BR Shenoy Memorial Lecture 2024 | Dr Pravin Krishna

BR Shenoy Memorial Lecture 2024 | Dr Pravin Krishna

Source: https://www.youtube.com/watch?v=MiHCkwiKnBg Duration: 6209.1s

Speaker 1 (00:00): so good evening everyone and welcome to the biashanai memorial lecture 2024 to be delivered by professor praveen krishna of johns hopkins university my name is kumar anand and i will be your host this evening professor bellicote ragunat shinoy was born in 1905 in the small kerala village of bellicote one of 11 children of a poor farmer educated up to class 5 he ran

Speaker 2 (00:26): away from home while a school boy to join the Indian independence movement where he

Speaker 1 (00:30): was arrested carrying the flag.

Speaker 2 (00:33): Jailed in the same prison as the educationist Madhavan Mohan Malviyeh who had recently founded a university in Banaras.

Speaker 1 (00:40): He finished high school and then traveled alone from Bellicote to Banaras, a 2000 kilometer journey away in search of education. And given a scholarship to up to his MA degree in economics, he won a scholarship to do a

Speaker 3 (00:53): DSE Economics at the London School of Economics, where one of his teachers was Professor Friedrich Bonn Hayek. At young, the young BRS at age 26 was among the first Indians

Speaker 1 (01:05): to publish a scholarly economics article in the Quarterly Journal of Economics in 1931. Appointed Indian representative to the IMF, he descended from the then national emphasis

Speaker 2 (01:15): on Soviet styles investment in heavy industry, and instead of more appropriate employment generating agriculture.

Speaker 4 (01:23): He left his official positions to argue publicly for market-oriented policy reforms as the only road to prosperity for a poor country.

Speaker 1 (01:32): Professor Shinoy was one of the few lonely voices from within the country who advocated for the 1991 kind of economic reforms. Abolition of the license permit Raj in 1991 changed everything. BRS spoke frankly on the corruption-inducing and production-distorting effects of import licenses in foreign trade.

Speaker 2 (01:51): He wrote, As part of the policies of planning, we have brought about a pressurized expansion of industrial sector, import substitution to save foreign exchange, physical restraints on imports and exchange controls contributing to this process in no small measure. This industrial bulge has inevitably involved a colossal diversion of resources into new industries at the expense of traditional and export industries.

Speaker 1 (02:47): After economic reforms, our foreign trade grew enormously from 15.5% of GDP in 1990 to 27% in 2000, and it now stands at around 50% of India’s GDP. Foreign trade is an essential component of our economic development. We are hence privileged to have Bia Shunai Memorial Lecture 2024 given by an expert on foreign trade, Professor Praveen Krishna.

Speaker 4 (03:11): Dr. Praveen Krishna is Chung-Ju Young, Distinguished Professor of International Economics and Business at Johns Hopkins University and a Research Associate at the National Bureau of Economic Research. Professor Krishna’s fields of research interests are international economics, international political economy, the political economy of policy reform, economic development, and the political economy of India.

Speaker 1 (03:38): his many scholarly articles have appeared in journals such as american economic review journal

Speaker 2 (03:43): of political economy and the quarterly journal of economics he’s also the author of trade blocs economics and politics cambridge university press 9 2005 and co-editor along with jagdish bhagwati

Speaker 1 (03:54): and arvind panagaria of trading blocs alternate analysis of preferential trade agreements mit press 1999. Professor Krishna holds a bachelor’s degree in engineering from IOT Bombay and a PhD

Speaker 2 (04:08): in economics from Columbia University. He has previously held appointments at Brown University, University of Chicago, Princeton University and Stanford University. He has also served

Speaker 1 (04:19): as a consultant to the World Bank and the International Monetary Fund. Before we begin with today’s event just a small housekeeping announcement. So today’s memorial lecture will

Speaker 2 (04:29): will be followed by a question and answer session with the professor.

Speaker 4 (04:33): So please write your questions in the chat or comment section on the Zoom or YouTube, wherever you are joining from. And with that, on behalf of the Economic Research Center,

Speaker 2 (04:43): Mangalore and the Center for Civil Society, New Delhi, it gives me great pleasure to invite our speaker, Professor Praveen Krishna, to speak on trade policy and India’s structural transformation.

Speaker 1 (04:54): Professor Krishna. Thank you very much. It’s a great pleasure and a tremendous honor for me to give this year’s B.R. Shenoy Munbury lecture. I should start by saying that economists of my generation

Speaker 5 (05:10): did not really have the opportunity to meet Dr. Shenoy or to hear him speak. And what we know of

Speaker 1 (05:16): Dr. Shenoy, we know primarily through his writings and from what others have written about him. Nonetheless, the clarity and the impressions of Dr. Shenoy’s writing in arguing against government interventions, his early warnings about the consequences of heavy-handed central planning, import substitution, and more broadly, the licensed Raj, make him an intellectual legend and a tremendous source of inspiration to all of us. I grew up in India in the 1970s and the 1980s, when the consequences of government intervention and heavy government intervention, which Dr. Chenoy had prophetically warned about, had become evident to everyone. Almost all of Dr. Chenoy’s fears had come true. Indeed, his warnings were so accurate

Speaker 5 (06:05): that the Nobel laureate Milton Friedman famously had said, written, Dr. Chenoy’s writings sounded more like a retrospective description of what had happened

Speaker 1 (06:15): rather than a forecast. This is the clarity with which he was able to see the future. Dr. Chenoy’s boldness in making his case when it was unfashionable to do so, and his ability to speak the truth to power show a singular intellectual and moral courage, making him a true hero. I’m deeply honored to be giving this lecture today. My topic is India’s international trade and trade policy and in which Dr. Shunai’s warnings about the adverse impact of government interventions proved to be especially relevant. And I will be discussing this topic with reference to the challenges of the structural transformation of the India economy. So with this, let me share my slides. Here we are. And go to the full screen. Okay. So trade, trade policy and India’s structural transformation. And so as far as the outline for today’s talk, I’d like to touch upon sort of three sets of issues. One is India’s development trajectory, the transition from agriculture to India and to industry and services. How has India done? How does it compare with other countries that have been through similar transitions? How does it compare with developed countries that have managed this transition successfully? And where does all this stand in relation to the employment challenges that India faces arising in particular from India’s demographics? So that’s one piece about but just a characterization about India’s development trajectory. A second part, I will want to talk about India’s international trade. So what does sort of India’s trade look like? And the connection between these two issues, which is the development trajectory and international trade will be clear in the sense that I will make the case that in order to address the employment

Speaker 5 (08:17): challenges that India faces, greater participation in international trade, an expansion of India’s export footprint and a greater ability to leverage global markets is going to be completely the key and essential. I’ll talk about the reasons why India’s export footprint

Speaker 1 (08:34): remains still quite low,

Speaker 5 (08:37): about how relative to its GDP share or relative to other countries in sort of similar stages of development, how India could be doing better

Speaker 1 (08:50): with respect to international trade. Talk about the particular reasons, including domestic policy that have inhibited India’s competitiveness and sort of induced an outcome that is less than optimal

Speaker 5 (09:05): from this perspective, from the standpoint of trade, and then talk about India’s trade policy options.

Speaker 1 (09:11): In particular, when I discuss India’s trade policy,

Speaker 5 (09:14): I would want to do this with reference to essentially what’s going on in the background. So what was the history of the multilateral system of which India is part? What were the trends in that system? How did India’s own trade policy choices, how did they sync or not sync with what was going on globally and where all that stands with respect to our unilateral policies, bilateral choices with respect to trade blocks and so on, as well as multilateral sort of, you know,

Speaker 1 (09:43): where we stand with respect to the multilateral trade system, IED, World Trade. organization. Let me start with India’s development trajectory as I mentioned. We see here shares of the different sectors in overall output. We’re talking about manufacturing, agriculture, services and what one sees is that the share of agriculture over time has diminished

Speaker 5 (10:14): but remains reasonably high. The share of manufacturing, despite a tremendous number of economic reforms undertaken, let’s say starting in the 1990s, both on the international margin as well as domestically,

Speaker 1 (10:29): looks relatively flat and services have expanded a bit.

Speaker 5 (10:35): The transition out of agriculture

Speaker 1 (10:39): or kind of the share of agriculture in India’s economy there’s a kind of a particular contrast that is worth noting when one looks at the kind of the fraction of output relative to the fraction of the workforce that is taken up in this sector.

Speaker 5 (10:59): So if one looks at output shares, one sees that agriculture accounts for about 15% of India’s output, but you contrast that with the percentage of the workforce in agriculture.

Speaker 1 (11:11): and that number is much larger. As you see here in the panel on the right, what you have here is a very substantial sort of share of the workforce that is in agriculture. We’re talking about roughly 45 percent of the workforce producing only 15 percent of the output. What this What this points to is the very low relative sort of productivity of the agricultural sector

Speaker 5 (11:42): relative to industry and services. And what you have here is a plot of the relative sectoral productivity. This is output per worker in industry as well as services and the trends over time in relation to agricultural productivity. And you see that this product, the output per worker productivity measure in industry and in services is several multiples, essentially around

Speaker 1 (12:05): three, four, five times higher than what you have in agriculture. Suggesting that agriculture perhaps is a sector that one wants to move workers out of one way or the other into the higher productivity industry, higher productivity services activities. This is a chart showing you some international

Speaker 5 (12:28): comparisons. Where does India stand in relation to these other countries that one might loosely think of as comparative countries or countries whose economic performance we aspire to Bangladesh, Vietnam, Indonesia, South Africa, Brazil, and so on. And you see here that India’s agricultural share is very high in 1996. It continues to be high in 2019 and certainly the highest among these compared to countries. And by contrast, what you have in sort of industry is that it’s relatively low and the only sort of, you know, in terms of comparisons you’re doing better than Bangladesh in 1996, but slightly worse by the time you get to 2019, similar to Brazil, but worse than the other countries.

