India's Policy Landscape: Insights From The Survey Of India

>> Sumit Ganguly: At the very outset, I want to read out a small paragraph from Milton Friedman, who was long associated with this institution. And you will see in a moment why I'm reading this paragraph out. This is the paragraph that he had drafted as part of a memo to the government of India, particularly to the Ministry of Finance in the early 1950s.

Indian thought may not have taken full account of the post-war experience of European countries in expanding the public sector. Country after country moved in this direction immediately after the war. To the best of the present writer's knowledge, the results were in every case disappointing. This experience has produced a drastic change in the attitudes of the labor and left wing parties towards nationalization and detailed state control over economic activity.

The elements in the parties that have not changed their approach are now being dubbed, quote, reactionary, unquote, by some of their fellows. There's a reason why I cite this. Had the government of India heeded this advice, it would not have waited till 1991 to embrace the market and see rapid economic growth.

This is a fascinating counterfactual thought exercise for all of us.

>> Sumit Ganguly: At the outset, I would be remiss if I did not thank a small handful of people, obviously, in addition to Bintra, my friend and my collaborator. I want to thank Denise Elson, who gave the imprimatur to proceed with this and the funds that are necessary to produce this work.

Sitting quietly in the outer ring is also Jane Leakey, the program assistant for the US India, the Huntington Program on Strengthening US-India Relations. She is responsible for all the logistics whip, Madeleine Berg, who's working in the back. And without them, we could not have pulled this off. And I am deeply grateful to all of you, all three of you, for your support and your assistance.

I would also be extremely remiss if I did not mention three people from the press, Barbara Arellano, who is here, okay? Danica Hodge, who is not here, and Alison Law. Their work on this product was absolutely unstinting. And having edited many books, including through university presses, I cannot believe the level of attention and detail that they went into to make this a success.

I'm briefly going to talk about the significance of this volume. Quite frankly, there is no comparable one stop shop that provides this kind of panoramic view of India's economic, social, and political developments. Consequently, I believe that this volume will address that important lack. And this gap really needs to be addressed for a compelling reason.

Decades ago, an expatriate Austrian intellectual, Stefan Zweig, moved to Brazil and he had written a sardonic book. The book is called Brazil the Country of the Future. And in that book, he said, Brazil is the country of the future and always will be. A few decades ago, this characterization would have been entirely apt when talking about India, that India was the country of the future and always would be.

All that changed after 1991 in the wake of an unprecedented fiscal crisis, which led very belatedly in my view, to the adoption of market oriented policies. And since then we have seen the results thereof. And even with the presence of card carrying economists in this room, I'll say that it contributed not just to growth, but to a dramatic reduction in rural and urban poverty.

Despite some formidable challenges that still, still confront the country both at home and abroad, India is no longer an inconsequential actor on the global stage. The contributions of my colleagues to this volume, I hope, will provide fellow academics, journalists, and policy analysts our informed and lucid account of where India currently stands and where it is headed.

Without any further ado, I'll turn it over to Dinsha.

>> Dinsha Mistree: Okay, I'll just say a couple of introductory remarks before we hand it over to our speakers, and then I'm supposed to present the chapters that they're not talking about. That's gonna be a little bit more work. I joined Sumit in thanking all of the people who helped make this volume a reality.

I'd just like to give two concrete examples for why I think a volume like this is necessary. So a couple years ago I was sitting with the folks from the State Department. They had a project engaged with the Indian Ministry of Education and it was shocking they didn't know how the Indian system of higher education worked and they were trying to think about ways in which the two countries could work together.

This is a bilateral problem, unfortunately. Listening to Indian Ministry of Education officials talk about how they're able to, with the flick of a pen, make sure that everybody can get this license or lower this educational standard. It happens in one government office, basically in Delhi. That's not the way the US system works, right?

Similarly, when I've had conversations with other elements, for instance, military leaders, it's Ireally quite surprising how little exposure American officers have oftentimes their Indian counterparts. So this is something we see over, and over, and over again. This small volume is supposed to be a solve to that. Obviously, we're not going to achieve a deep understanding here.

