BREAKING THE MOLD

Two Indian American academics offer a stern assessment of the Indian economy, education system, and other institutions and why they have not risen to their full capabilities to propel the country forward.

Characterizing the current government as being “better at perception management and suppressing unpleasant facts than creating real well-being for the masses,” Rajan and Lamba, both of whom worked on economic issues within the Indian government, give a forthright accounting of the nation’s many faults and enormous unused potential—i.e., human capital. In three well-structured parts, the authors lay out their arguments. Regarding the rapid rise of the Indian economy, they side with India’s critics, rather than its “cheerleaders,” because of some hard, ugly facts. These involve persistent inequalities in society, lack of employment opportunity and sufficient education, the abysmal treatment of women, low-quality health care, lack of clean drinking water and proper nutrition, and rural blight and poverty, among other reasons. Today, India’s annual income per person is roughly $2,300; in China, that number is $12,500; Korea’s is around $35,000. “India is no longer in the middle of the pack; it is at the bottom by a long way,” write the authors. Rajan and Lamba do not think protectionism and subsidies to spur manufacturing are the way to a more vigorous economy for all. They argue that the government should turn away from low-wage manufacturing—in the past, “the ladder to riches”—to emphasize direct services exports as the Indian future. Using human capital also encompasses encouraging visionary entrepreneurs and new businesses, and the authors showcase many examples—e.g., the eyewear chain Lenskart. As the supply chain has changed drastically, the authors believe India should “embark on a more unique Indian way of development, one that is more aligned with India’s strengths.”

A sobering economic study packed with useful ideas.