Dr. Raghuram Rajan, former Reserve Bank of India governor and leading economist, speaks to The Wire‘s Karan Thapar on India’s economy and its future amidst the raging pandemic, alongside making notable insights into what has gone wrong with the Indian political leadership in containing the virus and articulating a vision for the country.
He also talks about how the image of India as a democratic country has been eroded under the current dispensation. Yet, he says he is optimistic about India’s future, but warns against triumphalism. He says India needs atmavishwas(self-belief) more than atmanirbhar (self-reliance).
Below is the transcript of the interview. The text has been slightly edited for improving readability.
Karan Thapar: Hello and welcome to a special interview for The Wire. How should we view the economic results released on Monday, May 31? Or what are the key lessons India needs to learn from the second surge of the virus to ensure the same mistakes are never repeated again?
Those are two issues I shall raise today with the former governor of the Reserve Bank of India and now, a highly regarded professor of finance at Chicago University, Raghuram Rajan.
Dr. Rajan, before I broaden the discussion, let’s start with the state of the economy. On Monday, May 31, the government released recent GDP results, and they show that during quarter four of the last year the economy grew by 1.6% which is better than what most people expected. And over the course of the whole last year, it shrank by -7.3% which is not as bad as the government feared. How do you view that outcome?
Raghuram Rajan: Well, to some extent it has been overtaken by events, the second wave of the pandemic, of course, setting the economy back again. I mean, the news has some good sides and some bad sides. The good side, of course, is the overall number. The bad side is much of this was obtained through the government’s spending growing. If you look at consumption, which will be needed to sustain demand going forward, that grew at a very bleak three-point-something percent. And that’s sort of the worry that many of our households, especially the poorer ones, not the richer ones, but the poorer ones are stressed as a result of the pandemic. Their purchasing power has been much diminished, many of them are indebted, and so to get the economy really back on track over the medium term, we need them to come back, to have a sense of confidence. And the worry is the second wave which we’ve just seen, (it) disrupts further and it may spread to the upper class as well as the upper-middle class, which has been quite free in spending in the earlier rebound.
KT: Let’s then pick up on some of the impacts of the second wave and of some of the things that have already been hinted at by you. The Centre for Monitoring the Indian Economy has put out some pretty distressing details about the collapse in consumers’ sentiment as well as a sharp rise in unemployment.
Take consumer sentiment first, according to CMIE, since the last week of March, it collapsed by 15%, and CMIE says over 90%, in fact, 97% of Indian households have suffered a fall in real income. How worrying is this?
RR: Very. I mean, this is a tragic occurrence, of course, in terms of lives lost. But the impact of this second wave seems to be much more widespread than the first wave. You know, much beyond the official numbers of deaths and cases, everybody seems to know somebody who has died. You know, there was a survey done by Prashnam which suggests that something like 17% of the people surveyed had lost someone. Now I’m not sure what that means in terms of how large a family they’re thinking about, but that’s a huge impact. That’s on par with the impact of similar surveys in the US, which suggest that, you know, around 19% of the people surveyed had somebody in the near family die. And when you multiply that to get an estimate of the deaths that have occurred, it’s huge. Certainly, relative to the official numbers.
Now, there are a number of variants, depending on the source; The New York Times has a number, somebody else has a number. Now the point is that this has been very impactful, so take the direct calamitous effect of the pandemic and then take the fact that of course states are going through lockdowns. Perhaps, less dramatic than the one we had last year, but that is affecting livelihoods and if people are not coming out to spend, you know, your sabjiwala has a problem in terms of income. And so when you put it all together, this could have a lot more negative effect on sentiment, partly because people are aware of the kind of health hazards that are around, they’re going to be a little more careful about their savings, especially the ones that have moderate buffers. And so going forward, this will have an impact on consumption. You know, I’m hopeful that we are nearing the bottom, but we need to be thinking about how we get out of this, looking forward. That’s very important.