Speaker 1 (13:18): So this is suggesting that India’s transition, It’s sort of somewhat, the movement out of agriculture into these other sectors has been somewhat stagnant relative to what has happened even in these other economies. Here’s another comparison. This is now with the United States. Just to get a sort of a broad historical perspective of what a developed country like the US,

Speaker 5 (13:42): what were the transitions that it went through? These are sort of fractions of the labor force by sector. you see a very rapid decline in agriculture from close to 70% in the 1850s to something like, you know, 2, 3, 4% by the time you get to 2010, it’s around 2% is the number currently. And you see that the time in which the U.S. agricultural labor share was similar to what is where we are in India today, which is about 45%, was over 100 years ago. So you’re talking about sort of 1890, 1880, 1900, this was the time period when you had a comparable sort of distribution of the labor force by sector in the agricultural sector.

Speaker 1 (14:27): A different chart here showing you evolution of South Korean manufacturing.

Speaker 5 (14:34): So if you go through the 1960s, 70s, and the 80s, and so on, you see a very rapid increase that the axis on the left is the share of manufacturing in total employment. And you see that they’ve gone up from the 10% or so, where India roughly is, to over 25% by the time they peaked in 1990. And this is sort of the Korean growth miracle, the East Asian growth miracle. This was the nature of the increase in the labor force and manufacturing relative to essentially workers coming out of the agricultural sector into manufacturing in this very successful example. A different chart altogether showing you plans and sort of global value-added manufacturing. In China, you see a very, very rapid increase, just a short few years between 2004, 2012, an extremely rapid rise in value-added manufacturing.

Speaker 1 (15:25): China, very vastly different from what we’re seeing in India. So this is roughly the picture in terms

Speaker 5 (15:34): of the necessary structural transformation. that’s what you could take away from these graphs that I’ve just shown, were about 17% of the world’s population, 3% of world’s output. One reason for this very low fraction is a very large fraction of our workforce that’s used up in agriculture. And overall, the picture that, what I take away from all of this is, is the very urgent need to transition workers out of low productivity, agricultural jobs into higher productivity jobs in industry and services. This challenge and the need for this is all the more urgent given the demographic pressures in India. We’re very youthful country, over 30% population is less than 15 years of age, which suggests that the number of workers entering the labor force each year is going to be a very large number. And there’s the important and urgent question of where these workers will be accommodated within the labor force. And we would certainly want to see more and more of that take place in industry and services and high productivity services.

Speaker 3 (16:41): If agriculture is not going to be

Speaker 5 (16:43): where these high wage jobs are created or relatively high wage jobs are created, one has to look for ways in which industry can potentially expand. And one very obvious solution here, and this is kind of a key part of the structural transformation discussion, is that this will have to come from India’s ability to leverage global markets. So we still have a very small share of global markets. There is an enormous space out there

Speaker 1 (17:12): for Indian manufacturing to be able to expand and supply to Indian services as well, of course. But international markets, exports are very low fraction

Speaker 5 (17:23): of the export market as it currently stands, give us this sort of sense that there is tremendous potential there for job creation through export growth. And given again, that our export trade footprint is quite small, as you all probably know, India shared merchandise exports was kind of really small number, maybe around half a percent in 1990. And this is a good straight, it’s just below 2% at this point,

Speaker 1 (17:51): which tells you that there’s kind of tremendous opportunity there still for us to grow. A comparison with China here is valuable perhaps. These are the trends in terms of our global export shares. As you can see, India’s export shares have grown over time, relatively modest increase from about a half a percent to close to 2%, as you see on this chart. But at the same time, a country like China

Speaker 5 (18:22): went from a number that wasn’t too much higher, maybe 2.5% or so to something like 14, 15% of the world’s export markets truly having become the export sort of manufacturing hub and export factory of the world. There’s another angle through which one can compare India’s trade performance with China and with other countries, but I’ll focus a bit here for the purposes of this discussion on the comparison with China. And this is through the composition of our exports. These different angles through which one can look at trade performance, not just looking at the aggregate outcomes, which tell you essentially the share of global markets, but these different angles

Speaker 1 (19:07): through which one can look at it, particularly now, the slide that’s on, looking at the composition of exports

Speaker 5 (19:14): indicate other issues with India’s international trade, in the international trade performance. And this has to do with, let’s say, the composition of the Chinese export basket relative to India’s export basket. So what you see here is composition of China’s exports. You see a very consistent pattern, sort of, and if you compare this picture for 2022, you see a lot of views in the exports that they produce of their low-skill labor. And over time, if I looked at the same sort of profile for the 2020s, 2010, you know, the 1990 and so forth, you see very steady increase in skill and capital intensity over time. So essentially, as China went from being kind of a low-skill abundant country to accumulating its capital, to accumulating skill in the labor force, you see that they moved from having an export basket completely consistent with international trade theory that they had went from having an export basket that was sort of essentially made very good use of their low-skilled workers and move towards higher skill and more capital-intensive exports over time. Same picture for India looks a little more haphazard. So we have an export basket that combines on the one hand natural resource exports, on the other hand sort of skilled labor, semi-skilled labor and so on. It does not quite reflect in the same way that China’s export basket does and the trend over time, which you’re not seeing here, but the way that China’s export basket trended over time

Speaker 1 (20:51): in terms of their use of low-skill labor, we don’t necessarily see that in the Indian case. You could look more narrowly at the top six merchandise exports of China,

Speaker 5 (21:03): and you see that same picture of consistency in the sense of their kind of labor force being employed in manufacturing, being employed in manufacturing, assembly, and so forth, trending over time. Again, a picture that you don’t necessarily see here, but turning over time into more capital intensive and skill intensive production.

Speaker 1 (21:23): Whereas the Indian profile for the top six merchandise exports are a little more half passive again, once again, a combination of kind of, you know, natural resources, some low skill activity, some mid skill activity and so on. you see a very similar picture if you look at sort of the top two merchandise exports for India in China in 2020. So my overall point over here is that very clearly reflected in India’s export basket is the sort of the lack of the connection between the abundance of resources that we have,

Speaker 5 (22:01): which is low-skill labor, and the nature of the products that we’re producing and exporting. This has been commented upon by many experts in this field, but nevertheless a significant feature that one ought to recognize and sort of question as to why it is the case that we’ve been able to make less use of our abundant resources. And that sort of theory would suggest that we should and that we would, why have we not been able to do that in the Indian context in a manner that other very successful countries like China actually have. Yet another sort of angle through which one could sort of look at India’s trade performance is through global value chains and India’s participation in global value chains. So many countries have embraced the opportunities provided by global value chains, essentially where you have a great deal recently of production fragmentation taking place in the world, where it’s not as if the intermediate inputs and the final goods are all necessarily all produced in the same country, but these are all produced in different places. countries have been able to leverage their competitive advantage more effectively by specializing in different parts of a product’s kind of production process, right? And this is especially true for countries in Asia, such as China, Japan, South Korea, and so on, which have very efficiently integrated their economies into these networks, and the networks in turn accounting

Speaker 1 (23:24): for a significant fraction of global trade. How does India do with respect to share of global value

Speaker 5 (23:31): chains, unfortunately, this is actually quite small. So if you look at this kind of panel at the bottom here, the top panel really is talking just about a point we already discussed, share of world manufacturing exports. But the bottom panel is about the share of sort of, you know, GPN, this global production network products or global value chain products within manufacturing exports. And you see that India’s numbers are actually really quite small relative to some of these other countries like China, Korea, and some of Indonesia, Malaysia, Thailand, and so forth as well. So we’re less able to integrate into these global value chains, which are increasingly prominent, increasingly providing opportunities for countries that might be very, very good at producing one piece or one intermediate input that goes into a larger kind of production process

Speaker 1 (24:23): without necessarily being good, producing things all the way up to the final good. All of these point to sort of weaknesses and different ways of looking at India’s trade performance.

Speaker 5 (24:38): And overall, one knows very clear that, you know, sort of not so impressive trade performance comes from a combination of two things. One is competitiveness. The other is market access. So in general, in international trade, you wanna do better, you think in terms of greater competitiveness, you think in terms of greater market access. And it should be clear that all the competitiveness in the world will probably not get you very far if you don’t have any market access and you’re shut out from the rest of the world. And all the market access in the world will probably not get you anywhere if you have a low level of competitiveness. So in the Indian case, this has been subject to an enormous amount of discussion and a number of prominent scholars over the years have written about this. Most recently, Professor Arvind Panagaria, Jandil Pakwati, various others have talked in great detail about the various issues that bedevil India’s competitiveness in a manner that is relevant for international trade and international trade performance. I’ll point out just a short list here and I’ll just focus on one of these. So there’s a question of the scale of production, how large are Indian firms relative to firms in the rest of the world? What fraction of the Indian workforce is employed in low productivity firms, small low productivity firms? There’s other questions more broadly about the business environment, labor regulations, challenges that they create for expansion of operations for hiring more workers, land acquisition challenges, logistical challenges, and so forth on the one hand. So there’s a series of reasons for why you have kind of domestic, in a sense, factors for kind of low performance. And one could ask this question about trade policy. How well have we integrated with the international trade system? What are the trends in the, you know, multilateral sphere? What have we done with respect to our bilateral agreements? and what’s the story with respect to our multilateral, with respect to our unilateral policy choices. So I want to speak very briefly to this question of productivity and domestic competitiveness, which again is extremely key, of course, to our ability to do well and to expand and gain a greater foothold in terms of exports and international markets. But we’ll focus most of my comments on the topic for today,

Speaker 1 (27:10): which is trade policy against the broader global environment with respect to trade openness. I should mention, as I already have, that this work I’m going to focus just on the issue of

Speaker 5 (27:25): international scale. Much has been written about this. Professor Panagaria has been very articulate, contributed to this debate. Some of this work is based on sort of his analysis and the analysis of others including Dr. Rana Hassan at the Asian Development Bank who’s done quite a lot to document sort of what it is that I’m about to talk about which is the kind of the employment distribution the size distribution of Indian firms and why it matters from the standpoint of kind of Indian trade.