The real idea is to give people a perspective on what's happening in the short-term and hopefully at least whet some appetite, get some people who are going to be more curious about exploring this in the long-term. So that's the idea of it. Today, we're trying to cover too much in too little time, right?

It's going to be fun. We're also looking forward to leaving a good amount of time for questions. But with that, maybe we should kick it over to Nirvikar as the first presenter.

>> Nirvikar Singh: Well, I thought Jack is.

>> Dinsha Mistree: Jack is the first presenter. Yeah, Jack is Joyous Online. He's a demography expert based in outside of DC. You wrote a lovely chapter with Leela. There he is.

>> Dinsha Mistree: Go ahead, Jack.

>> Jack Goldstone: There we go. Well, thank you very much for having me. Even from a distance, my co-author, Leela Visaria is one of the most distinguished demographers that Indy has produced.

I'm sorry she can't be here, but I do wanna Thank her for her contribution. This was a joint paper. We went back and forth and depended a lot on her expertise. Now, I'm going to try and be brief because we have a lot to cover. Are my slides coming up? I can't tell from this side. Do we have the first screen up there, What Everyone Knows About India?

>> Dinsha Mistree: Yeah.

>> Jack Goldstone: Excellent, okay, so let me start with what I think most people are familiar with in regard to India. Last year, India passed China to become the world's most populous country with almost one and a half billion people.

About 500 million more than China at this point. I'm sorry, I mean 50 million more. It's a very close margin. But the 50 million has given bragging rights to India. More importantly, unlike Europe, China and the US India still has a young and growing population. Population is expected to reach 1.7 billion.

That would be the peak population in 2060, and then it will enter a slow decline, but it will still remain the largest country on earth probably throughout this century. In addition, today India's population structure is really in a nice sweet spot. It's primed for a demographic dividend. That is to say, the largest age cohorts in the population are age 15 to 29.

The young child and the senior age groups are much, much smaller. So these high productivity young workers that are about to enter the labor force or just entering the labor force, they're going to pick up experience, they're going to bring better education, and their entry and moving up in the labor force should raise productivity and output.

So this is potentially a very favorable time for India's economy if the macroeconomic conditions are favorable. Now, what is less known is that this demographic sweet spot spot will not last. In fact, India's fertility has been falling since the early 60s. Fertility was then six children per woman.

That is what gave rise to fears of the population bomb and other anxieties that have have since faded. Fortunately, fertility has fallen all the way to below two children per woman two years ago. Today, it's well below replacement. For India as a whole, fertility is about 1.96, and in most of the southern states, it is even lower than that.

The number of annual births peaked over 20 years ago and have been falling ever since. So you might say, well, why is India going to continue growing? Why is it in such a robust situation if it's the case that fertility is now below replacement and births are falling?

Well, the answer is a little bit counterintuitive. Most of the population growth that India will experience in the next 35 years is not because more children than before are being born. Rather, it's because life expectancy was so low 60 years ago that the number of Indians today who are over age 60 is quite small.

So the number of seniors who are dying every year is still quite small compared to the number of Indian births. But that will not continue for long. And in the meantime, much of the growth in India's population will be from gains in life expectancy rather than high fertility.

Again, fertility in India now is well below replacement and it's what we would have considered a worrisome low fertility for a long time. So the result of these changes is that while India is in great shape now, it is aging fast. Between now and 2060, the population of children is actually set to decline by 100 million again due to the falling number of births.

Even the prime age workforce, those 80 to 49, will decline slightly. Now, that's not a big change, but remember, people are expecting the Indian economy to boom. That boom is not going to be created by an increase in young and productive workers. In fact, the number of workers will probably increase for about a decade and then start to decline.

By 2060, there'll be a net decline of 4%. The big increases. When I talk about India's population going from 1.45 billion to 1.7 billion by 2060, the big increase will likely be in older workers and seniors. That is welcome to the world, India. Just like the rest of us, you're going to have a boom.