KT: I’ll come to that, but let me put to you one more very worrying and distressing statistic made public by the Centre for Monitoring the Indian Economy. Unemployment shot up in May to 11.9% and it was only 8% in April, and when you dig deeper you discover that in May, 15.3 million jobs were lost, and that’s after 10 million were lost between January and April. That means that during the first five months of this year, over 25 million jobs have been lost. How bad is that?
RR: It is bad, I mean those numbers are not small. Of course, we saw in the first lockdown…if you looked at the numbers then, it was much bigger in terms of jobs lost. Some of these jobs will come back, many of them are because mobility has decreased. People are consciously staying home in order to not spread or get the virus, and as a result, the jobs: for example the street vendor or the restaurant worker, those jobs don’t exist anymore. At least for a while, till people start frequenting crowded restaurants again. So some of that will come back but some of it is permanently gone – when the small enterprise closes, when the restaurant closes, they’re not going to come back in a hurry. And so we have to think about a prolonged period of relatively weak employment unless we take serious action.
And the range of actions first starts with let’s contain the pandemic as quickly as we can, but bring all our resources to containing it. And then let’s think about vaccinating as quickly as we can, so people can feel confident that we can venture out of our houses and many of these jobs start coming back. And then we have to think about repairing the economy, and finally, even as we’re doing all this, to think about the reforms we need if we are to get back to anywhere near the path of growth we had pre-pandemic.
Other countries are doing that, China is back to its pre-pandemic growth path, but we have a long way to go. Even at the end of this year, if we grow by the 8% or 9% people are thinking, we will still be 8% points below the pre-pandemic path, and the pre-pandemic path wasn’t great. We already were below what we were doing in 2015-2016. So the loss in terms of our potential, where we could be, is huge. And we really need to think about revising our road model if we are to make a dent in that, to create the jobs. Not just the jobs that were lost, but the new jobs that are required because we have 10 million people coming into the labour force every month, almost.
KT: Let’s take up those four critical issues that you raised, one by one, and let’s start with the immediate crisis. And let’s move on to talk about what we need to do to revive the economy, and how we should, in fact, tackle reforms to get us back to the pre-pandemic road path. But the immediate crisis is the collapse in consumer sentiment and the sharp spike in unemployment. Now, as far as I can tell, all that the government has done is to offer 5kg of grain to the beneficiaries of the Food Security Act. Is that sufficient or is a lot more needed?
RR: Well, what we have – by the way, it should be 10 million a year rather than ten million a month – is rural support in the form of MGNREGA. And you can see the MGNREGA roles picking up hugely, suggesting there is stress. People want the support that MGNREGA offers, and they’re going for it. We don’t have a comparable form of urban support, and we need to think very quickly about whether we should have one. I mean, we should have used the year, this was apparent after the first lockdown, when the migrants went home because they had support at home, if nothing else through MGNREGA. But they don’t have support in the cities. So that’s one problem, that those poor in the cities don’t have any support, and you know, there are ways we are making cash transfers but we need to see if everybody is covered, and whether they’re getting adequate cash transfers. We need to up the cash transfers to the very poor because their livelihoods are being impacted and will continue to be impacted as we have periodic lockdowns until the virus is dealt with. That also means food support which you talked about, has to be extended to such time as we are still combatting the virus.
But equally important is (to) combat the virus. Now how do you do that – well, you need to bring all of your resources to bear. For example, we hear horror stories of medical facilities in rural areas being inadequate, there are pictures of even medium-size cities in Uttar Pradesh and Madhya Pradesh with hospitals full of people in the wards but also on the floor, waiting around to get treated. Can we not bring more resources to those places as Mumbai and Delhi find that they have spare medical resources because they’ve dealt with the virus. Can we not move doctors? Our hearts should go out to those hard-working doctors and medical personnel who have helped us this time, but we need more of their help going forward.
Similarly, can we bring the most afflicted patients to the places where there are spare ICUs? This requires Central effort, to combat the worst effects of the virus, to prevent additional deaths. Are we doing enough here? We saw with the oxygen requirements, that there was chaos for a little while until we started trying to manage it. Can we do more on the other aspects? And of course, there’s a big issue with the vaccines.
