Kellogg India Business Conference: Public Policy Panel

If you haven't seen this discussion by two fantastic thinkers and legends, Dr Raghuram Rajan and our ex-professor at ISB with the toughest class, Dr Prof. Krishnamurthy V Subramanian debate amicably about India's economic and political environment, it's one to watch. Topping on the cake - it's a fantastic student-mentor relationship with a healthy dose of contrarian thinking. Though it's an hour long, it's definitely worth it. 

Key takeaways for me from the discussion:

1. Why India grows at 7%+ post Covid: Every crisis is a demand shock. This one was a supply side shock as well, and frictions here are most salient. A healthy mix of both demand and supply side measures on a tightrope helped recover, even though with a lag. 

2. But is this catch-up growth enough? This is a question of what do we need to grow at, given poor countries do grow fast. And, is everyone growing? On first, we are "really" growing at about 6-6.5%, vs 8.5%, which is reported. On second, where is employment growing - agriculture, which is low productivity vs. focus on manufacturing or services, which is our strength. The labour market is not doing well in India. Consumption at about 3% has not recovered post the pandemic. 

3. China Plus One Strategy: Manufacturing sector is important - that was a non-conflicting view. We see green shoots in manufacturing, largely due to the infrastructure spends by the govt but there's a lot still to be done on the policy front. Growth is not guaranteed, and India is doing relatively well vs peers like Brazil, China. And, another counterpoint - perhaps manufacturing is not all that important. The services sector has big opportunities - and this is beyond software programmers. It's about retail, banking, and even security guards.

Lasting thought: We need to do more in fixing our human capital - skill more, more R&D. We don't do enough original research in India. We need to focus on our fundamentals - get kids to study at school. Have more good IIT like institutions. 

Let's celebrate what we are doing well, but let's not get carried away. We need to fix the dark side too, and that's why we need criticism. And we need the press to do this more. 

Best (and most fun) part was the debate on the GDP/ GVA/ growth deflator - took me back to my Economics class in college. Whatever the result, this was a great discussion.

Additional reads/watches:

- Dr Rajan's excellent playlist on Indian economy: https://lnkd.in/gjDmuFFY

- Prof Subbu's excellent essay on if GDP is overestimated: https://lnkd.in/gHwvmwsT

- Road to India@100: https://lnkd.in/gpsHs_RR

- Gurcharan Das' book - India Grows at Night: https://lnkd.in/gyRySy-j