The number of people over age 65. In fact, of all the population growth to 2060, all the net population growth, almost 90% will be in ages 65 and over. That is to say, the population under 50 will decline. The population from 50 to 64 will roughly balance that decline.

But most of the net increase will be in the senior population. Now, that's not all. The other problems that India is facing, headwinds, if you were, is that there's still major discrimination against women. Women show no gains to income from higher education or job experience. Women are sadly largely considered expendable in India's labor force.

There is also quite major job discrimination against Muslims who are a large part of the population, and the Scheduled Tribes and Castes who are an even larger part of the population. There are government programs with quotas to provide jobs for Muslims and Scheduled Tribes and Castes, but those tend to be largely lower level jobs.

And in the private sector, Muslims and Dalits find it very difficult to get loans, to start businesses and to get promoted in the private sector. That means, if we add up women, Muslims, and people in the Scheduled Tribes and Castes, about 70% of the population faces impediments to reaching their full productivity.

Also significant, less than 30% of women age 15 to 64 are even in the labor force. That is much less than most Asian countries, less than half of China. And they're not out of the labor force because they're having children. Remember, fertility in India is now quite low nationally and is very low in the booming southern states.

Rather, it's a cultural thing. Once women marry and have children, they are culturally expected to stay home and take care of them. They are not encouraged to be working mothers. In fact, that's frowned on, and the result is that many women withdraw from the labor force and remain out even after their children are school age and beyond.

Lastly, much of the existing Existing labor force is poorly educated. Even today, literacy is under 80%, as opposed to about 95% in China. And this is serious. Less than 60% of eligible boys and girls are enrolled in higher secondary education. Now that is large, largely a regional issue.

In rural areas, the fraction of eligible boys and girls in secondary school is often under 40%. In the more urban regions and in the more economically booming regions, secondary school enrollment is much more acceptable. It's closer to 80%. But this huge regional disparity means a large number of workers.

Potential workers are losing productivity due to lack of education. And of course there are issues with quality of education. There's a huge gap between the world class technical institutes that train the elites and the huge number of degree factories that churn out students with minimal education but with certificates that lead them to expect employment.

If India is to realize its demographic dividend, it really needs to address these cultural issues. Increase women's participation in the labor force, upgrade educational enrollment and quality, especially in rural areas. Overcome the job discrimination against Muslims and the Scheduled Tribes and Castes, and balance the diverging north and south.

Or India could have an Italy problem. As Italy has a great divergence economically between the more urban and industrial north and the more rural and much lower income south. India is heading in that direction. In the rural areas of the north, we find agricultural employment is actually going up in recent years, the reverse of the normal pattern in development.

So unless the north and south are to go their separate ways, some action needs to be taken. And India as a whole will suffer if its largest, most populous provinces lag behind the rest of the country. If India is to catch or surpass China, therefore, I think it will more likely be because of China's decline.

China has far more severe demographic problems than India. In China, the prime age workforce is declining 10% every decade. So China's economy kind of may come down a little bit to reach India's. But India does not look like it will replicate China's rapid growth of the last 40 years.

It doesn't have the same literacy that China had when it started out. It doesn't have the equality of women and other issues in terms of castes and Muslims being disparaged. So India has some things to overcome. Now that said, India does have advantages. It has that world class technological higher education which produces world class engineers.

It also has the world's largest and most successful diaspora. I think that's sometimes underrated. A lot of entrepreneurial talent has been groomed in the Indian diaspora and returned to India to start world class companies, India has the potential to grow even more rapidly. And I think regardless of what happens, India will become the world's third largest economy by the early2030s.

It won't be a great challenge to surpass Japan and Germany who are ahead of it because they too are facing an aging and shrinking labor force. But for India to realize its full potential, these cultural shackles that are holding it back need to be overcome. And the last point is it needs to be done quickly.

India has about a 20 year window before it really starts to feel the impact of that rapid growth in people over age 50 where the workforce becomes predominantly older and therefore less productive and the number of seniors needing health care intentions doubles within a couple of decades. So this is a special moment for India.