KT: Can I, on the vaccines’ point, just ask – everyone says that the best stimulus for the economy would be a mass vaccination campaign. The problem is, it’s now crystal clear that the government’s first target of vaccinating 300 million by the end of July is going to be missed. And it’s going to be missed by a huge margin, as a result of which, very very few people are prepared to give any credibility to the second target the government has set, which is to vaccinate every adult above 18 by the end of the year. And people don’t believe it, (a) because we clearly do not seem to have the right number of vaccines and it’s unlikely we will, and (b) secondly, few people believe we can vaccinate at eight million a day to reach that target. So if we are unable to do it, what will that mean for the economy? Because, by the way, it looks like we’re not going to do it.
RR: Well first, I think the lack of preparation on the vaccines is certainly something that is really devastating. I mean, we should have been able to add up our requirements for the vaccine, and should have known that we need to procure these much. I do remember that Serum Institute was trying to get orders from the government, knowing that it had commitments abroad. But of course, somebody doesn’t seem to have paid attention to how much we needed and how we could generate that, both from our domestic producers and international (producers). We should have been out there getting the vaccines so that we could be more confident, come out of this more quickly, recognising that we probably would not have been able to contain the virus.
KT: Can I ask you this? It’s not rocket science that we could have calculated that we don’t have the capacity, we knew that last year in May and June. We could have easily ramped it up. We didn’t. We also knew that you need to buy in advance, buy in risk. Practically every leading country did it, we didn’t. In fact, we didn’t place our orders till January and we placed minimal ones for 10 million. So would you say that beyond using the word ‘devastating’, this has been irresponsible?
RR: Well, you know, we can find a lot of words to describe this. It is a failure of governance, a failure of the government. And the question we have to ask is when the time comes, we have to look back and ask why it happened? And we haven’t done that enough for some of the problems we’ve had in the past, and the failure to recognise our failures creates the conditions for more failure. And it is important we look back, but now the time is really about how do we get out of this. And this is where I think, you know, the Centre has to take the lead on procuring vaccines, on investing in our vaccine producers, on pushing them to move faster. I mean, this is the one place where the Trump administration did a lot – probably the one success story it had. And it’s important that we learn the power of the Central government. Many vaccine producers will not deal with state governments, and of course, state governments competing with each other to buy vaccines is pushing up the price of vaccines. The Central government has clout, and it has the ability to see on an overall, all-India basis, what we need. Giving the responsibility to state governments is the wrong thing, it needs to take action. And it is also the Central government’s responsibility. It needs to centralise, to some extent, the idea of what resources we have, and move them to the places we need.
KT: Let me ask you two more questions to do with the economy before I move on and broaden the discussion. It’s not just the economic impact of the lockdown and the horrible virus that has to be contended with, and for which the government needs policies. But there’s also a lot of concern, I imagined internationally as well as in India, that the horrifying frightening spike. It has created a sense of panic, a loss of confidence, and that would have a behavioral impact on people’s attitudes, of people’s perception, and in particular, on how households and investors view the future, and what decisions and actions they take. How concerned are you about this behavioral aspect of the change in people?
RR: Well, it is hard to predict how it will, sort of, evolve. Once the pandemic is over, I mean, in the United States, you see that, you know, despite the horrors of what happened in New York, etc, you’re seeing people now, sort of being more willing to put the pandemic behind them. But I think the question for us going forward is really how do we come out of this in a way that gets us back to our levels of growth that we had earlier? And I think we need to recognise we should be working even now on moving the economy forward to the place we need to be.
Take, for example, something like education. We’ve got tens of millions of kids who’ve been, you know, at best, able to follow their classes on a cell phone. That’s a terrible experience. And remember, many of these kids weren’t even learning well when they were in the physical classroom, imagine what they’re learning if they’re trying to do it on the cell phone. The poorest kids have the least access to these kinds of resources. So what we will see when we come back is lots of kids who were in third grade, who have forgotten what they learned till then and now are effectively in first grade. How are we going to bring them back if we put them in fourth grade when they come back, and they’re actually learning at the level of first grade? The dropout rate, effectively, is going to be huge. They’re not going to really be able to keep up. And that is going to be disproportionately concentrated in the very poor. What are we thinking about in terms of remedial action when the schools come back? That’s something we should be thinking about now.