Speaker 1 (27:57): So what you’re seeing here is kind of Indian manufacturing and distribution of sort of the

Speaker 5 (28:04): scale of the different firms and small, medium, large firms in India relative to China. And this is really very striking. You see that roughly 85% is 84% over here. This is in 2005. Indian firms are employed in, so essentially employed less than 50 workers. And the fraction of firms that are, could be considered in a sense large, employing 200 or more workers is about 10%. This very big contrast with what you see in China, where you have only about 25% at the lower end of this distribution and over 50% large scale firms.

Speaker 1 (28:47): Why does this matter? There’s a great productivity differential.

Speaker 5 (28:51): If you look at output per worker in small firms relative to the large firms, you see this distribution. So these numbers presented in the panel on the left.

Speaker 1 (29:01): the output per worker is about five times as high in large firms relative to the small firms.

Speaker 5 (29:09): That’s the comparison of the 200 plus to the 5 to 49.

Speaker 1 (29:13): Workers in the Indian case, this is productivity differentials on the Y axis. And you compare that to the Chinese case where you have a similar sort of profile, but all suggesting that productivity is considerably higher.

Speaker 5 (29:26): And in fact, the productivity differential in India is even more dramatic than it is in China, suggesting that scale matters a lot for productivity, for competitiveness. This is a well-known sort of figures, first produced, I think, by Dr. Rana Hassan, looking at the apparel sector, India versus China in 2005, where, you know, a sector that is very important for Indian exports. in exports, you see the very, very dramatic contrast. And there’s a sector in which China has done extremely well in recent decades. And you see the extreme concentration in small firms in the apparel sector in India, which is 92% of Indian workers are in sort of small firms, whereas that number is only about 12%, a little over 12 in the Chinese case. And most of their workers being concentrated

Speaker 1 (30:15): in sort of large firms. The consequences for international trade are shown on the slide where you see a rather different performance in terms of Chinese sales and global markets relative to where India is. And this is an important sector for us to kind of look at and to focus on and to see the implications of scale and the implications of lack of competitiveness and low productivity manifest themselves so clearly in export performance. This distribution is not unflattering for India just by comparison to China. This profile here shows you a comparison of the size distribution of Indian firms to the Philippines and Indonesia and South Korea and so on.

Speaker 5 (31:06): and so on, and it is clearly sort of at one end of the story, which is by the extreme concentration of workers

Speaker 1 (31:19): in very small and once again, low productivity firms. So this is the reason I wanted to mention that is to say that as far as India’s trade performance

Speaker 5 (31:30): is concerned, a very big part of that story lies in terms of its own productivity without even any particular reference to, you know, our market access and what’s going on with the international trade system and so on. There is a challenge of low productivity, that challenge is, you know, through multiple different reasons. One of those important ones, maybe, that’s commented on in public discourse has to do with, with scale, which is why I thought I pointed out. But the other reasons that I briefly mentioned in reference having to do with various distortions in factor markets, various challenges within the Indian system, all of which are improving and perhaps have improved quite a bit in recent years. These all remain issues that are worthy of one’s attention from a government standpoint and sort of how to improve things on these margins

Speaker 1 (32:21): and how to facilitate market operations to a greater extent. All right, so with that, having talked a bit about sort of domestic competitiveness issues, let me come to India’s trade policy and the world trade system. And in this discussion, I think it would be useful for me to talk a bit about just the trends in the world trade system by themselves. What has been going on outside of India? How well have we matched our own actions with what it is that has been happening

Speaker 5 (32:57): in the rest of the world in terms of the trends in the international trade system? So I’ll break this into three pieces. I’ll talk a bit about trends in the World Trade System, the GATT WTO system. I’ll talk in particular about the evolution away from this kind of very nice rules-based, non-discriminatory architecture that had been set up in the immediate post-war years, post-World War II years, and how the system has evolved from that architecture towards trade agreements and bilateral trade agreements and deviations from kind of the multilateral non-discriminatory architecture that have been set up. I’ll talk about the challenges that that WTO system has faced in particular with the failure of the Doha round which began more than 20 years ago and has not seen successful closure. And the more dramatic challenges that we face today given the ways in which US trade policy itself has evolved and the rather aggressive positions and postures that US and Washington has taken both under the Trump administration the previous Trump administration, Biden administration, that was continued on the Biden administration and what particular challenges this poses for countries that are part of the system. I’ll talk about India’s trade policy with reference to the developments of the GATT WTO and talk as well a bit about India’s sort of trade agreements for many years having not really participated in any significant way in terms of bilateral agreements, India signed a few trade deals in the last decade or two. And we’ll talk a bit about where, you know, what these agreements have delivered and what we could be doing differently

Speaker 1 (34:38): and talk a bit more generally about sort of future trade policy, what the opportunities are for India in that space. Okay, so let me start a bit with a bit of a background. Also the audience here is probably well aware

Speaker 5 (34:53): of these points and so I’ll be very, very quick. So the general agreement on tariffs and trade signed in 1947 really was a product at one level of the global experience in the interwar years. So between 1919, 1939, the Great Depression and the rather dramatic failure of international economic cooperation with countries sort of attempting to raise tariffs

Speaker 1 (35:16): in an attempt to kind of offset this kind of declining domestic aggregate demand

Speaker 5 (35:22): using trade policy to direct demand towards their own output and through the use of competitive devaluations. And the overall judgment, if one looks back, and it was already quite clear back then, that this sort of aggressive use of tariffs and the aggressive use of competitive devaluations really didn’t do much other than to prolong what was already about depression turning into the Great Depression. And so the US as it emerged from World War II had in mind, sort of very committed to free trade, wanted to set up a kind of a rules-based international system where it would be difficult for countries to abandon agreements or to raise tariffs arbitrarily or to devalue in this competitive manner to improve their export positions and so forth. And so you got the International Monetary Fund that could sort of essentially monitor some of these issues in particular with respect to exchange rates. And the gap emerged as this sort of basic treaty which would in a sense govern, provided the rules

Speaker 1 (36:30): under which international trade between the member countries would take place. The GATT was impressively different

Speaker 5 (36:40): from most agreements that preceded it in history in one of its features, which is Article I of the GATT, which insisted on non-discrimination in trade relations between trading partners. So essentially, this is sometimes referred to as the most favored nation clause, the GATT article one insisting that whatever treatment you give to your most favored nation is the treatment that you would give to all countries, right? Essentially saying you will not discriminate between your trading partners, whatever imports come in, they should be coming in, you know, they should receive the same treatment, whether the US is importing from Japan or Germany or Great Britain and so on, all of them would be subject, given good would be subject to the same tariffs, an essential feature of the gap that was insisted upon by the U.S. And the U.S. in fact resisted very heavily at the time, approached by various European countries to incorporate into the gap some possibility with an exception from Article 1. So the Europeans already had in mind and have this imagination that maybe one day we will integrate and greater interdependence between our countries, European countries, will prevent wars of the sort that had ravaged the continent previously. And so they did not want to sign on to any deal that would prevent such an integration from taking place and lobbied very heavily. And these are very interesting exchanges between the European delegations, the delegation from the UK led by Keynes and the Americans and so forth at Bradenburgs, talking about where the Europeans were pushing for preferential agreements to be allowed and where the U.S. was pushing back against it. So all this being said, in the end, as much as the U.S. was a champion of non-discrimination in that system, Article 24 was included within the GATT, which permitted preferential trade agreements in the form of free trade areas and customs unions, provided that these free trade areas were very substantial. So in order to form a free trade area and to kind of deviate from this non-discrimination rule of the GATT by giving trade preferences to some partner country, you have to get into a very substantial trade agreement with a partner involving liberalization of essentially all trade. And that was the intention of Article 24, that if you’re going to deviate, you have to do so because you have some greater intention of sort of really deep integration with this partner country. Later on, it was included in the GATT something called the enabling clause which diluted this requirement somewhat and it’s very interesting development that is not commented upon as much uh which is that uh in in 1979

Speaker 1 (39:21): the developing countries uh for for very interesting reasons of history which we can

Speaker 5 (39:26): discuss in the q a if you’d like uh were permitted to offer uh preferences uh to each other and in particular to get into uh sort of trade agreements with each other but agreements that would fall short of the article 24 architecture which is to say that you could have very limited trade agreements within developing countries country could wake up one day and say i would like to liberalize my tariffs on one particular group with respect to some of the developing country partner and that other country liberalizes equally on on you know a handful of goods and then you

Speaker 1 (39:59): could call that a trade agreement and that would be uh legal under under the gap so what you’ve seen of the GATT is sort of on the one hand very broad multilateral liberalization that took place

Speaker 5 (40:10): under kind of you know non-discrimination kind of reciprocity and the multiple rounds of trade negotiation that took place uh under the sponsorship of the GATT between roughly 19, 1950, 1995. Very substantial reduction in tariffs and very substantial increases in international trade and this is kind of the global you know wonderful period for the GATT and for world trade but around that time the U.S.

