Sunday Posts

An infographic in Indian media India's unemployment rate has reached a historical high and the government is panicking. It has rejected and suppressed the report and committed itself to inventing a new set of numbers. Members of the national statistical body have resigned, and the bad job numbers have become one of the worst kept secrets in its modern history.  As the government went down the road of obfuscation, it had also fooled itself believing that everything was fine. Once the statistical reports were questioned, the best explanation that the Head of the apex economic policy-making body could come up with was that Uber and other taxi-hailing companies have created millions of jobs in India. But then, the crisis is anything but hidden - walk on any street in any neighbourhood in any Indian city, and it is likely that you will see a few working-age people loitering, waiting or playing cards or carom in the middle of the day. IMF has recently warned that youth inactivi...

Over the last decade, India has set in motion one of the largest ‘skilling’ missions in the world. However, despite the grand ambition, unparalleled political and media attention and enormous expense, it is clear that the objectives, both quantitative and qualitative, have not been achieved. Though the Indian endeavour is only a few decades old, the English habit of ‘restructuring’ has already caught up – and several attempts have been made to redefine the objectives and reorganise the delivery for better outcomes. However, the founding assumptions of the ‘skilling’ mission have gone unquestioned and rethinking these assumptions, rather than operational rejigging, may provide a framework to decide what needs to be done. At the outset, it is worth noting that India’s ‘skilling’ ambition, when it was unveiled, was a top-down affair. Employers did not beseech the government to intervene; angry young workers didn’t attack Delhi demanding a better life and living. Rather, it was th...

The relationship between state and enterprise has been at the heart of public policy debate for many years. There was the Nineteenth Century Liberal idea, reformulated in the Twentieth by the Libertarians, that the relationship between the two is necessarily antagonistic: The activities of the State discourage enterprise through regulations, taxes and by subsidising inefficiencies. On the other side, there were the Twentieth century ideas of the Welfare State, rediscovered as the 'Entrepreneurial State' in the Twenty-first, which posited the opposite: That the state and enterprise live in a symbiotic relationship, not just because the State creates the right environment, but also because it can enable the enterprise, by spreading education, improving health and supporting fundamental scientific research. Both are plausible arguments, and adequate empirical and anecdotal evidence can be marshalled to support either. The debate, however, has been deeply ideological, and it ...

I write this post mainly as a record and a response to a debate that I participated in last week. The question we were concerned with is the well-known one, why did Western Europe, and particularly England, took the lead in the industrial age. The debate was drawn along the lines of the arguments of David Landes, who argued about the primacy of culture (positing Max Weber's 'Protestant Ethic' at the core of his argument), and that of people like Andre Gunder Frank and Kenneth Pomeranz, who argues that the the 'Western' hegemony is contingent (that it has come about following a number of chance advantages, geographical and historical) and perhaps cyclical.  To me, the 'contingency' argument has more appeal. This is not just because of my general view of life - that contingency plays a huge role - or because that would be more consistent with a Darwinian world view. For that matter, such an argument would also be consistent with the idea of 'conjun...

At some point in 2006, the nature of the Higher Education changed. Many developing countries, led by China and India, embraced the idea that a college educated population is the key to escape poverty and develop the country. So began a great experiment - of opening new institutions, mainly by granting approvals to private entrepreneurs to do so. In doing so, China more or less doubled its college-going population; India's numbers, less spectacular, still grew rapidly between 2006 and 2014, with 10 new colleges, on average, being opened a day. And, this was not just China and India: Many African and Middle Eastern countries had done the same, following similar strategies - granting approval to private entrepreneurs - and ushering in an all-new 'mass Higher Education', the likes of which we have not known before. This phenomenon is now entering a mature phase, and we should be able to analyse what happened. The growth, both of college population and growth of jobs in Hi...

The Middle Class is all about paradoxes.  Those who embrace Middle Class claim not to believe in classes at all, or at least in class as a determinant of human behaviour. For Middle Classes then, it's about in the middle in terms of income and not about being a class at all. In that sense, Middle Class is only a temporary, transitional, identity. Also, this 'Middle' is neither the average, nor the exact middle point and nor the most common level of earning, but rather, about being in transition - not being defined by what one is, but what one wants to be. So, the most plausible definition of the Middle Class is not about class, or a point in income distribution, but a mindset. Now what that mindset is, there is no clear agreement on that. One view holds that middle class is about striving, trying to get better, doing better than their parents did. The other is that the middle class is about an endless struggle not to be poor, by mimicking the techniques of t...

Right now, India is one exciting economic story. Its population is young and its economy is growing. The government, with a strong mandate in Union and State levels, have been introducing a number of structural reforms that the previous governments, over a quarter century, could not do. With legislative reforms, private participation in infrastructure building is becoming easier, and there is hope that India's rickety ports, faltering railways and mostly potholed roads would soon appear in a different, shiny, avatar. In a lot of ways, India is at a moment like China in the early 80s: The structural changes should unlock a steep growth, quick growth of employment and a new cycle of private prosperity. This would be a reasonable expectation but for India's deficiencies in Education and Health, which may mean that India's demographic potential would never be realised. Structural reforms and infrastructure building can create the opportunities, but without corresponding g...