Similarly, small and medium enterprises, tons of them have built up debt, the ones that are still surviving, many have closed. What are we going to do about the debts they’ve built up? Are we just going to waive them? Are we going to negotiate them down? What processes do we have to negotiate them down? Now the RBI has been quite, sort of, you know, compassionate in offering forbearance, etc. But forbearance kicks the problem down the road. Eventually, somebody has to pay the piper, somebody has to pay the debt holder unless you renegotiate it. Do we have the process in place to do that? Are we preparing? So forget the past, what about the future? The future after the pandemic that we need to think about. And this is all about repair, can we repair the damage that’s been done to the economy?
Even right now, with support to people, we should also be working very hard to contain the virus and we should be bringing in the vaccines in order that our population is vaccinated. The sooner we bring it in. And here, the cost is not that great of an issue. Because the value of vaccinating the entire population quickly and increasing economic activity far outweighs any spending we will do on the vaccine. Sometimes we are pennywise and pound foolish. We should be thinking about procuring as much as we can. Of course, unfortunately, there’s not that much left to procure given how late we are, but the last point – we need to be thinking about the vision for the future.
I mean, as I said, ten million people come into the labour force every year. I mean what are we doing, both to remedy what we’ve lost, but also to create employment for these people? We were not growing fast enough to employ these people, which is why we have these agitations by the Patels, by the Jaats, because you know, land is no longer enough to occupy them. They are looking for jobs. Everybody wants a government job, because you don’t see private jobs coming. What are we doing on creating new jobs? What is the vision that we have? And unfortunately, vision is something we don’t see right now.
KT: You’re absolutely right, but I know that this is something you think about. So why don’t you share with the audience what you think the government should be sketching up as the vision? Spell up for the audience, the top 3-4 elements of what you think would be the right vision, and include in that some of the reforms you think we should be putting in place, so that vision can be realised.
RR: Well, let’s start with what’s going wrong. What’s going wrong is extreme centralisation of governance, a distaste for experts, and an appearance of criticism.
So what that does is create a kind of echo chamber when you hear from people like you. And that does very little to discipline government decision making, right? Everybody is saying “tussi great ho” (you are great) within the realm of the government. And so as a result, you know, when you haven’t procured the vaccine, nobody is saying “boss, we need to do it, we need to do it quickly”. There are plenty of smart people in the government, but they’re not speaking up. And that’s because, you know, the dominant narrative doesn’t really want alternative opinions. But let’s move on.
Let’s say that we have changed the style of government to embrace different opinions, to hear from the experts to understand how we make, you know, better decisions as a result, what is it that we need to do going forward? What is the kind of country we want?
I mean, if you think about where we have the greatest capacity, it’s not so much in manufacturing. Yes, we can improve our logistics, we can start, maybe, competing with Bangladesh and Vietnam, in a better way than we’ve done in the past. But really, where we have a lot more expertise is in the services. And there are enormous possibilities for providing high value-added services. I’m not talking about restaurants and hotels. That too will employ the moderately educated in our country, if we expand those, if we expand tourism, if we expand, for example, rural industry. But we can also generate enormous value through high-value-added services, think about providing financial services for the rest of the world. Think about providing consulting services, right? Now, what we need for that is a much stronger education system, we need to build that. We need these institutions of excellence, but not just five or six, we need hundreds of them to educate our population and to give everybody a chance. But it also needs a style of governance.
Today, for example, why do countries distrust Chinese, you know, firms, such as Alipay? If Alipay comes into your country and provides financial services, you wonder how much of this is actually of my purchasing data, available to the Chinese government? How much is it that they can see if they want to see it? Right? So one of the problems with financial services with high value-added services provided by a firm in a country with an authoritarian government is there are no checks and balances on it, right? And so you wonder, there’s a lot of fear in the United States about Chinese apps coming in, because they may use the data that they get against the American people.