It's poised to take a new, more dynamic, more important role in the global economy. But it has significant internal obstacles to doing so. We shouldn't be unrealistic, we shouldn't expect India to be another China. What China did in the last 40 years is probably going to be somewhat unique.

But if India can do even half of what China did, it will be a dynamic and major power in the world system. And it certainly has every potential to do that if it addresses these issues within the next couple of decades. Thank you, thank you.

>>Nirvikar Singh: So absolutely delighted to be here and to have been part of this project.

I want to thank Shumit and Insha for being such gracious and also firm leaders of the project and also the Hoover team. It's really been a delight to be part of this. So if we can put my slides up then I'll get going or I have to press something.

Okay. So my job was small one, just to review the whole economy and I'll show you a few pictures and then talk about some of the big issues. And it, it's very. Jack has made my life easier because he's covered a lot of the, the key issues. So as, as India grew relatively slowly after independence.

The growth accelerated starting with reforms in the late 80s and early 90s. But its growth rate has been nowhere near what we've associated with the so called East Asian miracle. First Japan, Taiwan, South Korea and then most recently China. Part of that growth was associated with also increases in savings and investment rates.

But those have actually reversed and somewhat flattened out in the last few years. And I think that that's part of what is holding India back, and there are complicated reasons for that. And you see a similar pattern in trade where there was a lot of the reform was associated with openness to the global economy that led to an increase in exports and imports of course as well.

But you see that over the last decade or more that that that engagement with the world has flattened out. So what what what is the status of the Indian economy and where do we where will it go from here? Jack highlighted the importance of jobs and one of the striking things about India's growth over this period has been its failure to generate good jobs.

Now if you look at the official employment figures the unemployment rate is very low but these are a lot of these are still low productivity jobs and even when workers move out of agriculture they move into low productivity urban sector jobs. So why is this happening? I think that answering that is a complicated question.

I'll say a little more as I go through. Jack highlighted gender already and I think that is also something that needs to be addressed. Part of it is cultural. But also some of it is just simply because of the economic structure. If you're not creating enough good jobs for men, then women are going to be somewhat behind in the queue.

So, creating jobs in general I think will also address part of the gender issue. Jack mentioned skills, and this is actually I think a major impediment to Indian growth. Shumit quoted from Milton Friedman's memo from 1955,$ and in that same memo he mentions the importance of human capital.

He even has some kind of statement that okay, if you destroyed all the buildings, if people are skilled, if you have human capital, you'll recover. And he was thinking of obviously of post-war Europe at the time, but India is really not invested enough in its educational system right from.

And I'm going beyond just skills to also include, human capabilities perhaps, but I think going all the way from prenatal care all the way through advanced education there, there's an under-investment and low efficiency of investment in, in human beings. And I, I think the, when you see Sundar Pichai and Satya Nadella and Nadella and so on, you have to remember that's just a few people.

even if it's, millions of people, it's still a very small slice of the Indian population. So, I don't think it reflects the it doesn't really tell us what, what is going on in India. There's just not enough skill investment and development, and a lot of this actually at the level of medium skills.

I can come back to that later. Climate change is, is obviously looming for everybody. And I think actually here contrasting India with China is useful. China and India were both initially recalcitrant in terms of dealing with climate change. They said, well, you caused the problem, why should we pay for it?

But China has gone much further ahead. You can see what China has done with electric vehicles and renewable energy. India has plans but it has not been implementing them effectively. So the national electricity plan came out a year ago with, very, very well-thought-out, well articulated targets for investment in renewable energy.

A year later, fraction of that growth has been met. So, I think actually India has an opportunity with the green transition. If it actually does it, then geopolitics again is a challenge right now in some ways with trade restrictions. But I would argue, and this is in contrast to some other economists who say that, well, that boat sailed in the 60s and the 90s with trade liberalization and so on.

I think the nature of trade has changed in the form of the creation of these global production networks, it's harder to kind of get into that game, but then you also have a lot of inertia. So actually, if India were to make a really concerted effort in the current geopolitical situation, it could actually do very well in terms of connecting with the global economy, I think, for technological change.

