been done about it. Okay, so one

679
00:41:41,440 --> 00:41:41,910
Speaker 2: big

680
00:41:42,330 --> 00:41:45,040
Speaker 2: thing that was taken up was the usual a scheme

681
00:41:45,050 --> 00:41:49,489
Speaker 2: that is the scheme which said will provide gas connections,

682
00:41:50,840 --> 00:41:54,620
Speaker 2: cooking gas connections to every woman in the country

683
00:41:55,489 --> 00:42:00,419
Speaker 2: and when they started getting done and then it, you know,

684
00:42:00,430 --> 00:42:03,180
Speaker 2: there's a subsidy, which you can first, there was a

685
00:42:03,180 --> 00:42:05,660
Speaker 2: give it up. So people like us who used to

686
00:42:05,660 --> 00:42:08,399
Speaker 2: be forced to take a subsidy and feel bad about it,

687
00:42:08,410 --> 00:42:12,180
Speaker 2: no longer needed to take the subsidy and others, the

688
00:42:12,180 --> 00:42:15,560
Speaker 2: poor could apply through their heart and get money into

689
00:42:15,560 --> 00:42:20,020
Speaker 2: those Jansen accounts, the their bank accounts for the subsidy.

690
00:42:20,030 --> 00:42:20,750
Speaker 2: Now this ho

691
00:42:20,760 --> 00:42:28,080
Speaker 2: full vision was not something which was laid out or

692
00:42:28,080 --> 00:42:30,790
Speaker 2: what was talked about. So I think part of what

693
00:42:30,790 --> 00:42:38,340
Speaker 2: has happened is that people uh saw something happening. They,

694
00:42:38,350 --> 00:42:41,460
Speaker 2: you know, the one mission after the other, one mission

695
00:42:41,460 --> 00:42:44,890
Speaker 2: after the other and they did not see the plan

696
00:42:44,890 --> 00:42:46,040
Speaker 2: behind

697
00:42:47,110 --> 00:42:48,190
Speaker 2: all of these.

698
00:42:49,510 --> 00:42:52,239
Speaker 2: It took 345 years then

699
00:42:53,969 --> 00:43:00,260
Speaker 2: When they go back in 192019 to the public, that

700
00:43:00,260 --> 00:43:04,160
Speaker 2: by then people have actually got a lot of just

701
00:43:04,160 --> 00:43:06,820
Speaker 2: just these are just basic amenities of life. These are

702
00:43:06,820 --> 00:43:12,570
Speaker 2: just fundamentally SDG goals. What are they house, a toilet,

703
00:43:14,710 --> 00:43:21,100
Speaker 2: drinking water, electricity and clean air inside the house. So

704
00:43:21,110 --> 00:43:26,830
Speaker 2: primarily these, these are the fundamental uh that you know,

705
00:43:26,830 --> 00:43:30,700
Speaker 2: people received the one important, I thought that the one

706
00:43:30,700 --> 00:43:34,910
Speaker 2: important story which not many people know about is that

707
00:43:34,910 --> 00:43:40,310
Speaker 2: when these schemes were being dispersed through the government system

708
00:43:40,310 --> 00:43:44,250
Speaker 2: and the district administration and so on. The party would

709
00:43:45,090 --> 00:43:48,790
Speaker 2: almost like a social audit. It would approach people and

710
00:43:48,790 --> 00:43:51,210
Speaker 2: it would ask them, are you getting what you're supposed

711
00:43:51,210 --> 00:43:54,550
Speaker 2: to get okay and if there were any issues they

712
00:43:54,550 --> 00:43:55,890
Speaker 2: would go ahead and sort them.

713
00:43:56,090 --> 00:43:59,480
Speaker 2: So that created a connect also between the party because

714
00:43:59,480 --> 00:44:01,560
Speaker 2: this is these were the objectives of the party to

715
00:44:01,570 --> 00:44:05,170
Speaker 2: give a better standard of living to the people and

716
00:44:05,180 --> 00:44:08,900
Speaker 2: of doing it through government. But understanding that there are,

717
00:44:08,910 --> 00:44:12,009
Speaker 2: you know reigns and corruption and so on. So they

718
00:44:12,010 --> 00:44:15,940
Speaker 2: managed to go and speak to people. So that's how

719
00:44:15,940 --> 00:44:19,330
Speaker 2: they connected with them. That's how you know, and and

720
00:44:19,340 --> 00:44:19,900
Speaker 2: a lot of the

721
00:44:19,910 --> 00:44:23,670
Speaker 2: those people also became the members and I started participating

722
00:44:23,670 --> 00:44:27,320
Speaker 2: in their activities and supported them in elections. So that

723
00:44:27,320 --> 00:44:34,930
Speaker 2: was the unique story of the 2014 to 2019 BJP

724
00:44:34,930 --> 00:44:37,090
Speaker 2: period modi administration,

725
00:44:37,100 --> 00:44:42,230
Speaker 1: fascinating. Very, very well captured. So is India's future. A

726
00:44:42,239 --> 00:44:43,730
Speaker 1: deeper welfare state.