India, in the past, was much more trusted as a democracy with the rule of law, with the judicial system which can stand up to the government. And we can protect the privacy of people’s data. We have a wonderful sort of, you know, proposal on how to ensure privacy of data. If we implemented that, and protected the privacy of people against intrusion by the government, that would be a very strong signal to the world, that India can be trusted on these kinds of services.
KT: We lost you briefly, but literally just for a second. Let me quickly pick up on the two big points you said. At the core of your vision for India for manufacturing, put a building up of financial services of services per se and value added to them – you’re talking about increasing consultancy, increasing financial services. And that you said, not only requires a vast improvement in the educational system, put an open, transparent government with checks and balances, a government that is trusted, a government that is open and a government that is willing to change. The fact that one of the chances are proper to get that sort of government out of the transparent to get the improved education on that front, there seems to be no movement in India at all?
RR: Well, I think, sort of, the new education policy – if we can rule that out in an effective way, it gives us a kind of blueprint on what needs to happen on education. Of course, we need to allow for more funds to come in, we need to bring in some of the foreign universities in addition to the Indian, you know, supporting some strong Indian universities. We need more freedom of speech within our universities, because after all, you’re not going to attract strong academics to come to those universities if you’re suppressing what they say. So, you know, this is a package deal. You can’t pick and choose, you can’t say on what are the best universities, but then, you know, suppress speech. You cannot say I want the best IT services, and at the same time, send a policeman to Twitter to complain about what’s going on there. Because, you know, they have a policy, which flags some sort of news as fake news. I mean, the image that we have, that we had, was of a democratic ally, a trusted democracy.
I think bit by bit, we are rolling that and that, in a sense, is also eroding our future. We cannot afford that. Because we need every scrap of growth that we can get in order to come back to where we should be. This doesn’t mean kowtow into the world. You can be independent, you can be strong, you can take the right decisions. But these decisions are not just right for our economic future. They are right also for our political well-being. And we have to be, sort of… we have to see that the two are linked. You know, if we allow freedom of expression, if we allow debate, if we allow free speech, we’re also going to get the kind of criticism, etc., which tells the government course correct.
KT: We lost you again, briefly, but only briefly. Let me put this briefly, I want to quote what you said. “The image we had,” and you use the past tense, “Was a trusted democracy. You said we’re eroding it. And as it erodes, we’re eroding our future.” Explain to the audience just how much damage, not just in the eyes of the Western press, in the western public, but importantly, in the eyes of Western investors whose money we need, has been done by things like the Twitter incident. By things like the attack on critics, whether they are activists or journalists, or whether they’re just ordinary people who are on social media, making innocent comments which the government doesn’t like. The damage done by the erosion of our institutions, all of those together, does it put off investors in addition to giving the country a bad name in the media?
RR: Well, you know, I would first worry about what it does to us directly. And yes, it does affect investor sentiment into India. A strong, powerful, uncontained government – you know, no investor wants to be at its mercy. We can see that, for example, in the government’s refusal to accept some of these arbitration claims, and now we have cams going off to Air India planes across the world. This is not news that we need. But I think from our own perspective, it is absolutely essential that we have free criticism, free debate, because that keeps the government on the right track. If the government doesn’t hear criticism, it always thinks it’s on the right track. And therefore it can go very far from the right track before it goes correct, as evidenced by what happened with the vaccines.
If we had somebody keeping on asking the questions – “Where are the vaccines procured? Do we have them?” – perhaps, the government would have woken up much earlier. And similarly, I think, you know, criticism is in our own interest. But also, let’s move to the foreign investor.
The foreign investor thinks that they have a chance in India if they have a dispute with the government of using our wonderful judicial system if they believe it is independent. But to the extent that the judicial system continues supporting the powers on every decision, they start asking questions – am I confident that my rights will be protected in that country? Or will it become like China, where the judicial system essentially is an arm of the government?