Again, Jack mentioned some of the bright spots, but again, the problem is that there isn't enough depth and breadth of investment. And if you talk to, Indian corporate leaders, they will also argue that there just isn't enough money being spent both in the public sector, and the private sector on things like R and D in general.

And, not just basic research, but also applied research. Finally, even if you're not economists, you probably know that the Nobel Prize in economic last year went to three economists. And actually one, I think one of them is actually a political scientist who, who work on institutions and emphasize the role of institutions.

And in some way this, this is at the heart of the matter for India. And, India can't mimic China's institutions, and I wouldn't want India to go in that direction in terms, politically. But there's a lot of potential for institutional change in India. Not just political institutions, but also institutions that regulate the private sector and, set the scene for the private sector.

Things like competition policy, and again tax policy to encourage innovation. There's a lot of scope for, I think, institutional change in India, which would support accelerated growth. And Jack mentioned cultural factors, and certainly they are there. But I want to caution against becoming too culturally deterministic. And I think policy changes can make a rapid difference.

People who, the Dalits who are, or women who are maybe not getting opportunities in India when they come here, they do just as well so as anybody else. So I think policy changes can make, will override cultures. I want to end on that optimistic note. Great, thank you.

>> Dinsha Mistree: So we all, I guess, teach classes about India's economy, probably. You lecture for 30 hours in a quarter, and we're trying to shove it all into one lunchtime, so forgive us for that. I've got some slides, too, I promise to be the quickest and probably the dirtiest because I'm actually talking about other people's chapters instead of my own.

So this is the table of contents blown up so you can actually see what the topics are. Domestic politics, demography, economy, foreign policy, health and education, innovation policy and energy. We've already heard from these two, I'm just crossing them out just for. For image’ sake, don't worry, I'm not going to talk about all the other chapters all at once.

If you have questions about stock, we can get into it in Q and A. I am going to be a little ambitious though, and go after domestic politics and actually on innovation policy, we'll put health and education aside and quick and dirty. So the big news in India in the political scene was in 2024, general elections took place.

Modi and his party, the BJP, came back after two terms where they had dominated the electoral landscape, had absolute majorities in Parliament. This was 2019, for instance, the last election. Orange is Modi's party, you can see that much of the country is covered. 2024, Modi came back, but he has to rely on a coalition now.

What we've been seeing already in the first six months is a couple of dynamics. Power seems to be decentralizing a little more for the most part, I would say from 2014 through 2024, a lot of decisions were made at the Prime Minister's office. Now, it seems like the parliamentary committees are waking up again.

The bureaucrats certainly are stepping out and asserting a little bit more power. We're seeing a lot of that, by and large. I would say if you asked me how to describe Modi's first 10 years, I would say that there was a lot of shock, and non-reform in the sense that rightly or wrongly, he would say this is the direction we need to take.

And without too many meetings, it would happen. For instance, demonetization, which was changing the currency in 2016. Very few people knew that it was going to happen. It was announced that they were removing 90% of the country. Country's cash all at once. It hadn't been planned for. It resulted in, in a lot of economic hardship.

It did shift the country into more of a digital payment system, but that wasn't something that was, deliberated and routed through the proper processes. This happened time and again during Modi's first terms, including right after he came to power both in 2014 and then when he won the elections in 2019.

We haven't seen anything like that in the first six or seven months and I think we won't see very much more like that over the next five years. That has implications for US engagement where a lot of people, for instance, are hoping for nuclear regulatory reform. Something that people were debating might happen right after the 2024 election that seemed to have gotten scuttled after the election.

You can think about other areas as well. We're not gonna see such a shoot from the hip approach to govern it, is the anticipation. Just briefly on science and technology policy and why it matters. This has been hinted to, alluded to quite a bit. The Indian diaspora is a major STEM pipeline for America.

There are about 5 million people of Indian origin in America right now. They contribute, I think the estimate is about 8% to income tax revenues. Many of them, most of them are focused on STEM and medicine are coming over from that. Reciprocally, American firms outsource all kinds of R and D to India, from basic, very low business process outsourcing to more medium levels kinds of R and D.