It is easy to overestimate the potential impact of urban development initiatives, public or private. Because as high level concepts, we delve in a culture-free world, assuming that everyone will do what makes best economic sense; or, more accurately, we treat those who wouldn't pursue economic prosperity as outliers - oddballs - and keep them outside our calculations. But this is where culture gets in the way of our best intentions. More so, if a City needs regeneration, at the heart of the problem there is, more often than not, a 'culture trap', a negative feedback cycle of despair and denial. Any effort of new thinking must acknowledge the cultural challenges first and foremost. But while culture is important, it is also hard to change. A culture emerges and solidifies over time, and it is inherent in assumptions and behaviours of a given people, hard to scrub out with a few conferences here and there. This is the other mistake well-meaning initiatives often make - ...

Kolkata needs a fresh start.  One of the first mega-cities in Asia, and $150 Billion economy, has fallen from grace, somewhat. It is no way a 'dying city' as Rajiv Gandhi, then Prime Minister of India, called it, but it has decisively lost its urban glory. The seat of a brilliant creative 'awakening' in the late Nineteenth and early Twentieth century, now the city loses its aspirational young people as they migrate to other cities in search of educational and economic opportunities.  Once the home of many of India's largest corporations and many of the big multinational corporations, the City experienced an exodus of business and talent in its dark days in the mid-seventies, something that never came back.  Steeped in dreams of changing the world, this City lived through its street-fighting years of the late Sixties, something that was brutally crushed by the authoritarian Central Government of Indira Gandhi; the end of dreams meant degeneration, as th...

Two things trigger this thought. First, the conversation I have been recently engaged into, and particularly the question, why is Indian IT Industry is not more innovative. And, second, this is about the Not-For-Profit projects which I dabble with, which concern themselves with the task of creating innovation ecosystems in India and Africa. My point is - despite all the fuss about Innovation - developing countries are doing quite poorly in innovation. Overall, the world is living in a bubble that Fredrik Erixon and Björn Wiegel will call an Innovation Illusion. There is a lot of talk and lots of people claiming that they have made a truly new thing - and media fawning over this and that - but apart from 'digitization' of some of the tasks, we are moving forward little. And, this is particularly acute in the developing world, which is doing some 'Copy and Catch-up' innovation (Tyler Cowen's term) but failing to solve their most basic problems. In more ways than...

I wrote a post yesterday on the 'crisis' of the Indian IT industry . My essential point in this was that while the Indian media sees a sudden crisis in the Indian IT sector and summarily blaming it on Trump, the problems were simmering for a long time and blaming it on Trump Administration's current or intended policies would be mistaken. And, besides, while a number of observers - Rajat Gupta, formerly of McKinsey fame (and Galleon infamy), being the latest - blame the leadership of Indian IT companies for lack of vision and inaction, I thought this was unfair, it was hard to change business models for mammoth publicly listed companies: In fact, this is exactly what these companies are trying to do, triggering all the crisis talk. However, all this don't point to a solution, which some reading the post pointed out. To this, I do not think there is any silver bullet. Many, Rajat Gupta included, have spoken about educational change, but that is neither short term n...

Calcutta needs a new start. The city which I call home has earned a bad name, but its reputational problems have more to do with the politics of India than economic fundamentals. The city, the second most populous in India after Mumbai, is the third largest city economy in India, presiding over a mostly prosperous agricultural economy and a strategic state. Yet, people don't tend to see it that way: India's geopolitical obsession with Pakistan and Kashmir keeps minds focused on its Western frontiers, and a succession of opposition party governments in West Bengal (the last time Congress ruled the state was in 1977) ensured that the state did not feature in the Central Government's list of priorities. But this is changing - there is increasing realisation of the geopolitical challenges and opportunities of the Indian East - and one would hope that this would bring about a change, if only gradual change, in Indian policy. But any conversation about change must b...

All our politics is Politics of Welfare. For, all our difference, between Liberals and Conservatives, the Left and the Right, can be summarised as this: 1. The Liberals want the State to tax those who earn and provide Welfare to those who do not, so that those who earn can keep themselves forever on the treadmill and those who do not can be happy with the handouts, and this should keep everyone off politics. 2. The Conservatives do not want to tax those who earn and do not want to give Welfare to those who do not, so that the former is happy and the latter is on the treadmill, and this should keep everyone off politics. These conversations are so common that one may think this was always the case. However, as we know, politics of welfare is not primordial, but rather an industrial age phenomena. At its core, it assumes that everyone can, and should, be able to find work, and it is either Unfortunate (Liberal) or Criminal (Conservative) not to be able to find work...