So these things matter, these things matter for investment, these things matter also for India’s image. I mean, still, in the United States, India is seen as fundamentally a good democracy. But, you know, some of this news is eroding people’s faith in India. You know, when we talk about the coalition of democracies that Biden wants to build, often a question comes up – is India part of the coalition or not? This would not be a question that was asked in earlier times.
KT: And that is seriously being asked in America. It’s not just journalists being irritating. It’s seriously being asked.
RR: Well, I walk in some circles, which, you know, are part of the circles of power. And it is a question that is being asked. Now it will never be asked openly because the United States does not want a rift with India. But I would say that the question is being asked more than it was asked in the past.
KT: I want to talk to you, Dr. Rajan, two widespread impressions in India, about the way we’ve handled this crisis. And the way in our handling, we’ve exacerbated it, and unfortunately, did so with our eyes wide open. Firstly, there is a huge view that India believed, not just the government, the people as well, industrialists, and a lot of others, that we were an exceptional country. That we wouldn’t have a second wave even though we knew that every country in Europe and America did, and the second wave was a lot worse than the first. But we convinced ourselves that wouldn’t happen. And as a result, the Prime Minister in January was boasting to the World Economic Conference that India had contained corona effectively. The BJP passed resolutions praising the Prime Minister for defeating corona. Do you think that this attitude of exceptionalism and the triumphalism that it produced was a terrible mistake?
RR: I think you said two things there: exceptionalism and triumphalism. I mean every country believes it’s exceptional, right? It’s different. And that’s not a bad view that you believe in the future of your country, you believe you can do great things. That’s great. It’s triumphalism that becomes a problem. If you believe you’re exceptional, you have a great future, and you work hard in going towards that, in preparing yourself – you know, you can move mountains. That’s what South Korea did. It grew from a poor country to a rich country in the span of a generation and a half. We can do that in India. But we cannot be triumphal, we cannot say we’ve arrived, we haven’t. We have a long way to go. You have to look outside at the world and see how much more the rest of the world is doing to recognise what a long way we have to go. So if you looked around and said, “Well, maybe we had a good first wave, we didn’t get affected so much. Maybe there are some immunities. But that means we might have to move faster on preparing for the vaccine so that we come out of this with the minimum damage,” that would be a good thing.
And if you said, “We’re exceptional, we have a great distribution system. We have dedicated doctors, we have a great voluntary system, let’s bring them all together to roll out the vaccine in a fast expedient way, using our fantastic drug manufacturers, who, you know, we’re going to incentivize to produce these drugs, these vaccines,” that would be a great resolution. And there you’re benefiting from the exceptionalism in a positive way. Complacency coming from exceptionalism, triumphalism coming from exceptionalism. We know everything there is to know because we learnt it in the past. That is the way to ensure we go nowhere, we go backwards. And I’m afraid that sometimes that is the outcome.
KT: The second concern I want to raise again it’s connected to the way we handle this terrible spike that we’re just about recovering from is the fact that we now know – the government was advised by its own body of scientists, that the new variants were worrying, they could easily lead to an exponential rise of cases. And that advice was ignored. Instead of taking protection, we decided to hold huge political rallies, huge Kumbh Melas. Is this disregard for science? And I suppose it’s not just science, its a disregard for expertise. Is this another failing, we have to correct?
RR: Well, again, we have to look at this not as an isolated incident. I mean, remember the demonetisation, which happened without us preparing enough money to replace the currency that were taken out, which created chaos for a few months, right? We were not prepared enough. There are parallels between how that decision was taken and the preparation we had done, and what is happening with the vaccines. And this is why I say we should go back to understand what went wrong, if we’re not to repeat mistakes over and over again.
But I want to caution you on one thing, which is to assume this is a failing of the current, you know, powers that be, and just them. It is also a system, which allows the kind of centralisation, the erosion of institutions that you talked about, the ability to ignore experts, and the ability to shut down criticism. This has happened in the past. But even today, when you look at the Centre and compare it with some states, some states have similar sort of, you know, features of governance happening there. It’s not that the Centre is unique in this. And it’s not that, you know, every state is a paragon of virtue, we have some excellent, sort of examples, from states of management of the virus. But they don’t all come out with shining colors. Can you see that some of the state chief ministers are much more democratic and spirit? Not all of them are. And so what we need to look at is the system itself.