The US's 8th and 9th largest trading partner at this point. And a lot of it is this business process, services R and D. So there's a lot of stuff that's flowing in that direction as well. And of course there are Indian firms that invest in the UN. On science and technology policy.

The ecosystem tends to be quite underfunded. It's dominated mostly by the government rather than the private sector. One could argue that there aren't the right kinds of tax breaks or incentives for the private sector to do what we would consider to be healthy R and D. The government gives most of this money away.

The, as you can imagine with government decision making in this space tends to go typically through bureaucratic processes, very centralized science laboratories, very vertical, instead of what we see in other places. A different model that India has been playing with is this National Research Foundation. They've announced that they're going to create something like this and it's supposed to be modeled on the US National Science Foundation.

It's still to be seen how much of it will look like this where we've got a merit based peer review system. This is something that, Following World War II, the US made concerted commitments to going for small scale, peer reviewed, merit based sorts of funding. It's still open ended to see what will happen in that space.

It has dramatic implications for the US If India becomes a country that's funding research and funding R and D in the private sector in a meaningful way, that will have resonance not just for the STEM pipeline for the people who are coming over here, but it means that they could be a much more reliable partner for deeper science and technology, engagement and cooperation for the US dollar.

So that's the big sweeping, dramatic tape on India. I think we haven't touched everything obviously, but we'll open it up for questions. Sumit, you're taking the QA?

>> Sumit Ganguly: Yeah, I'll be happy.

>> Dinsha Mistree: I should also mention Nirvikar and Jack both mentioned the importance of female labor force participation.

We have recognized that as well. Suhani Jalota is a new Hoover fellow who works on labor force participation in India. She just got back to campus yesterday or this morning. So we've got another expert at the table who can talk to us about what's happening there. So with that, let's open up for some questions. Yeah.

>> Speaker 1: Okay, all right. So a phone call happened between Trump and Modi yesterday and the readout says that Trump has invited Modi for February. Modi is going to be here? It looks like there is, based on what I saw from Martor Rubio's US India Defense Bill. That got paid actually, but it's still in the pipeline.

To me it looks like the US still really wants to engage India into more of a committed relationship with the U.S. What is your own thinking? What is your own. As you have done your survey, what sentiment are you gathering there from the Indian side? Is there an equal amount of enthusiasm that we are seeing from Rubio and Trump?

You see some. I mean, I know Jaishankar and Modi are of course very bullish on us and very close to Trump, but what is your sense? I mean, you guys happening in the French is talking to people. Do you see bureau, for example? Do you see bureaucratic?

>> Sumit Ganguly: A friction arising or as power gets shifted from the usual channels direct to the executive.

There is still a great deal of bureaucratic inertia and a level of distrust that permeates the bureaucracy because of the Cold War legacy. And if I may be so blatantly self referential, we are organizing an entire conference towards the end of the spring term on trust and mistrust in US India relations.

And we are going to grapple with this issue not only from an academic standpoint, but with very concrete policy recommendations for both capitals. The principal problem is a legacy issue, and the legacy is the one of the Cold War. And I was in India in October and I talked to an entire cross section of the Indian foreign policy elite, and I found it shocking that to play on a term that Kurt Vonnegut, the great writer, coined, he said this one character gets unstuck in time.

Well, the problem is these people are stuck in time. They are still fighting the battles of the Cold War, and unfortunately, they're still very influential. This doesn't mean that there isn't a shift in attitudes and beliefs, but there is a generation that only has one foot on the funeral pyre.

They need to put the other foot on the funeral pyre. We always want to see more of. What can we say? HR.

>> HR McMaster: I was just gonna actually ask a related question. I think this will be the first head of state to visit the new administration. And as we discussed before, I think that was always the plan for President Trump.

And then what are three agenda items that you think that they ought to have or deliverables for this first meeting? What do you think's feasible to achieve or to announce the first meeting of Trump's second term? Well, what would you recommend, I guess?