727
00:44:45,520 --> 00:44:45,850
Speaker 2: See you

728
00:44:47,130 --> 00:44:51,010
Speaker 2: I don't know what is the deeper welfare state. So

729
00:44:51,020 --> 00:44:54,380
Speaker 2: I don't I don't understand the word deeper welfare state.

730
00:44:54,390 --> 00:44:58,750
Speaker 2: I mean, what we are trying is that if there

731
00:44:58,750 --> 00:45:03,520
Speaker 2: are people who are not able to with their Children

732
00:45:03,520 --> 00:45:07,100
Speaker 2: who can't go to school or if there are people

733
00:45:07,100 --> 00:45:07,650
Speaker 2: who

734
00:45:07,670 --> 00:45:11,050
Speaker 2: Are in such remote areas that there are no roads,

735
00:45:11,060 --> 00:45:13,670
Speaker 2: 10 roads should be built, some houses should be provided.

736
00:45:13,680 --> 00:45:17,750
Speaker 2: But if it means that people will be encouraged to

737
00:45:17,750 --> 00:45:23,560
Speaker 2: not work, get unemployment benefits, stay at home, withdraw from

738
00:45:23,570 --> 00:45:28,200
Speaker 2: the labor force. I don't think that's where we're going.

739
00:45:28,510 --> 00:45:30,440
Speaker 2: So I mean there is a you know, where we

740
00:45:30,440 --> 00:45:34,830
Speaker 2: are very, very far from what we understand but at

741
00:45:34,830 --> 00:45:37,850
Speaker 2: least like for example what I saw as a student

742
00:45:37,850 --> 00:45:43,860
Speaker 2: in the U. K. Where a lot of my neighbors

743
00:45:43,870 --> 00:45:47,350
Speaker 2: were not working and why because they had both housing

744
00:45:47,350 --> 00:45:50,890
Speaker 2: benefit and unemployment benefit. And they would

745
00:45:50,900 --> 00:45:54,029
Speaker 2: find some way of just showing that they were looking

746
00:45:54,030 --> 00:45:56,430
Speaker 2: for a job but they were not really looking for jobs.

747
00:45:56,440 --> 00:45:58,859
Speaker 2: I don't think that's where we're going. I don't think

748
00:45:58,880 --> 00:46:02,920
Speaker 2: we are going to be looking at you know uh

749
00:46:02,930 --> 00:46:08,090
Speaker 2: transferring income to hundreds and millions millions growers. I don't

750
00:46:08,090 --> 00:46:09,820
Speaker 2: think we can even afford it. But I don't think

751
00:46:09,820 --> 00:46:13,270
Speaker 2: that's the philosophy. The philosophy is not of handouts.

752
00:46:14,010 --> 00:46:17,890
Speaker 1: Let me receive the question if today per capita transfer

753
00:46:17,900 --> 00:46:22,460
Speaker 1: is X. Would it be X times 1.1 in real

754
00:46:22,460 --> 00:46:24,170
Speaker 1: terms five years from now?

755
00:46:26,020 --> 00:46:29,920
Speaker 2: I'm not sure. Maybe maybe a little bit more of

756
00:46:29,920 --> 00:46:34,050
Speaker 2: transfers are a little bit less. So if when covid happened,

757
00:46:34,060 --> 00:46:37,810
Speaker 2: transfers went up. But if we managed to get more

758
00:46:37,810 --> 00:46:40,660
Speaker 2: investment and jobs then I think they'll go down

759
00:46:41,180 --> 00:46:45,259
Speaker 2: because it's more uh with the intent of if you

760
00:46:45,260 --> 00:46:49,319
Speaker 2: have high growth, there are losers, there are there are

761
00:46:49,320 --> 00:46:52,980
Speaker 2: people who will suffer and you need to provide social

762
00:46:52,980 --> 00:46:58,610
Speaker 2: Security uh you know cushion to them so that they

763
00:46:58,620 --> 00:47:04,880
Speaker 2: don't fall off completely. I mean so this is not

764
00:47:04,900 --> 00:47:09,130
Speaker 2: Not a place where if there are big shocks that

765
00:47:09,140 --> 00:47:12,420
Speaker 2: people would be left completely on their own. That's not

766
00:47:12,420 --> 00:47:16,390
Speaker 2: the society, it's a society where, and you know, it's