Why does it succumb periodically to this, you know, authoritarian populism? What kinds of checks and balances do we need to bring into the system? How do we prevent the excessive centralisation within the country at the Centre, within states at the state capitol? How do we protect the rights of the press to make sure they don’t become poodles, again at the Centre but also in the states? This is a systemic issue, and we can sort of see it crystallised in the current leadership. But it’s not just their doing. We’ve done it in the past, and we do it in the states also.
KT: You have put the finger on the system, and you have a lot of convincing examples. But as you spoke, the thought occurred to me, is it perhaps even worse? Is the problem something that lies in the Indian character, in our culture, era upbringing in our thinking? That we accept compromises, we tolerate authoritarian rule, we get riled by criticism? And often simple preparations that good administration requires we don’t do, out of carelessness is the fault in ourselves.
RR: I think the danger is again of going to exceptionalism but in the opposite direction – we are terrible. No, I think when you look at examples of our success, ISRO, a fantastic public sector institution, which has done wonders on very low budgets. That to my mind reflects the best of India and you cannot compromise on quality when you sit sending rockets into space, they come down very fast, if you compromise on quality. And so we have learned to overcome the “chalta hai” (it’s okay) attitude, the tolerance for a certain amount of defect, the unwillingness to emphasise the need for really superior quality all the time.
I think there are lots of Indian firms that have done exceptional work. But we have to give them a chance. Remember, for example, how the Election Commission was strengthened by T.N. Seshan, and it became a force to reckon with. So that our elections became clean, normal boot capturing – boot capturing was something that used to be so prevalent in the past, we changed that. However, if we start sending away, you know, an Election Commissioner because he protested. We send them abroad because we can’t stand him on the Election Commission anymore, you get a more pliant Election Commission. There’s no point saying, “The Election Commission didn’t stop the elections because COVID was rampant, it was their fault.” No, they listen to you.
So if you have weakened the institution, you cannot complain that the institution is not standing up to you. That is a feature of what you did. So you have to, we have to think about why we allow, I mean… these are strong institutions. We have, still, a number of strong institutions, we have to ask why we allow them to be eroded? Why do we don’t have more of a public outcry when these things happen? And, you know, ultimately, this affects us. It’s not about the foreign investor. It’s not about the rest of the world. It is about India, and its ability to secure its place in the world without emphasising all these aspects, institutions, you know. Be trustworthy advice of experts and all that, you know. Our future is grimmer than then it could be. And I do think we have the possibility of a glorious future, not because of exceptionalism, but because we will work hard towards it.
KT: Now coming to the end of this interview, but I want to put through more questions to you. You probably remember when the elections happened in 2014, there were a lot of people saying, “India needs a strong, determined leader.” Would you say that actually, it’s not strong, determined leaders? What we need is strong, resilient institutions, and a commitment to make them work at all cost.
RR: We need both right? We need strong determined leaders who are willing to articulate a vision, and vision needs thought. How do all the pieces fit together? How do they fit with the Indian ethos? Where are we going, and do we have the resources needed for that? Or do we need to prepare more, I mean, all this has to be thought through and sold. We need political leadership, which sells that vision. And that vision, I believe, has to be one that takes all Indians together. Not, you know, segregate one set and say, “They’re not Indians, they’re not part of our vision.” It has to bring all of them together.
At the same time, we have institutions that are trying to find their own – an Election Commission, a Reserve Bank – which is very important. We need to check and balance the unbridled growth of certain industrial groups also. So these are all part of what we need, to make India work. I think they have to work together and not work at cross purposes.
KT: So in an option, just to sum up that answer, would you say the problem is that India certainly has become a country without the vision? It doesn’t know where it wants to go, and therefore it doesn’t know how to get there? We’re slightly floundering in the dark?