Speaker 1 (40:34): which had been the sort of principled supporter of this idea of non-discrimination started to sort of you know started to look more aggressively and started to get more interested in

Speaker 5 (40:46): bilateral arrangements got into a trade agreement with the canadians expanded that trade agreement to include mexico to form nafta and really at that point uh various other countries around the world started to think about uh you know why why it should be the case that they shouldn’t themselves look at other trade deals with bilateral partners and you went from having just really a handful of trade agreements, bilateral trade agreements which are again a violation or kind of against the non-discriminatory architecture of the GATT into a kind of you know you had a handful of agreements

Speaker 1 (41:21): prior to 1990 and you went from there to having many many hundreds of agreements today. Every country member country of the GATT is part of some special trade agreed bilateral deal or the other

Speaker 5 (41:32): The average number of trade agreements that the country is part of is about seven or eight at this point. So it’s really a dramatic number. So you have here just once again an indication of just putting in some numbers on the successes of, you know, gas-sponsored liberalization, a reduction in tariffs on the left scale, an increase in trade on the right scale. And here you see this other picture that I wanted to talk about, which is preferential agreements. So very small number of agreements, really in terms of operational agreements, which had kind of significant volumes of trade. You’re talking about the European trade was kind of the one exception prior to 1990. And you’ve gone from there to having a very, very large number of trade deals being signed. The one thing I’d point out to you in this picture is that a very large fraction of the trade deals that were signed in the recent decades

Speaker 1 (42:29): is that they’re between developing and developing countries. This is showing up here in kind of the light blue or the sky blue, one might call it, suggesting that these have all been notified to the GATT under the enabling clause

Speaker 5 (42:44): and suggesting, again, that the kinds of liberalization one might imagine when one thinks about a free trade agreement is not actually what has been undertaken because these are developing and developing country agreements. and it could be the case and it is the case in the context of many of these trade deals that

Speaker 1 (43:02): the kind of liberalization that was undertaken was actually quite partial. Nonetheless, you’ve had,

Speaker 5 (43:09): as you see, hundreds of trade agreements here with very, very complex web of overlapping trade agreements and a complete departure really from this kind of uniform non-discriminatory platform

Speaker 1 (43:20): that was envisioned in the gap by post-war years into what Professor Jagdish Bhavati very famously

Speaker 5 (43:29): referred to as a spaghetti ball of arrangements, multiple linkages, the sort that you see here, where each country is linked to many other countries through a different trade deal with a different set of trade rules, with a different set of rules of origin, and so on. So vastly

Speaker 1 (43:48): complicating the picture of international trade. With that, let me turn to Indian trade policies. So very clearly we had some increasing protectionist measures, turned India into a near-near

Speaker 5 (44:01): autarky by the 1970s. Very, very substantial liberalization, impressive undertaken in the early 1990s. Everybody here is familiar with the numbers of the highest tariff rates being about 300 percent and the simple average being over 100 percent that over time being reduced

Speaker 1 (44:18): to just over 10 percent although these numbers have uh have risen a bit uh slightly uh india’s also gotten into some trade agreements in the past and let me say a couple of words about both of these things the way that i see some of this essentially indian india’s trade reforms is is that there’s a certain sort of asynchronous feature with respect to what was going on in the rest of the world. So when the rest of the world, which is kind of the richer countries

Speaker 5 (44:48): and the other GAP members, had liberalized very substantially, the period between 1950s up until 1990 and so on, India was very protectionist, close to an autarky at some point.

Speaker 1 (45:00): And just as India began to liberalize unilaterally

Speaker 5 (45:04): its trade regime through the reforms that initiated in the early 1990s and started to be integrated more with the multilateral trade system, the WTO system itself started to become less liberal. So there’s the multilateral sort of trade system started to move more in the direction of bilateral agreements

Speaker 1 (45:23): just so we became fully ready to attach ourselves to the multilateral system. Just as we started to rationalize our trade policy regime

Speaker 5 (45:32): with respect to tariffs and non-tariff barriers, trade negotiations at the Uruguay Round and otherwise had started to focus, is a significant feature of trade negotiations with the United States and the European Union, to focus on other issues, intellectual property rights, environmental regulations, e-commerce, and so on and so forth. And just now, much more recently, as India has started to consider its own bilateral trade agreements, The world is starting to move in a different direction yet. So having moved away from multilateral to bilateral, you’re now starting to see the beginnings of a more, perhaps the beginnings of a more substantial reversal from globalization altogether. So the developments in the United States, what’s going on with Brexit and so on, suggest to you that this process of globalization slowing is various, you know, a lot of economic nationalist

Speaker 1 (46:26): driven talk about the sorts of globalization, reassuring, French shoring, and so on and so forth. So with that, let me talk a bit about the trade agreements that India got into. So this is, having gone through this kind of, these unilateral reforms in the mid-2000s and beyond, India entered into a set of free trade agreements, right? So the list of free trade agreements is provided here

Speaker 5 (46:56): on the left column, but you see as well the manner in which these agreements were notified to the GATT. So most of these, the vast majority here, were notified through the Enabling Clause, which is to say, repeating myself here, that the kind of liberalization that was undertaken within these agreements probably falls short of what one imagines when one thinks about free trade agreements, agreements, which is to say that it’s not a very substantial liberalization, and I should take away the word probably that I already started here, it is in fact the case that the amount of liberalization

Speaker 1 (47:34): undertaken within these agreements was quite limited. The consequence of this is indicated in this table here, which is that if you look at India’s imports or exports with respect to these kind of bilateral partners, the rows indicated in yellow are the immediate numbers

Speaker 5 (47:54): across India’s bilateral agreements, you see that very little has actually changed as you go from the year 2007 to 2017. I just chose kind of a one decade period here to see what had changed. And you don’t really see a very substantial change, meaning trade within the agreements looks rather different with trade outside of these agreements. It’s just a different way of illustrating the same thing, year by year trade profiles showing you that not very much has changed. And so the outcomes under these trade agreements are not what one might have hoped for. And the reasons for this low impact already sort of hinted at, but to say this more strongly now, partial scope agreements in number of exclusions, liberalization mostly undertaken in sectors with already low MFN tariffs and already low volumes of trade, and low liberalization being undertaken in those sectors where you’re actually trading a lot with this bilateral partner. There’s also a question of timing. Most of these agreements have sort of phase-in periods. Full liberalization takes place, you know, five, ten years later, typically ten years later, and most of the liberalization sort of backloaded. So you end up with, you know, 60 percent of the tariff lines being liberalized at the very end and so on and so forth. Different agreements are, of course, quite different. But my overall impression, having looked at these, the details of these trade agreements more closely, is that the ambition already was quite low and the liberalization was intended to be a bit slow. And on top of everything else, there are quite significant and complicated rules of origin, which is rules that restrict what kinds of goods get, trade preference, and so on. And so preference utilization is probably quite low within these agreements as well. So on the one hand, unilateral liberalization, which India did undertake and undertook at a very dramatic level in the 1990s, perhaps was not quite as much by the fact of our low domestic productivity for the various reasons that we’ve mentioned. Our bilateral agreements have been somewhat limited in their ambition. There was one big opportunity to integrate with this sort of Asian sort of trading partners through the Regional Comprehensive Economic Partnership. One of the features of this was China’s prominence within this agreement. India had been negotiating with RCEP or possible entry into RCEP for quite a while, and ultimately, I think in 2019, decided not to join. One of the benefits of RCEP would have been that it’s a very large market. There’s a lot of trade of the global value chain type that takes place within the system. having free trade with the member countries here would have been very beneficial to India in terms of the ability to participate in a more frictionless way in the GDC system. The other feature about the RCEP, which potentially could have been nice for India, was RCEP deliberately chose to avoid issues that might have been contentious, such as labor standards, environmental standards, et cetera, that are championed to a much greater extent in the US, in the EU, in the trade unions. But the problem with this, of course, was a fear of sort of greater trade imbalances with China, a fear of sort of trade dependence on China. None of these fears have been alleviated given the geopolitical and sort of the border frictions with China that took place in 2020. And so as much as at one level, the RCEP could be seen as a missed opportunity, I see very little prospect of ours, even though as I understand it,

Speaker 1 (51:35): there’s an open invitation for us to join our set if we should choose, it appears as if there’s a limited likelihood of that. One of the other developments in the Indian system has been with respect to unilateral policies,

Speaker 5 (51:51): our own tariffs, and while one could have hoped, while I had certainly hoped that these would be lowered, perhaps further or rationalized in some way, made uniform, provided greater clarity and sort of a more systematic structure of incentives for domestic value addition and so on. What you’ve actually seen in the last few years is an increase in these tariffs. It’s gone up from the simple average has gone up from maybe 13 and a half percent to about 18 or so. It’s not some super giant increase, but significant enough and certainly a move in the wrong direction, adding frictions to trade,

Speaker 1 (52:30): making it more challenging to participate in global value chains rather than to limit that. We’ve of course negotiated much, much more recently a number of additional free trade agreements

Speaker 5 (52:41): with the UAE and Australia and this European grouping of Iceland and Norway, Switzerland and so on. I understand, I haven’t looked at these agreements closely, but that there’s a greater kind of a broader liberalization

Speaker 1 (52:54): that’s been undertaken within these agreements, a more ambitious level of liberalization and perhaps therefore these will yield better outcomes.

