Raghuram G Rajan - “Everyone should have a chance to succeed”
The former RBI Governor Raghuram G Rajan and economist Rohit Lamba spoke about their book at the Kolkata Literary Meet earlier this year
In what context did the two of you get to know each other?
Rajan: Well, I was the Chief Economic Advisor to the Finance Ministry. I got an email from this guy (Lamba) at Princeton University, who said: “I want to come and work with you for some time.” I knew a professor at Princeton, so I asked him: “Is this guy a crazy guy or what?” The professor said: “No, he is a very good student.” So I wrote back to Rohit, saying, “Okay, if you want to come and work for free for the government, come.” He came and did some good work for the Finance Ministry in 2013. This is how we became friends.
How did the idea of co-authoring a book grow out of this friendship?
Lamba: After 2013, he (Rajan) moved to Bombay to work for the Reserve Bank of India. I moved to the US to finish my PhD in economics at Princeton. We stayed in touch. Whenever we met, we used to talk a lot about India. During the Covid-19 pandemic, we began to formalise some of our thoughts into op-eds and that laid the foundation for this book.
How have the classes you teach (Rajan at University of Chicago’s Booth School of Business and Lamba at Pennsylvania State University) fed into this book? Have you tried some of the ideas with students before putting them into the book?
Rajan: More than students, conversations with people across India have fed into this book. I mean conversations with entrepreneurs, intellectuals, and sometimes even politicians. Of course, I do teach some of the concepts in my classes but the broader argument we are making is that there could be a different path for India to go in terms of economics and governance reforms. Unless there is greater decentralisation, it would be hard to achieve the progress we want to see in the health and education sectors in particular. This is something that I haven’t touched upon much in my classes. But now that Breaking the Mould is out, we are going to various colleges and universities to give lectures and interact with students.
Lamba: Yes, it always gratifying to see debates come alive in the classroom. The idea our book puts forth is that India does not necessarily have to follow the development path that other countries have followed. It would be great to hear what students think about this.
Rajan: People who read the book thoroughly understand what we are getting at. But there are also those superficial intellectuals who read only descriptions of the book and then attack the book based on just that. For example, they ask: “How can you say that manufacturing is not important?” People want to become consultants and experts overnight without reading carefully and engaging with ideas in depth. They jump to conclusions that are inaccurate.
What sort of reader did you have in mind when you wrote the book?
Lamba: We wanted to address every reader who is interested in India’s future. This book is not only for economists or social scientists. We wrote it in English but it has been translated into Hindi, Tamil, Malayalam and Marathi. There is an audiobook version too.
Rajan: We have minimised the jargon because we want to reach a broader audience. We want people to learn, and open their minds to possibilities because the world has changed.
In the book, you say that economic reforms can happen more easily if we have political leaders who preach unity and tolerance instead of creating divisiveness and hate. Why do you think it is important for economists to look at this aspect?
Rajan: I believe that leaders who want to centralise everything, who want to stop discussion and debate, are causing damage in a variety of ways. They are not letting the broader population of India have power, which is needed if we want to have a government that is responsible. Good governance is not about giving freebies. It is about citizens having the ability to say that they want better services. How do citizens do that when the people they have to appeal to sit miles away from them in Delhi, and they have no one local to take their concerns and grievances to? India is too big a country to be governed in this manner.
In the book, you say that when Indian politicians talk about Akhand Bharat, that irritates our neighbouring countries. How can we address this? Do you think that the South Asian Association for Regional Cooperation (SAARC) can be reinvigorated?
Rajan: It is important to remember that the world is regionalising, and India is not part of any of the significant Asian regional forums like the Regional Comprehensive Economic Partnership (RCEP), the Association of South East Asian Nations (ASEAN) and the Trans-Pacific Partnership (TPP). But look at our competitors — Vietnam, for example, is part of at least two of these. Therefore, India is at a disadvantage today. We do not have good economic relations with our neighbours. This is something to worry about. Our neighbours can be a source of benefit to us if we can build stronger ties with them. I have been to many SAARC meetings, and seen the two big countries—India and Pakistan — go after each other’s throats.
Prof Lee Badgett, an economist at the University of Massachusetts Amherst, estimates that India loses around 1 percent of its GDP because of homophobia and transphobia. Any thoughts on what the Indian government can do about this?
Lamba: This is a problem that countries all over the world have to deal with. When Section 377 of the Indian Penal Code was struck down by the Supreme Court of India, it was a great day for our country. A lot of us were hoping that the marriage equality petitions would lead to another significant victory but the Supreme Court put the ball back into the government’s court. The Indian government can do a lot if it wants to. But we have that burning age old question, right? Should law move ahead of society or should it take society along?
Rajan: We are moving in a good direction but a lot more needs to be done. When we talk about taking everyone along, it’s about the broader issue of inclusion. The answer has to be yes for everybody. We have to ensure that every citizen has a chance to succeed, no matter what their ethnicity, their language, their religion, or their sexual preference is. India has to be an inclusive country. Economic growth will certainly happen when there is total inclusion.
Here, at the Kolkata Literary Meet, I met a young woman from a scheduled caste background. Her parents are domestic workers. Through the dint of education, she is now in a position where she is working on succession planning for a multinational company in its headquarters. She is an incredibly talented person. She has come a long way because society was inclusive but it is not inclusive towards everyone. It has to be made more inclusive. Everyone should have a chance to succeed, and to feel comfortable in their own skin.
In the book, you say that India needs to lay out in some more detail how it plans to achieve its Net Zero target to deal with the climate crisis. What kind of interdisciplinary expertise might be required for this to happen?
Rajan: You need a whole range of capabilities to address such a huge challenge that confronts humanity. These will come from engineering, science, sociology, advertising, marketing and so many other fields and disciplines that economists need to partner with. There is a lot of work that needs to be done at every level. Climate change is coming rapidly to hit us, and so we have to be at the forefront of telling other countries, “You have to change and we too are willing to change.” Instead of seeing this as a crisis, we have to see this as an opportunity and think about how we can build new industries and take advantage of climate investments.
Your book recommends that India should build its strength and partner with other countries in their growth. This could involve big trade-offs. What kind of price is India paying to build alliances with Israel and the United States? Do you think that it is alright for India to give up its legacy of solidarity with Palestine for economic growth?
Rajan: I think that values are important for a country. If you say that you are only about interests and not about values, your reliability as a friend goes down. As a country, it is important to be known for a certain set of values and to assert them. Democracy is one. Sometimes, countries do compromise a little but it is important to be clear what you stand for.
Chintan Girish Modi is a freelance writer, journalist and book reviewer.