RR: I mean, I saw a piece by Yogendra Yadav a couple of days ago, asking for that vision. I see him as a, you know, thoughtful, very thoughtful political commentator. I mean, I think that we certainly know that, you know, the Nehruvian Socialism ran its course. We, after that, tried to muddle through a sort of, “Yes, we need more markets. Yes, we need strong institutions.” But we didn’t really articulate how they fit together and how they fit together with India’s social side, which is extremely important.
I think we need to recognise that going forward, we need both the sort of opportunities afforded by open markets and integration with the rest of the world. But we also need to emphasise that India’s strength has been the debate, has been the exchange of ideas. And has been, you know, what sometimes is not recognised today, our unity in diversity. We bring different visions to the table, but integrate them into a broader vision. I think we need to rediscover that. We need both, the dynamism, but also we need tolerance and respect for one another. The decency, the plain, basic decency, of working together and working together without demonising each other. If we can do that, and I hope we find leaders who can rebuild that in us. I don’t think there are any limits to where we can go as a country.
KT: Let me end by quoting you something Pratap Bhanu had that wrote, I believe yesterday in the Indian Express. He said, “Not so long ago, India was a country that believed its future was bright and glorious, and we were realising it with every single day. Suddenly, over the course of the 15 months, this pandemic has lasted, the prospect that faces us is of slower growth, rising poverty, a shrinking middle class. In fact, the Azim Premji University has pointed out that over the last 15 months of the pandemic, 230 million Indians have fallen below the poverty line. We were so proud of lifting 270 above it, 230 have now sat down.” And the point he was making is the point I want to put to you. Are we suddenly in this terrible position, where a future that we took for granted would be bright and glorious, and sunny, suddenly has clouded over and the prospect looks grim and gloomy?
RR: I think adversity can certainly constrain the mind and make you feel really, you know, down. I do hope that we have stronger efforts at containing the virus. And we have, you know, much better efforts for procuring the vaccine. That could change the environment in India. But I think the point that we should not ignore is that we haven’t been doing well for some time. The pandemic sort of brings everything to a crescendo. But we need to rethink our future going forward. What is the India that we want? And how do we make it possible if the pandemic triggers such rethinking, and makes it possible to set a new agenda for India? A vision, that much maligned thing, which, which sort of brings together the whole of India and gives us confidence that we can do it. That will not be such a bad thing.
I mean, adversity often brings out the best in a country. Remember, 1990-91, when we put in place a bunch of reforms that effectively created a new India. We need that, and I keep saying more than atmanirbhar (self-reliance), we need atmavishwas (self-belief). We need to believe in ourselves. But not in, as you said, triumphalism. We need to know that we can do it, but we need to put in place the various things that are needed to make us achieve that. And that means work every day, as hard as we can to make that vision possible. It means strengthening our universities. It means you know, running the, you know, talking to… something as mundane as creating resources for the government by talking to the banks that you want to privatise, talk to the unions, and bringing forward the privatisation we keep talking about when we never actually do.
But bring it forward in a way that makes customer service better, but also makes employees more confident about the future. These are all things we can do. I mean, it seems like a small thing, but it’s part of that larger vision. We need to do yesterday, what we plan to do tomorrow. How do we do that? I think it’s possible. But we need to take stock and articulate that vision.
KT: That is a positive moment to end on. This is a dark moment, but we have the capacity, we have the reserves, and we can find the vision to move ourselves forward. The only thing is that effort is what we have to make. And we have to make it unsparingly every day. There are no shortcuts. I see you’re nodding, and I assume that means, you agree?
RR: Absolutely. The worst thing we can assume is that we’ve arrived, or, what you just said, there are shortcuts. There are no shortcuts. We have to work harder than the rest of the world. But we can, and you can see it by looking at our medical personnel, our voluntary organisations, all of whom who’ve risen to the challenge. If they can do it, the rest of us can also do it.
KT: I don’t want to discuss it, but that reminds me of Robert Frost, “The woods are lonely, dark and deep and I have miles to go and promises to keep,” and we must remind ourselves that this is a journey. We cannot fall around. Thank you very much for an interview that was not just eye-opening but I think even at times truly inspired. Take care, Dr. Rajan. Stay safe.
RR: Thank you.