Speaker 5 (53:05): Having said all this, maybe the opportunity for India, the greater opportunity, because the volumes of trade in these agreements

Speaker 1 (53:10): is still quite low from an Indian perspective, would be a kind of an ambitious sort of possibility here,

Speaker 5 (53:17): would be to consider joining the CPTPP, this grouping of Pacific Rim countries that the US was going to be part of and then exited from under the Trump administration, a very large grouping of countries providing tremendous opportunities for India, including trade with Korea and Japan and so forth, or separately trade deals with the US and EU if there is enough sort of economic and political will within the system to make these things happen. These would perhaps provide a more substantial stimulus to the Indian system and greater opportunities in terms of market access for Indian exporters. So with that, I’m almost out of time. So let me conclude with the following thoughts.

Speaker 1 (54:05): One is to say that India’s early round of unilateral trade reforms were very impressive, but perhaps succeeded only partially for all of the reasons have kept domestic productivity relatively low, including the issues of scale,

Speaker 5 (54:23): various logistical, infrastructural challenges, of technology and so forth. India’s bilateral agreements have been relatively shallow, limited levels of liberalization been undertaken. Our GDC participation is low, raising import tariffs recently has not helped this process. We could perhaps do better on this margin. On the multilateral front, I didn’t talk about this too much, perhaps this will come up in the Q&A, but there are genuinely vast sort of uncertainties

Speaker 1 (54:55): about the future of the international trade system stemming from the fact that the US seems to have reversed at one level its interest in the WTO, that it seems to sort of, it seems to be a spirit of economic nationalism

Speaker 5 (55:12): that has taken over in a bipartisan manner, both Republicans, Democrats in the US and what this brings, we’ll see. Having said this and having talked about the potential uncertainties, The multilateral system in YBO still offers India tremendous, tremendous opportunities. If nothing were to change, and there was no greater liberalization undertaken at the WTO level, this is still an enormous market for India. This still offers great opportunities. We would be well advised to take as much advantage of the opportunity that the WTO system presents as we could.

Speaker 1 (55:50): We have seen, and this is for me,

Speaker 5 (55:52): the, you know, what gives me tremendous optimism about India is a very impressive improvements in digital infrastructure and physical infrastructure and the business environment and the move towards sort of relaxation of the various restrictions with respect to factor markets. One can hope that these would be accompanied

Speaker 1 (56:14): by equally bold moves in trade policy, perhaps some integration with the CPTPP, perhaps with the Europeans through some type of an FDA, free trade area, perhaps through some combination of these with unilateral reforms that make things relatively frictionless at the border or certainly lower the frictions at the border. This would ensure greater sort of ability for markets

Speaker 5 (56:44): to function appropriately in a manner that I think Dr. Shinoy would certainly applaud.

Speaker 1 (56:50): And with that, let me stop and take any questions that you might have. Thank you very much. Thank you very much, Dr. Pravin Krishna. That was very illuminating.

Speaker 2 (57:08): Of course, over the years, I have read you, Dr. Panagaria, Dr. Bhagavati, and others in newspapers on talking about similar issues. But that generally gives you 800 to 1,200 words of space to make your case. And so, yeah, this was a bit at length. I’m glad to see that there are a lot of questions and queries from the audience. So what I’ll do is some of the directly or indirectly, you might have covered a few of those answers, but I’m not going to assume it. and maybe that will give you an opportunity to kind of dive deeper or make other remarks that you’d like. So with that, I’ll start. The first question comes from username AZD and he has this question he or she is, why has productivity in services declined over a period of time? And second part of the question is kind of different, is that should India join trade

Speaker 4 (58:09): blocks like RCEP or will it be against India’s strategic interests? Yeah so let me actually

Speaker 5 (58:17): start before answering the question let me start by saying that you know I’m a faculty member professor now but but at heart I very much consider myself to be still a student and a lot of what I’ve said today really reflects what it is that I’ve learned from from the work of others most notably Professor Bhagwati and Professor Panagaveev and so on, if they were watching this or if they see this in the future, they will recognize both their thoughts and their arguments as well as make some of their slides even be reflected directly in the presentation. So I owe a lot to my predecessors in the field both on the sort of the academic research side from whom I’ve learned a lot as well on the practitioner side, Dr. Montek Alvalia and so forth from whose work and from whose

Speaker 1 (59:04): writings. I learned a lot and deeply grateful for that. Coming to the question, so on the RCEP issue, where I think I could be more detailed, it’s a difficult challenge for us, right? So on the one

Speaker 5 (59:25): hand, it was a very interesting, enticing opportunity. It’s a very large market, roughly one-third of world trade. And if we have been in a position to join, either because of the strength of our own domestic productivity, if you had felt more confident that we wouldn’t be swamped, in a sense, by Chinese exports to us, maybe one could have seen that a little differently. I think quite apart from the geopolitical issue, which is very significant and certainly cannot be diminished in any way. Quite apart from that, there were concerns just about our economic ability to do this in the sense of, you know, can you integrate with China in a way that doesn’t completely swamp your domestic producers? It’s a reasonable question, right? So as much as one wants that stimulus from import competition and so forth, there is a question of how, you know, our ability to absorb a quote unquote China shock, various other countries feel like the United States feel but they’ve paid a very large significant domestic price by having done this too quickly.

Speaker 1 (01:00:32): And so it’s a question for policy makers to think about. I felt a bit positively about RCEP, partially because I thought this would give us

Speaker 5 (01:00:40): that great opportunity to join essentially the global value chains. And maybe there was some way within the negotiation that we could slow down, sort of have some phased entry into RCEP, maybe 10 years, 15 years, and so on, figure out some manner in which to negotiate our entry. At this point, because of the geopolitics and because of what’s happened, not just even broadly in a geopolitical sense, but what’s happened specifically with respect to India and China in Galwan and so forth, I think the geopolitical question probably dominates and our willingness to be dependent on our imports on China is probably uppermost in the minds of policymakers

Speaker 1 (01:01:24): when they think about this particular trade relationship. So I see very little prospect for joining RCEP.

Speaker 5 (01:01:33): Maybe it’s a bit of a missed opportunity, but I don’t see much else that could happen in this context. The one thing that we could still consider, and so this trade relationship with China cannot be ignored altogether. We are of course trading with China, even the United States, which now has clearly articulated that it sees China as a major competitor, strategic adversary and so forth, and adversary and so forth, trades a tremendous amount with China, right? So there’s a question of whether we can manage our strategic concerns about China and geopolitical concerns with respect to China, while nevertheless engaging in international trade, nevertheless engaging Chinese foreign direct investments and so forth. And maybe there is a path here that you think about those goods where there isn’t this kind of strategic concern, You think about those investments where your national security is not compromised or you’re not really relying on China and so forth. And maybe the set of goods and the set of industries where these are very heavy concerns are limited number. And so one could certainly engage China a lot. One could certainly have a lot of trade investment relations with China, but maybe not through RCEP. So that would be my answer to that. On the issue of services productivity, I’m not quite sure I’m well positioned to answer that question. I mean, my understanding of the services sector is that there’s a kind of a bimodal structure to this. You have very high level, high productivity, high value-add, high wage services, IT, and so on and so forth where Indian workers are doing, when businesses are doing extremely well. These are subject to high productivity growth as well. And equally, on the other end of this distribution,

Speaker 1 (01:03:12): kind of low wage, low productivity service sector jobs. So what’s going on on that end with respect to productivity growth, I can only speculate, but I could certainly see if you said, you know, selling chai or selling pakoras or something like that on the street side is a service,

Speaker 5 (01:03:29): which it is, then maybe the manner in which chai was being sold, you know, 30 years ago

Speaker 1 (01:03:34): is the same in which it was being sold right now. So there hasn’t been that kind of productivity growth that you see, of course, on the other end of that distribution. So when you aggregate all of these together, maybe there’s a composition effect and you’re overly influenced by the other end of the distribution. But I should say that I’m not, I don’t know more than. Thank you. Thank you. We talked a little bit about China and therefore probably it’s better to take

Speaker 2 (01:03:59): the second set of questions from Anirudh. And he asked that all Asian export miracles have generally been dictatorial countries, probably his meaning less of a democratic nature. So will or does the world need another China and or is the export driven growth model over?

Speaker 1 (01:04:20): Yeah, so let me start with the last piece about whether the export bubble is over or not, right? So I’m old enough to remember, this is the pre-China days when I was a graduate student at Columbia University and we had our seminars on international trade.

Speaker 5 (01:04:34): And by that point, Korea had done very well and Japan had done very well. So these are the countries that had already in a sense peaked in terms of their manufacturing their exports to the US and people at that stage were talking very confidently that the manufacturing-led export growth was over right they said there’s no room anymore

Speaker 1 (01:04:51): Japan’s doing everything Korea’s doing everything and there’s some little pieces left over for

Speaker 5 (01:04:56): and since then you’ve had this tremendous amount of uh sort of you know uh change with China’s entry

Speaker 1 (01:05:05): and Chinese exports and really a very dramatic transformation with Chinese economy right so whether the Indian system could equally succeed in the way that China

Speaker 5 (01:05:16): bringing hundreds of millions out of farms into factories and out of poverty into greater incomes and so forth, maybe the opportunities have dimmed somewhat, right? So with the obvious presence of China in there, but from an Indian perspective, that’s not, that would not be my worry in the sense that we are operating at such a low share. We were at 2%, right? So even if we went from two to four or two to five, this is, this is great for us. And from two to five, I don’t think that opportunity is exhausted. From two to seven, I don’t think that opportunity is exhausted, right? And so, yes, the opportunity perhaps is not what it was maybe before Korea entered and before somebody else entered and before China entered and so forth, but that opportunity is still there. And improvements in our domestic productivity, and there’s a lot of room for us to do that,

Speaker 1 (01:06:01): and improvements in market access and whatever else, mostly domestic productivity here, will give us a huge amount of sort of, there’s still huge opportunities left within the system. Look at what Vietnam and Bangladesh have done as well, right?