767
00:47:16,390 --> 00:47:18,710
Speaker 2: just that, you know, in the beginning, also, as I

768
00:47:18,710 --> 00:47:23,850
Speaker 2: said that it's not that one give 6% of GDP

769
00:47:23,850 --> 00:47:28,730
Speaker 2: to households, even at the worst time when COVID hit

770
00:47:28,739 --> 00:47:32,090
Speaker 2: that is not what was done. I mean, other efforts,

771
00:47:32,100 --> 00:47:34,150
Speaker 2: efforts were made to

772
00:47:34,340 --> 00:47:38,750
Speaker 2: allow people to stay alive, maybe just giving them food,

773
00:47:39,050 --> 00:47:42,870
Speaker 2: maybe grain actually, you know, not even food what was

774
00:47:42,870 --> 00:47:48,750
Speaker 2: given was wheat. So you saw almost everybody washing that

775
00:47:48,750 --> 00:47:52,120
Speaker 2: wheat because it wasn't all that clean washing it and

776
00:47:52,120 --> 00:47:55,239
Speaker 2: going to mills, getting it ground and then making it

777
00:47:55,239 --> 00:47:58,940
Speaker 2: into flour and then cooking it anything. It, so it's a,

778
00:47:58,950 --> 00:48:02,880
Speaker 2: it's a different system. So I don't want to even

779
00:48:02,880 --> 00:48:03,589
Speaker 2: judge it by,

780
00:48:03,600 --> 00:48:07,640
Speaker 2: okay, five years down the line will be be spending more.

781
00:48:07,650 --> 00:48:10,700
Speaker 2: I mean, it could be that if money can be

782
00:48:10,700 --> 00:48:14,569
Speaker 2: spent efficiently, then maybe. Yes, it makes sense. So I

783
00:48:14,570 --> 00:48:18,680
Speaker 2: would prefer public goods first and foremost, I would wish

784
00:48:18,680 --> 00:48:22,850
Speaker 2: that it goes into clean air, it goes into roads,

785
00:48:22,850 --> 00:48:25,980
Speaker 2: it goes into law and order, it goes into judiciary,

786
00:48:25,989 --> 00:48:28,170
Speaker 2: it goes into just maybe

787
00:48:28,190 --> 00:48:31,060
Speaker 2: now we even may need to increase our military spending,

788
00:48:31,070 --> 00:48:34,400
Speaker 2: but you know, I wish it goes into public goods

789
00:48:34,410 --> 00:48:38,570
Speaker 2: and we don't need to do that much welfare yet.

790
00:48:38,580 --> 00:48:41,400
Speaker 2: I find that the welfare that is done. I mean,

791
00:48:41,400 --> 00:48:44,660
Speaker 2: if I compare myself to a family that has received

792
00:48:44,660 --> 00:48:48,090
Speaker 2: welfare and I try to think of hopes they should

793
00:48:48,090 --> 00:48:51,290
Speaker 2: not have got a toilet, you know, and I think

794
00:48:51,290 --> 00:48:52,779
Speaker 2: of the number of toilets in

795
00:48:53,050 --> 00:48:57,640
Speaker 2: houses like ours and you don't even want to go there,

796
00:48:57,650 --> 00:48:59,580
Speaker 2: you you don't want to go there, you don't want

797
00:48:59,580 --> 00:49:00,060
Speaker 2: to go there.

798
00:49:00,940 --> 00:49:01,230
Speaker 1: So

799
00:49:01,230 --> 00:49:03,380
Speaker 2: I'm not sure that we are a very first date.

800
00:49:03,380 --> 00:49:06,890
Speaker 2: I think it's, you know, yes, you have to have

801
00:49:06,890 --> 00:49:10,680
Speaker 2: social safety nets, you want high growth, you want people

802
00:49:10,680 --> 00:49:13,990
Speaker 2: to take risks, You have to have social safety nets.

803
00:49:14,000 --> 00:49:17,969
Speaker 1: Absolutely. Um finally, in your view, and this is a

804
00:49:17,969 --> 00:49:21,170
Speaker 1: very big picture question. What is India's promise over the

805
00:49:21,170 --> 00:49:25,960
Speaker 1: next decade and the caveats, how can that promise go unfulfilled?

