Rohit Lamba, an assistant professor of economics, discusses reimagining India's economic future focusing on shifting policy towards services and education. Topics include decentralization, scaling education and health, India's growth rate, and the need to pick winners and losers in policy decisions.
Shift focus to services and education policy for economic growth
Decentralization crucial for India's industrial policy and growth
Empower states through fiscal federalism for balanced economic development
Deep dives
Focus on Human Capital and Innovation in India's Economic Future
The podcast discusses shifting India's economic focus towards enhancing human capital and fostering innovation in high-end service sectors. Authors recommend moving away from traditional industrial policies to prioritize services and education programs. Emphasis is placed on improving the quality of human capital through decentralized approaches, aligning with a services-driven growth trajectory. The argument revolves around creating growth engines through agglomeration effects and externalities, particularly targeting higher skill services.
Challenges of Centralized Industrial Policy in India
The podcast highlights the challenges in centralized industrial policies in India, focusing on the lag in policy consensus compared to intellectual debates. Discussion points out the necessity of decentralization, especially in industrial policy decision-making to drive market creation and enable growth centers. Disparities between states in growth rates emphasize the need for nuanced approaches at the state level to address regional economic divergence.
Decentralization and Fiscal Federalism for Economic Development
The podcast underlines the importance of decentralization and fiscal federalism in fostering economic development in India. It discusses the need for empowering states to raise their own revenue and make policy decisions autonomously within a framework of funds, functions, and functionaries. Emphasizing the significance of enabling local governance, the conversation advocates for decentralization strategies to address the disparities between states and promote balanced growth.
Building Centers of Excellence in Higher Education
The podcast suggests a strategy for enhancing India's higher education by establishing centers of excellence to attract global talent and drive innovation. The focus lies on improving quality over quantity to create world-class institutions that can produce high-skill talent and entrepreneurs. The argument centers on liberalizing and investing in existing institutions to achieve a multiplier effect, particularly in frontier research areas like R&D and entrepreneurship.
Critique of the PLI Scheme
The discussion in the podcast delves into a critical analysis of India's Production-Linked Incentive (PLI) scheme, which focuses on high-end manufacturing and involves government intervention in picking winners and losers. The guest expresses concerns regarding the efficacy of this approach, highlighting the lack of transparency in policy objectives and sector/player selection. By questioning the policy's long-term objectives, effectiveness, and criteria for success, the guest emphasizes the need for clarity, openness, and a comprehensive understanding of industrial policies to drive sustainable growth.
Challenges in Interpreting India's Growth Rate
The podcast conversation also addresses the complexities surrounding the interpretation of India's growth rate, underscoring the discrepancies in official GDP data calculations and the need for enhanced national income accounting practices. The guest emphasizes the importance of accurate economic data for informed policy-making decisions, advocating for systemic reforms in data collection and analysis to avoid misleading growth projections. By highlighting the potential risks of misinterpreting economic indicators, particularly concerning job crisis and underemployment statistics, the discussion advocates for a more transparent and robust framework to evaluate India's economic performance.
Today my guest is Rohit Lamba, an assistant professor of economics at Pennsylvania State University and a visiting assistant professor of economics at New York University Abu Dhabi. We spoke about his recent book Breaking the Mould: Reimagining India’s Economic Future which he has coauthored with Raghuram Rajan.
We spoke about their argument to shift the focus from industrial and trade policy towards a services and education policy, how India can and should decentralize, if India can scale education and health, India’s growth rate numbers, and much more.
