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Ravishankar Iyer

India's Economic Story since 1947 (3-2-1 by Story Rules #71)

Published 3 months agoΒ β€’Β 5 min read

Welcome to the seventy-first 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

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Alright, let's dive in.

𝕏 3 Tweets of the week

Every major country has used large-scale, low-skill manufacturing to provide mass employment. We seem to be charting a different, untrodden path, with manufacturing's share of GDP falling even as incomes rise.

That is a beautiful thought.

Couldn't agree more. Mad respect for Ro Sharma.

πŸ“„ 2 Articles of the week

​a. 'Sometimes sports can be messy and without any explanation' by Sidharth Monga (ESPNCricinfo)​

I know, I know. Two back-to-back Sid Monga pieces in two newsletter editions. You're welcome.

I spent an inordinate amount of time on the ESPNCricinfo website last week, especially after India's historic win. Of all the pieces, this one was the most poignant:

I can see India are hoisting Rahul Dravid up and catching him on the way down. Behind the podium, where nobody can see them, Quinton de Kock is down on his knees, playing with a little girl in a South Africa top and a pink tutu. Heinrich Klaasen is with another little girl. Daughters, I think.

How can your heart not go out to Rohit Sharma:

"I believe in destiny," Rohit says when asked if he had begun to start doubting that good things happen to good people. "This was written. Of course, we didn't know before the match that this was written, otherwise it would be so easy. That [to keep doing your best not knowing what's written] is the game."

I'm putting in a prayer for the South African team too. Their time will come:

It has played with South Africa here, but like Rohit and Kohli and Bumrah and Hardik, they must dust themselves off and give themselves the chance again. In the words of Rohit, that is the game.

​b. 'Why Modinomics has failed to attract foreign investment' by Arvind Subramanian and Josh Felman​

The article offers an interesting pattern-finding theory as to why India has failed to attract enough private investment, especially foreign. They break it down to two factors: every businessperson looks to maximise return while minimising risk. The authors argue that while the Indian government has taken several steps to shore up investment returns, these steps have been undermined by other actions which have increased the investment risk.

They list the measures taken to encourage investment, such as:

  • Infrastructure enhancement
  • Reduction in corporate tax rate
  • Production Linked Incentive (PLI)
  • Import tariffs to protect domestic producers
  • Banking sector clean-up and

The authors find a common pattern across these:

Look again at these measures. Many are designed to reduce costs, some to increase revenues and others to enhance after-tax profits. But all share a common goal: increasing the returns to investment.

(To be fair, some of these measures also have a risk-reduction impact, especially infrastructure build-up on supply-chain risk and the banking sector clean-up on getting access to credit)

They then move to the risk side of the equation and identify three state actions that have had an adverse impact on risk:

  • National champions risk
On numerous occasions, the government has abruptly changed the policy framework when it saw the opportunity to promote a national champion.
  • Direct and coercive state action, such as aggressive tax collection
In particularly prominent cases, Cairn/Vedanta and Vodafone invoked bilateral investment treaties to challenge the government's retrospective imposition of taxes. The government dithered when international arbitration upheld their claims.
  • Supply chain risk
...manufacturing firms need to be assured that they will have access to raw materials and inputs from anywhere in the world. But every time a tariff is increased or a product ban imposed, or even when such measures are floated by the government, firms worry about their access to low-cost supplies

​

🎧 1 long-form listen of the week

​a. 'The Life and Times of the Indian Economy' on 'The Seen and the Unseen' podcast with Rajeshwari Sengupta and ​Amit Varma​

I'm part of a WhatsApp group called the Clear Writing Community - composed of students of the writing course by Amit Varma, who also is the host of the peerless podcast, 'The Seen and the Unseen'.

Amit's episodes are known for their insanely in-depth dives into the lives, work and philosophy of its guests. The episodes routinely break the 4-hour barrier. Even by these lofty standards, episode #387 is a monster, topping at an epic 9 hours and 53 minutes. In the episode, Amit and Rajeshwari (an Associate Professor of Economics at the Indira Gandhi Institute of Development Research) narrate India's entire post-independence economic history. From the times of Nehru to the present day, the episode covers it all.

When Amit shared the episode on the WhatsApp group, his editor had a pithy response on where it ranked among the other 386 episodes.

"Greatest"

This is not an episode, it is an education. It is a must-listen for any economics student in India (make that the world) and anyone generally interested in economics.

Unfortunately, I don't have access to the transcript. But here are some themes that were eye-opening for me:

  • China and India were similar from 1700 to 1980. Then divergence happened driven by Deng Xiaoping (and our relatively slower pace of reform).
  • RCTs don’t move the needle much in real-life (although they have been lauded a lot, including by the Nobel committee).
  • Growth > inequality: We should not fret too much about inequality. It's better to have at least some pockets of growth rather than have equalised low incomes throughout the country
  • Planners vs Searchers: In government policy, instead of planning everything to the final dotted i and crossed t, a better approach is to be a 'searcher', or to 'cross the river by feeling the stones' in Deng Xiaoping's memorable phrase
  • Elites: India needs to balance between depending too much on elites versus completely mistrusting them
  • The horrendous economic impact of the 26/11 attacks. Shivraj Patil moved out of the Home Ministry, and Manmohan put his best person, P Chidambaram on the job. That resulted in Pranab Mukherjee taking over the Finance ministry and creating a major mess (the Vodafone retrospective taxation case, the banking NPA crisis) which we are still dealing with
  • The informal sector being hit by several shocks from 2016 onwards - from the ill-advised demonetisation scheme to poor implementation of GST and finally the Covid-19 lockdowns. The sector is yet to recover.
  • The poor political handling of the much-needed farm laws reform
  • The mistrust created due to the change in GDP series and the withholding of crucial government statistics because they contained uncomfortable news
  • The importance of GCCs (Global Capability Centres) as a key engine of growth post-Covid

Don't get daunted by the size of this episode. You can listen to it in 2x and it'll take you roughly 5 hours (or 2 normal Bangalore commutes).

That's all from this week's edition.

​Ravi

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Ravishankar Iyer

A Storytelling Coach More details here: https://www.linkedin.com/in/ravishankar-iyer/

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