Speaker 5 (01:06:16): So even after China entered, people said there’s no more room for anybody else to do anything. And Vietnam has done some good things. The Bangladeshis have done some good things in recent years. So the opportunity is there, whether it’s the highest possible level or somewhat diminished, I don’t think that’s an interesting question. it’s an academic question. From a practical perspective, maybe we don’t need to worry about it quite as much, in the sense that we do what we can, we improve our productivity and the results will come, and we improve our market access, the results will come. All the issue of authoritarian versus democracies and so forth, this is really above my pay grade

Speaker 1 (01:06:57): as an economist, and maybe political scientists

Speaker 5 (01:07:00): and comment upon the question with greater authority. I will say that, you know, certainly in some respects, maybe having sort of, you know, having in the state and the manner that somehow these, some of these companies have pulled off in organizing their economic activity could have worked over there. This is really an issue that there’s not some choice that we face in India in any case. We have a robust democracy. It has its own successes. it grows at its own pace. I think tremendous opportunities are still available to us with our system. And so maybe this sort of alternative of whether things would have been a little different if you had a more authoritarian structure, more able to control things and so forth. Again, an interesting academic question,

Speaker 1 (01:07:47): but just looking at our opportunities from our perspective, I think there’s a lot that we could achieve. Yeah, I think on a related note,

Speaker 2 (01:07:56): and that is the nature of doing things online. The next question is from anonymous. And the question is, so what is your opinions about Rajan and Lamba’s argument about India being able to use services mainly instead of manufacturing for high growth?

Speaker 1 (01:08:12): Yeah, so look, this argument has been around for a bit now

Speaker 6 (01:08:16): in terms of the policy space.

Speaker 5 (01:08:19): And I will just start by saying that maybe we don’t need to frame this debate as manufacturing versus services. It does not have to be manufacturing business. It’s manufacturing and services. I don’t see any particular governmental trade-off in thinking about, you know, should we support manufacturing or should we support services? Support both. And, you know, the issue is, let’s improve our domestic infrastructure, let’s make India a better place to do business, so forth. These are perhaps at one level, it’s a simple way of looking at things, equally relevant for manufacturing, equally relevant for services. It’s not as if on the marginal rupee that one is thinking about, should I put it in services or should I put it in manufacturing? So at one level, I would say we don’t need to frame this question for ourselves as a manufacturing versus services. It’s all about manufacturing and services. And I’m pretty sure that if you talk to Professor Rajan or if you talk to people on the other side of this debate, you know, they would agree that one does not have to look at this as, you know, this, an exclusion of that, to the exclusion of that, or that to the exclusion of this. That said, it is true that Indian manufacturing has been somewhat disappointed. And this was the core of the talk today. And so, you know, it’s sufficiently disappointing that one could ask the question about, you know, what hopes could one rest upon manufacturing for the future, right?

Speaker 1 (01:09:40): So I think I’ve made the argument that a variety of things that we could improve on could help us

Speaker 5 (01:09:48): sort of expand manufacturing, could help us bring workers out of farms into factories and so forth. But let’s look at that question from the services perspective, right? I think the argument that many have in mind when they think about services, they have this imagination about sort of the high-end services, right? So you’re talking about your IT workers,

Speaker 1 (01:10:07): very happy and proud of the success of the Indian IT sector and so on. But how many workers of Indian farms can you transition into those kinds of jobs, right? So those high-skilled jobs that are really symbols of India’s success over there.

Speaker 5 (01:10:24): So, you know, when you’re thinking about services, one has to be careful about the fact that, you know, it’s not as if we have an unending supply of high-skilled workers that can keep on staffing these service sectors that require a high level of skill.

Speaker 1 (01:10:38): But coming back to the question, if the issue is, listen, should we not be also focused on services and on services and manufacturing,

Speaker 5 (01:10:46): in fact related there are manufacturing linked services there are services with manufacturing activities and one but all of this is good so you know i don’t necessarily see these as this versus that and that versus this i think we could be doing well on all fronts thanks uh yeah so most

Speaker 2 (01:11:04): of the debate has been about uh manufacturing and services uh uh and therefore and uh probably uh vis-a-vis or as a complementary or a supplement so here therefore in addition this is an interesting question from abhinav singh and he asked what is india’s position in trade negotiations for agriculture goods and what are the main reasons why india is not a bigger exporter of agriculture

Speaker 1 (01:11:29): commodities agriculture um okay so agriculture is a bit of a complicated sector um and And you could think about, let me come back a bit to the kind of the Doha round of trade negotiations and India’s role with it, right? So the broad picture with respect to agricultural trade is that you have agriculture as a sector for many, many years was an excluded sector within the world trade system, right?

Speaker 5 (01:11:59): So there was no liberalization that was undertaken. It was not systematically considered. In some ways, it has been incorporated into these negotiations now.

Speaker 1 (01:12:07): about the Doha round was supposed to be the big round that sort of took care of the agricultural sector, right? And one of the, what it was supposed to achieve Doha from a developed country standpoint, right?

Speaker 5 (01:12:18): So what is the United States supposed to do, you know, under Doha? What are the Europeans supposed to do under Doha? Essentially is to remove or reduce their agricultural production subsidies and the extent to which production subsidies and in effect become export subsidies, right? So you want the U.S. to reduce, and I’m gonna come to India in a minute, but you want the US to reduce agricultural subsidies, you want the Europeans to reduce agricultural subsidies. The overall impact of that is to reduce agricultural production

Speaker 1 (01:12:47): and to increase prices for agriculture, you know, for food in the world, right? And, you know, as soon as you see it that way,

Speaker 5 (01:12:55): you can sort of understand India’s maybe reluctance is, you know, kind of, there’s a complicated attitude that one might have towards agricultural liberalization

Speaker 1 (01:13:07): and agricultural negotiations, recognizing the fact

Speaker 5 (01:13:09): that what you’re really asking the other countries to do, meaning the Europeans and the Americans, is to reduce subsidies, raising agricultural food prices. Is that something that we want, right? So that might be good for, let’s say our farmers, right? So if you’re a farmer or you’re on the agricultural production side of things, then those sectors will benefit from maybe those individuals and don’t, you know, will benefit from the higher agricultural prices. But what about the urban poor, right? So if you’re urban poor, you have nothing to do with agricultural supply, you’re not part of the agricultural food supply chain, you’re only a consumer of food, right? What is gonna be your attitude with respect to an increase in food prices? Not gonna be a very good one. And if you’re urban poor, living close to subsistence level and so forth, big part of your kind of expenditure is on food. And so rising global food prices, which were potentially a consequence

Speaker 1 (01:14:05): of agricultural liberalization, make it a challenging thing to think about, right?

Speaker 5 (01:14:13): So if I were a policymaker, I would also have a slightly be challenged by this proposition of how far do you wanna go with respect to agricultural liberalization in the form that the negotiations were sort of evolving under Doha. I’m not, again, an expert on the agricultural sector, So I know a little bit less about nuances and details. Each sort of subsector within agriculture has its own concerns and so forth. And I’ve read a bit about this, but one could see why you could have a, you could be challenged by this idea politically and for good economic moral reasons,

Speaker 1 (01:14:47): you’re out of concern for what rising food prices could do to your own population, right? With respect to agricultural sort of exports and so on,

Speaker 5 (01:14:58): I’m not sure when India does export agricultural commodities, maybe it could be doing more. Some of this has to do with productivity.

Speaker 1 (01:15:07): And in this, let me make one, let me offer one observation, not about India, but the United States, which is that the U.S., the immediate post-war years, kind of as the gap was being negotiated and so forth,

Speaker 5 (01:15:19): did not perceive itself to be a country that had comparative advantage in agriculture. In fact, it feared the comparative advantage of the other countries, developing countries in agriculture, and was not unhappy with having agriculture be excluded from discussions at that time. Over time, it’s become very clear because of the remarkable productivity of U.S. agriculture, right? The U.S. actually has comparative advantage in agriculture, which is kind of, in a certain sense, a very strange thought. you know, highly developed country actually specializes in, could be specializing in agricultural production, but they have remarkable productivity, right? So the capital to labor ratios in agriculture are extremely high and very different from the patterns of production you see in developing countries where labor capital ratios are so much higher, right? And so the kind of productivity you see on American farms is actually stunning. If you’re, you know, I’ve lived in this country a while, you get a chance to drive by farms every once in a while, and you’re actually stunned by the total lack of any, you know, you don’t see any human beings, right? So it’s all machines that are being operated by drones. And, you know, these machines are of some scale that I did not previously imagine. And it’s no surprise, therefore, that you have American apples now being exported to India. Just imagine how high their productivity must be if they’re able to make these apples, package them, ship them all the way to India, and they’re still able to gain a foothold in the Indian market when we have our own apples. Right. So a lot of this has to do with productivity as well. Of course, various things come in in agriculture as well about logistics and the ability to

Speaker 1 (01:16:55): support, you know, commodities that are perishable and so on. So it needs an extra element there that people in the agricultural sector might be able to comment on.

Speaker 4 (01:17:08): Okay. So on that related note, the question from Amit on topic of productivity.