806
00:49:26,900 --> 00:49:33,460
Speaker 2: So I think our biggest strength is the youth is

807
00:49:33,469 --> 00:49:38,629
Speaker 2: the demographic dividend. That is India's biggest strength. One, it

808
00:49:38,630 --> 00:49:40,310
Speaker 2: gives us a big market

809
00:49:40,670 --> 00:49:45,040
Speaker 2: Indian market because everyone is doing something and therefore adding

810
00:49:45,040 --> 00:49:47,960
Speaker 2: value and therefore GDP is gonna grow. So we're gonna

811
00:49:47,960 --> 00:49:51,220
Speaker 2: have a big market, we're also going to be able

812
00:49:51,219 --> 00:49:57,670
Speaker 2: to participate in uh production in the global production more

813
00:49:57,670 --> 00:50:01,569
Speaker 2: than anybody else because of sheer numbers. We are going

814
00:50:01,570 --> 00:50:05,989
Speaker 2: to be the youngest country in the world, 50

815
00:50:06,010 --> 00:50:09,230
Speaker 2: people will be in their working age population. I mean

816
00:50:09,230 --> 00:50:12,980
Speaker 2: compare that to all, you know, the kind of declines

817
00:50:12,980 --> 00:50:19,210
Speaker 2: that you're seeing everywhere using china europe japan of course,

818
00:50:19,210 --> 00:50:21,580
Speaker 2: countries like the U. S. And Australia, which are not

819
00:50:21,580 --> 00:50:25,750
Speaker 2: seeing a decline is because of immigration and but a

820
00:50:25,750 --> 00:50:29,310
Speaker 2: lot of the other countries are in a difficult position

821
00:50:29,310 --> 00:50:31,350
Speaker 2: and that is going to be our biggest strength.

822
00:50:31,550 --> 00:50:35,890
Speaker 2: What is it that making things go wrong? I mean,

823
00:50:35,890 --> 00:50:36,650
Speaker 2: you know,

824
00:50:37,330 --> 00:50:40,990
Speaker 2: and we want this population to be educated to be

825
00:50:40,989 --> 00:50:44,780
Speaker 2: healthy to be uh just to be able to contribute,

826
00:50:44,780 --> 00:50:48,750
Speaker 2: we want if we are unable to create an environment

827
00:50:48,760 --> 00:50:53,770
Speaker 2: where entrepreneurship is valued where

828
00:50:53,880 --> 00:50:58,520
Speaker 2: people can take risks where people can have both the

829
00:50:58,520 --> 00:51:02,510
Speaker 2: ability and so they should be capable of taking risks

830
00:51:02,510 --> 00:51:05,860
Speaker 2: that they should have received education. They should have got

831
00:51:05,860 --> 00:51:08,620
Speaker 2: some skills and they should also be in an environment

832
00:51:08,620 --> 00:51:11,800
Speaker 2: where that's something that they can do. So we are

833
00:51:11,810 --> 00:51:17,220
Speaker 2: a democracy. We are, I think that's another very big strength.

834
00:51:17,219 --> 00:51:18,569
Speaker 2: So if

835
00:51:19,110 --> 00:51:21,990
Speaker 2: We get governments that don't do so well they don't

836
00:51:21,989 --> 00:51:25,620
Speaker 2: stay for long. Okay, 10 years and then you know,

837
00:51:25,620 --> 00:51:28,810
Speaker 2: someone pushes them out. So governments know that they have

838
00:51:28,810 --> 00:51:34,040
Speaker 2: to respond to all these young people who are looking

839
00:51:34,040 --> 00:51:37,360
Speaker 2: towards them to create the right environment. But yes of

840
00:51:37,360 --> 00:51:40,510
Speaker 2: course there's always a risk that that's not done properly.

841
00:51:40,510 --> 00:51:44,969
Speaker 2: And then um that would be very sad.

842
00:51:45,950 --> 00:51:49,060
Speaker 1: Very good. That was excellent. Sheila, thank you so much

843
00:51:49,060 --> 00:51:50,430
Speaker 1: for your time and insights.

844
00:51:51,140 --> 00:51:53,830
Speaker 2: Thank you. It's always a pleasure talking to

845
00:51:53,830 --> 00:51:57,700
Speaker 1: you. My pleasure thanks to our listeners as well Kobe

846
00:51:57,700 --> 00:52:00,530
Speaker 1: time was produced by ken Del bridge from Spy studios

847
00:52:00,540 --> 00:52:04,460
Speaker 1: daisy Sharma and violently provided additional production assistance Kobe time

848
00:52:04,460 --> 00:52:07,600
Speaker 1: is for information only and does not represent any trade

849
00:52:07,610 --> 00:52:11,480
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850
00:52:11,480 --> 00:52:15,810
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851
00:52:15,820 --> 00:52:19,950
Speaker 1: and Amazon. As for our research publications, webinars and live streams,

852
00:52:19,950 --> 00:52:22,610
Speaker 1: you can find them all by googling Devious Research Library

853
00:52:22,620 --> 00:52:24,080
Speaker 1: have a great day.