Ravishankar Iyer

A Balanced View on India's Economy by TN Ninan (3-2-1 by Story Rules #63)

Published about 1 month ago • 4 min read

Welcome to the sixty-third edition of '3-2-1 by Story Rules'.

A newsletter recommending good examples of storytelling across:

  • 3 tweets
  • 2 articles, and
  • 1 long-form content piece

Let's dive in.

𝕏 3 Tweets of the week

Not an easy tightrope to walk on!

The French are masters of susegad.

The robots have been 'coming soon' for a few decades now!

To be fair, we have Alexa, Siri et al. But humanoid robots in homes still seem some distance away.

📄 2 Articles of the week

a. 'Changing strategy (OpenAI + MSFT)' by Sriram Krishnan

Microsoft CTO Kevin Scott had written a momentous internal email which probably led to the company's investment in OpenAI.

Here's the email (which was released as part of a legal case):

Sriram analyses this email and lauds it with these words:

To change strategy, you rarely need a fancy offsite or large presentation. In my experience, large strategy shifts at companies often happen with a simple email or conversation from the CEO or blessed by the CEO.

It’s rare to find a public example so when I ran into this email from Kevin Scott (CTO of Microsoft), it was a delight – this is the kind of conversation you want to encourage in your companies.

b. 'Women are traveling like they are possessed... where are they going?' by Uma Vishnu and Jithendra M in The Indian Express

I found this fascinating article on Twitter.

The piece chronicles some heart-warming and poignant stories of how a simple policy like free bus travel can become such a massive tool of empowerment and freedom.

Some of the quotes (like the one in the headline) are pure gold.

📄 1 long-form read of the week

a. 'The Indian Economy is Doing Well, But Not Many Indians Are' by TN Ninan

This long piece by Business Standard editor TN Ninan offers a balanced and nuanced point of view on the Indian economy. It does not (wilfully or otherwise) omit key data points... and while acknowledging the many successes, it concludes with a cautionary takeaway.

After listing the economic indicators (both the ones indicating growth and those implying concern), Ninan shares that the Indian government's approach seems to be to emulate the East Asian model... :

What has been the government’s approach to an economy experiencing these diverse trends? Perhaps it is best characterised as an East Asian model of business and industry, with an emphasis on creating national champions in the business world, combined inevitably with an East Asian model of strong-man government that in its benign form would be paternalistic in approach, and in less benign ways seek a docile workforce in order to facilitate the functioning of the national champions. And there are indeed some superficial similarities. India’s corporate sector saw quite a bit of churn at the top in the decade of the 1990s. More recently, the top companies or groups seem to have entrenched themselves at the top, yielding less churn. This has melded smoothly into the Modi government’s emphasis on building national champions amongst industrial enterprises. A strong government-industry nexus, aimed at building national capabilities (for strategic autonomy in high-tech and defence sectors), is manifested in the offer of large subsidies and the protection of tariff walls, combined with the selection of specific companies for important projects.

He then points out key differences between India's approach and that of the East Asian economies:

The East Asian economic model had as its foundation the creation of a healthy, educated workforce capable of doing what national ambitions asked of it. India is yet to achieve this, perhaps it has not even been seriously attempted. Similarly, countries like South Korea and Taiwan, not to mention Japan earlier and China later, expected their national champions to be outward-looking, and therefore export champions as well. This too is not India’s primary objective, though it is a subsidiary one. India’s national champions, all of them large conglomerates with multiple businesses, are primarily focused on capturing the domestic market for themselves. The difference in the two approaches, when it comes to the government-industry interface, is that an outward-looking system has an automatic test of success in the global marketplace. Without that external audit, an inward-looking, domestically-focused system can easily lead to crony capitalism with negative manifestations in terms of state capture on the one hand and business alignment with the strong ruler on the other.

He concludes on a cautionary note:

The Indian variant of the 'national greatness with national champions' strategy therefore has limitations that East Asia did not have. Meanwhile, the political strategy to deal with the inevitable pressures from below (for want of jobs and livelihoods) is to create the rudiments of a welfare state, as is being done along with an image build-up of the leader as the benefactor. And, simultaneously, to play on identity politics, which too is being done. But government hand-outs are no substitute for jobs, and religion cannot for all time serve as a mass opiate. For the moment, Modi is almost universally expected to win the current Lok Sabha elections and get a third term in office. Which would be strong political validation of his strategy so far. Yet it is well understood that the countries which do well over a long period have strong institutional guardrails, whereas strong-man rule is usually associated with a weakening of autonomous institutions, though it is also true that Modi is building national competencies that can only be to the good. Perhaps the conclusion at this point should be that the strategy is too Modi-dependent. Even if he is able to keep all the political and economic balls in the air, there is usually a time limit for most jugglers.

That's all from this week's edition.


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Ravishankar Iyer

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