Speaker 2 (01:17:14): he has two part questions one is your recommendations to make india developed nation by 2047 and how can india improve its domestic productivity

Speaker 5 (01:17:23): these are in a certain sense maybe that may be the same question right so our ability to be a developed nation uh and let’s take out you know 2047 is a nice goal 100 years uh and a developed countries in high school but just even more generally right how does one get better how

Speaker 1 (01:17:46): does one produce more how does one become more productive uh it’s a very long list of reasons and then some of these are hinted at in should already um having to do with um you know on the

Speaker 5 (01:17:58): one hand distortions in factor markets the quality of our labor supplies skill labor relative to you know the stock of our labor force at the moment uh female participation in the labor force anything that has to do with inputs that get into the production process whether it’s land

Speaker 1 (01:18:14): capital labor various other inputs requires a certain type of investment in the form of you

Speaker 5 (01:18:21): know skilling the workers whether it requires some sort of deregulation of uh onerous rules that prevent easy access to land or easy access to something else capital uh all of these in the end contribute to contribute to our productivity. We are victims in a sense of policy history on the one hand. It’s taken the Indian economy in different directions. I’m very optimistic nonetheless about the future and India’s trajectory as we head towards 2047 for a number of reasons, including the fact that all of the things that we’ve just discussed have seen improvements in recent years. active part of the policy discussion. People are aware of these things, no doubt. I hope that the discussions on these issues are followed by concrete policy actions that, you know, push India more fast and more quickly in these directions. But I think at one level, the answer is simple, which is that the production function, as the economists like to call it, every aspect and that could be improved. The inputs, the production function itself, greater productivity, better roads, better everything, better business environment. So that’s very easy for an economist to be, for you to sit in your office and for me to sit in my office here and talk about. Of course, the action, everything depends on the actual implementation of these. So it’s certainly within India’s reach. We have the right demographics. We’re poised very well. Things feel very different in a positive sense. I mean, each time I come back to India, each time I have come back in the last many years, things feel better. Things feel more improved. It’s great.

Speaker 1 (01:20:05): Young people seem to feel that things are going very well. There’s various other sort of high points like, you know, what’s going on in the Silicon Valley of India. It’s established in different parts of the country. The tremendous amount of innovation and the energy of our youth. so at one level i feel great but it’s also very clear that uh you know changes are needed including at the policy level uh for uh for this to happen for for all of these uh on all of these different

Speaker 3 (01:20:39): dimensions we’ve discussed so uh so the answers in your answer to the question the things that

Speaker 2 (01:20:45): you touched upon are exactly the qu is exactly part of the question that gilbert brahbu asks and it’s probably up to you maybe you can make a brief remark on that which is uh with india’s talent basket progress in computing how rapidly can we have improvement in of actual competitiveness and productivity and the concept of total factor productivity was rarely talked

Speaker 1 (01:21:07): off and now finds mention in the budget so some benchmarks please So, sure. I mean, I think we, of course, we need to improve productivity. We need to improve

Speaker 5 (01:21:21): total factor productivity. We are improving, perhaps, our total factor productivity and all of the changes that we’re already seeing with respect to infrastructure, with respects to the digital economy, with respect to all of the things that India is doing on the side of things will

Speaker 1 (01:21:37): improve our productivity. Is it sufficient that we have a high quality group of computer savvy engineers, you know, we’re able to achieve great things on that margin? I think probably not,

Speaker 5 (01:21:58): right? So that’s a very thin slice of the labor force overall. They’re very proud of their accomplishments and they’ve really done tremendous things at the national and at the global level, readily recognizable to everybody. But is that in of itself, maybe I’m misunderstanding the question, but if the question is, is that in itself going to achieve for us the kinds of things that we want, then my answer would probably be no, it will help us achieve those things. But it’s only a small part of something that is much, much larger, even just thinking about the labor force itself and the skill set of the labor force. You know, one hears very often, and I’m sure you’ve all heard this argument, including Mr. Prabhu, that the skill set of Indian workers doesn’t match the skill requirements of the employers. And really, we’re graduating lots of students at every single level from, you know, schools, middle school to high school to colleges and so forth. Everybody’s getting different sorts of degrees, and the actual competency level is below for many workers, maybe the vast majority of the workers is far below what is indicated on the degree. So one level there’s kind of a very broad problem about skilling and again I’m just talking about the workforce and you know what the workforce is able to do. Surely high skilled computer sector workers are great to have and maybe more of them will be better than them and we are producing more

Speaker 1 (01:23:23): of those year by year. But the problem is a broader one. If we’re able to achieve the sort of skilling again whether it’s in the manufacturing sector whether it’s in the services sector there could be across the board improvements on all of these things i think that would be what is necessary for this kind of full transformation and for us to be able to achieve that very high level of total factor productivity that we’re looking for yeah the thing that you talked about was uh you’re driving through rural america and seeing all the

Speaker 2 (01:23:57): the capital and recently a lot of people have started to make a case that population uh you know rising population is not the problem but probably declining population uh for many countries already maybe even the case of china india and others uh from among others even elon musk was making that case i come from the state of bihar and traveling whenever i go to go back to my hometown uh i see the median age of an average of an indian is about 28 29 years uh median age of a Bihar resident is 21. So the only thing I see is young people all around, nothing else. So Elon Musk, you have a problem, we have a solutions, you know, just take care of the capital factor productivity, all of that can happen. Good. So I’ll now move to the questions which relates to things related to probably trade agreements, et cetera. So the question comes from Manishri, which talks and she asks, what role can India play in the multilateral system,

Speaker 1 (01:24:56): especially when WTO is facing an appellate paralysis? Yeah, so very good question. Let me say something about the appellate body crisis.

Speaker 5 (01:25:07): So everyone’s on the same page here. So one of the things that, one of the negative things that’s happened at the WTO is that starting with the Obama administration, actually, the US has sort of refused to appoint judges to the dispute settlement mechanism. I’m speaking loosely, this is the appellate body of the dispute settlement mechanism, for a variety of reasons, their own concerns with the way that dispute settlement was going, their own issues about particular technical details about how the dispute settlement works and the cases of anti-dumping and so forth. But it surprised me that for these sort of, what I thought were very narrow technical issues that it could be resolved with some negotiations, that the US took this kind of fairly big step of saying we’re not going to have appointed judges. So this began under the Biden administration. And judges, I think, are appointed for maybe four years. I think it’s four years, maybe five, but I think it’s four years. And so after that runs out, you have to step down and you essentially go home, right? So over time, you have reached a point now that the judges are not being appointed, they’re not being reappointed, new judges are not being appointed.

Speaker 1 (01:26:18): And in fact, the spirit settlement body has run out of judges. There’s no judges left to bench cases at the WTO. This system, the situation has been very convenient for the Trump administration, and in fact the Biden administration that followed it, because a lot of things that the US has done in the last seven or eight years are in fact illegal by the WTO rules and have been, it can be easily be shown to be. So if you take a case against the US to the WTO, there’s nobody left there in a sense to rule against you. So it’s convenient to be that you’re violating the rules and at the same time you’re preventing any judgments from being against you because there’s no judges left. So that’s a real crisis for the dispute settlement system. And in the end, it reflects the basic reality that if the most powerful members of any organization want to paralyze that organization,

Speaker 5 (01:27:14): then that organization will probably get paralyzed in some ways, right? I’m at least happy that there is a basic functioning of the WTO and the things that were agreed to at the various multilateral rounds and so forth, that outside of the US’s violations with respect to India with the steel and aluminum tanks and so forth, which had their impact, but they weren’t super great in magnitude,

Speaker 1 (01:27:36): that for the most part, India has not been adversely affected by some of these things that have gone on at the WTO. With respect to what role we want to play,

Speaker 5 (01:27:46): or we could play, There are discussions going on about an alternative dispute settlement body that countries opt into. So it’s recognized by now that the U.S. does not want this to function, but it could be the case of the Europeans and India, for example, just to pick two, that they decide that they want a separate dispute settlement body and they agree to be governed by the rules of the dispute settlement body. So this is an idea that has been floated by the Europeans. I believe it’s on the table at this point being discussed actively by countries. I’m not sure of the exact status of that discussion. But India could play a role in shaping the rules of that new system. India could participate in that system if it wants to. India could encourage other countries to participate in that system. I personally am not sure because I don’t think I’ve read much about India’s views. certainly official views on how they see this paralysis of the WTO, whether they themselves want to improve upon things, whether they’re happy with the status quo or the WTO. I’ve had the opportunity to ask one or two Indian government officials this question about how they see the WTO. Are they happy with the way things are? Do you want changes to take place? Do you want a resolution of these issues? Do you want a new round of trade negotiations? And I have to say,

Speaker 1 (01:29:07): the answer has not always been clear, right? So maybe the way that India sees itself at the moment,

Speaker 5 (01:29:15): it’s not too unhappy with, and this is just speculation on my part, with the status quo of the WTO, we’re trading to the extent that we want and markets remain reasonably open to us and so we see this as an okay situation, maybe, right? But if you wanted to play a role,

Speaker 1 (01:29:34): especially with respect to this dispute settlement, when there are active initiatives that are out there, one could be contributing to. So Dr. Krishna, we are out of time, but there are a lot of questions remaining. So I wonder if you have some few more minutes, maybe five, 10 extra minutes we can. Okay, so we can then continue. Okay, cool. The next question is from CR underscore 12.

Speaker 2 (01:30:00): I think he’s a fan of Cristiano Ronaldo. The question is, Or do you think that tax carve-outs in BITS could play a role in affecting investment in Indian sectors, especially considering how India is a key partner to the BEPS framework?

Speaker 1 (01:30:17): I have to say I’m not terribly well informed about the BEPS framework or this particular issue of the tax carve-outs and investment.

Speaker 5 (01:30:29): I’m actually, yeah, let me pass on that question.

Speaker 1 (01:30:32): broadly speaking, tax incentives could incentivize investment, but I’m afraid I don’t know too much beyond that.

Speaker 2 (01:30:40): The next question directly and directly has come from someone, and this should be a top question given the current political economy around the world. The question comes from Professor Panagaria, I think,

Speaker 4 (01:30:54): and he asked if there is the threat of Trump tariffs.

Speaker 1 (01:30:58): very good to get a question from Professor Panagaria but on Trump tariffs I have to say there’s a tremendous amount of uncertainty so what Trump has said is that there will be a 10 to 20 he has said at least 3 or 4 different things one is that there will be a 10 to 20% tariff on everybody and everything which would affect India then there will be either an additional 60% or just a 60% tariff on everything that comes from China. That’s the second thing. The third thing that he said is that if the American companies decide to leave America and start producing somewhere else, like John Deere, the kind of the harbor, tractors and so forth, then they would be, their imports back, the American companies imports back into the U.S., let’s say they manufactured of something in Mexico would be subject to 100% or 200% tariff, right? So this is a punishment for American companies if they leave India. And finally, that he might replace income taxes in the U.S. altogether with just trade taxes,

Speaker 5 (01:32:11): which at one level seems impossible to do because trade taxes currently account for maybe 1% or 2% of the tax revenues of the U.S.

Speaker 1 (01:32:19): And so even if you put the maximum possible that revenue maximizing tariff in the US, that would be probably around 40 or 50 percent, the revenue generated under that is not going to equal what you need, what you’re getting otherwise from income. But could he go a bit in that direction? Possibly. So it’s the big question of the moment right now in Washington, Professor Panagari, and it’s very hard to say more than that. The only thing I will know is that in 2016, when Donald Trump first became president, during his campaign, he said a number of things about trade policy, which many people, including myself, thought were just sort of campaign speeches that he was not going to deliver on some of these things, especially with respect to China and some of these other things with respect to India as well.

Speaker 5 (01:33:10): and this willingness of the U.S. under him to invoke national security clauses and exceptions and unfreatening practices, rules and so forth to take a fairly aggressive stance with respect to one’s trading partners.

Speaker 1 (01:33:26): But in the event, he did so, right? And so what felt unlikely in the December of 2015 started to become a reality by 2016, 2017, 2018. and so as much as some of the things that he’s talking about now,

Speaker 5 (01:33:42): like this broad-based tariff on everybody and the high tariffs on China and so forth, it seems unlikely that he would do this. And you ask the question, why would he do this to an ally like Japan or India or somebody else or the Europeans? But the steam and aluminum tariffs that were put on in 2017, they began with his allies. So the tariffs were on Canada with Mexico and India

Speaker 1 (01:34:04): and South Korea and Japan and the Europeans and, of course, the Chinese. So he’s not above, you know, using this as an instrument to maybe get some concessions for preferred sectors on, you know, on allies.

Speaker 5 (01:34:19): And he’s certainly not above using this against, you know, strategic competitors, quote unquote, like China. So it’s hard to see what to make of it. I would fear that he makes good on his promises.

Speaker 1 (01:34:35): But at the same time, you know, we live in a world where it seems like a dramatic, maybe extreme thing to do. And so you, you, you’re conditioned to believe that maybe it won’t happen. And it’s just maybe a instrument through which he might seek to extract some concessions from, from partners. yeah i think he started to be the deal maker so we need to be a good deal maker as well when we

Speaker 2 (01:35:01): go on the table uh so uh last couple of questions uh maybe you have touched upon it uh already briefly bhavia asked this that you mentioned a global shift towards reversal of globalization de-globalization so what opportunities challenges does this trend bring for india

Speaker 5 (01:35:17): So yeah, I mean, there’s, on the one hand, simple economic nationalism, maybe it’s not the best thing for India, right? So if every country said, listen, we’ve had enough of international trade, which they’re not saying, but, you know, just for argument’s sake, if they said, we want to just move back to a simpler, a different world in which we just produce everything ourselves, we have a great deal of self-reliance and so forth, then that decreases, you know, our But that’s not where we are in the sense that there’s been a bit of a reversal. It’s not the uniform expressions of desire to cut away from international markets altogether on the one hand.

Speaker 1 (01:35:59): On the other, the picture is of course complicated by the evolving geopolitics and might potentially in that context provide some opportunities for India as well.

Speaker 5 (01:36:09): The very well-known China plus one sort of argument. So because of these strong bipartisan consensus, for example, in the US, so Republicans and Democrats agree somehow that they want to rely less on China, they want to have less trade with China, and they want to have, you know, friend shoring, move away American factories, especially critical ones away from China into France, and India is fortunately considered a friend in this context. that creates its own opportunities, right? And so both with respect to trade, both with respect to receiving foreign direct investment, we are a more attractive place. We’ve become a more attractive place in any case, in my opinion, right? So our own improvements, independent of all of this, has made us a better place to be than we were maybe 10 years ago or 20 years ago.

Speaker 1 (01:36:59): And so on the one hand, that’s happening. On the other hand, you have a push because of geopolitics that creates against China,

Speaker 5 (01:37:07): that creates certain opportunities for India in ways that other countries seem to have exploited well in the recent years, including Vietnam. And so that opportunity is still there for India, and maybe we’re able to better take advantage of it in the years. So the picture is not a uniform reversal of globalization, which would create a different type of challenge, I think, for India, but we’re nowhere close to that. There’s some

Speaker 1 (01:37:32): degree of retrenchment if you will but but maybe even a kind of a movement of the pieces uh in the canvas in different directions that that create sort of opportunities for us yeah i’m always very

Speaker 2 (01:37:46): when we talk in aggregate so and most of the conversation when we talk about foreign trade is generally about india china south korea etc and in classrooms uh sometimes we’re taught that individual countries don’t trade individuals do and do what you do best trade for the rest you you know, comparative advantage, et cetera. So in light of that, the question that Subodh asks is, what is the best way to argue for lowering tariffs and freeing trade and what trade strategy

Speaker 1 (01:38:15): would front load benefits to convince politicians and public? So what is the best way to argue for lower tariffs, right? So this is an argument that international trade economists I’ve had to think about quite a bit. One of the challenges really, in terms of the political economy of trade policy,

Speaker 5 (01:38:39): these are all arguments again, is that the people who are generally pushing for trade protection in higher tariffs are very concentrated and focused in their interests, generally businesses that are able to whisper into the years or scream into the years of a government asking for the things that they want. And consumers in general are more diffused, lot less concentrated. I mean, of course they see some benefits from lower tariffs in terms of lower costs of imports and so on. And so that creates a challenge that the powerful

Speaker 1 (01:39:14): vested interests are more concentrated, more able to communicate their interests to government. And so therefore they get their way. So it’s a challenge of how do you argue in favor, we make the argument in a way that, in the sense the common man appreciates this. Sometimes you’re helped by the fact that, there are intermediate inputs. So on both sides of it, both the consumers of the good

Speaker 5 (01:39:38): and the, who is the producer of this, these are both producers. And so intermediate input users in India, no doubt, would favor lower tariffs on the use of intermediate input so they can produce their final goods more efficiently and so on. So when you have that type of structure, it becomes a little easier to argue. But I will say at a very broad level, if you thought about what life was like in India in the 1970s, right in the 1980s, when what were the quality of products that you were dealing with? What is it that you were consuming? What was the quality? What was the price? And how that has transformed itself over the last few decades following the liberalization that we’ve undertaken. I think at least that story makes it extremely clear, even from a common consumer standpoint, if people have the memory, it goes back that far, which the young of the country probably don’t even remember these times and did not experience these times. But I think it’s fairly clear, both in terms of quality, in terms of prices, in terms of the variety of goods that are available as a result of liberalized trade that certainly did. Sorry, I’ve forgotten the… What was the second part of that question?

Speaker 2 (01:40:47): What trade strategy would front load benefits to convince politicians and public?

Speaker 1 (01:40:51): The front loading, it’s in a sense the same question, right? So which is, in general, the opponents of lower tariffs are producers that are essentially

Speaker 5 (01:41:05): the import competing industry. And so nothing’s going to convince an import competing industry that this is a good thing. Consumers of course will see the benefit as they do.

Speaker 1 (01:41:15): So the age-old challenge of concentrated producer interests lobbying the government against the interests of a diffuse group of consumers continues to dictate

Speaker 5 (01:41:28): the political economy of this to some extent. And maybe the one strong opposition force that you have in the country is gonna be consumers of intermediate inputs. Like if you put a tariff on steel,

Speaker 1 (01:41:41): then whoever used steel in production is gonna be unhappy and maybe they push back on this.

Speaker 2 (01:41:45): see the effects uh immediately yeah uh yeah so uh dr krishna you have been extremely generous thank you very much uh just a couple of uh last uh quick remarks so i was reading uh dr panagaria’s book the recent book uh the neru development model and in one of the part he has uh i think bifurcated the political leadership into two time periods he calls political leadership one which is 1950 to 84 and political leadership two which is 85 to 2023 uh unfortunately uh professor shinoy lived in political leadership one the benefits of where it is not universally accepted but economic reforms is better understood and better appreciated is political leadership two but still not completely we still have to continuously make the case uh for economic reforms so hopefully 2024 onwards or some years very soon we’ll have political leadership three when it will be uh unchallenged that we will have a sort of economic reforms as the go-to thing uh opening our free markets etc so yeah so this brings to the close the biashonai memory lecture 2024 so on behalf of economic research center mangler and center for civil society new delhi i would like to thank our speaker dr praveen krishna for such an illuminating talk and engaging with questions from the audience staying late uh getting up early for your talk all of that so uh many thanks also to my team

Speaker 4 (01:43:10): ccs who helped organize this lecture uh good night everyone and have a good day dr krishna

Speaker 5 (01:43:17): thank you very much a great pleasure thanks a lot