>> Sumit Ganguly: What I would recommend is the deepening of the defense relationship, which has had bipartisan support.

And Trump, in the same call that Asha alluded to, told Modi that you need to buy more defense equipment from us. And given that the Russians cannot deliver in a reliable fashion anymore thanks to the Ukraine, Ukraine war. I think this provides a very important opportunity. Second, I think there should be an expansion of India's role in the quad.

India is still the weak link in the quad. Third, India will have to make some concessions on tariffs, and not just because of Trump, because of its own inherent interest. Tariffs in a whole range of areas are much too high, and many industries are coddled in India. And I'm treading on your area.

>> Nirvikar Singh: Absolutely.

>> Sumit Ganguly: And I think, that is an area that has to be tackled. But let me shut up here.

>> Dinsha Mistree: I would add just one more, which I think aligns with Trump's interests, which is immigration. So from the southern border we've had, India's been the third or fourth largest country for immigrants coming in.

If you look at what's happened with the Canada India relationship, that is frayed partly because of these concerns over Khalistan and basically a domestic constituency in Canada making those kinds of concerns well known. It seems like the people who have been coming across, by and large, have been coming from the same area of India.

You've got a number of people who claim asylum as soon as they cross the border. The Gurdwaras provide services for them. They get jobs in Punjabi farms that have been here for more than 100 years. Even if they're coming and falsely claiming that they're asylum seeking, you can imagine that getting them radicalized here in a way that would really strain US and Deloittians going forward.

So this isn't just a US Problem with undocumented immigrants coming. It should also be seen, I think, as an Indian problem. And I think they would hopefully start to recognize the importance of that. So that would be something I open on the agenda as well.

>> Sumit Ganguly: Yeah, go ahead.

>> Nirvikar Singh: So I just wanted to offer a slightly different perspective in addition to what Shumit said. It certainly Indian foreign policy establishment is very conservative and subject to inertia. But I think that the new element in US India relationships, the US India relationship, is actually the presence of corporate leaders, significant corporate leaders of Indian origin.

And you could see that in 2023, around APEC and IPF and there were several meetings around that where you had Indian origin corporate leaders part of those meetings. And I think that actually creates, a kind of trust. And I think, I think also one difference in terms of, whatever other differences there are, one difference in terms of the BJPN and MODI is a kind of less suspicion of business as a whole.

So it is pro business much more than any Previous, previous government. So I think those are, those are positives and they should provide some positive factors for the US India relationship. In fact, when I saw what was happening, I was more worried about the US side that it would become unpredictable, whereas I saw under the previous administration it was sort of slow and steady and methodical.

And if the US side becomes kind of unpredictable, that I think could create more issues. But hopefully it'll work out.

>> Dinsha Mistree: See David at Larry's time. So David, maybe you're next.

>> David Fedor: Sure just to continue this conversation and reacting to your comments, Shamit about ideological cold warriors and the bureaucracy in residence to expand the US relationship.

I mean, does that as someone who thinks about the US and the relationship and wants to improve it and frankly wants to make the pitch to the Indian side for some of these things because I think it's in the US interest to be closer, that makes me rethink sort of my own strategy.

I feel like we've been coming at it saying, well, let's find these other substantive things to improve the cost benefit. And that wasn't quite right. What about this one? This could be wonders, but you're saying that the real barrier is maybe more of an ideological problem with certain decision makers.

So does that mean instead of trying to find sort of the next best stone and put it in front of the people that guidance relationship, we should be engaging more on the ideological conversation about the nature, the value of the US relationship, or do you just have to get to wait these people out?

What do we do If that's your diagnosis? I appreciate the business community comment as well.

>> Sumit Ganguly: To a large degree, the deficit in trust was assuaged by the 2008 US India Nuclear Accord that removed one major impediment in the relationship. But despite that, there's a kind of, it's almost sclerotic, an obsession with certain episodes during the Cold War.

They loom so large and they have such a high salience that it's to use a phrase from the great British poet of the 19th century, William Blake, these are mind forged manacles. And shattering these mind forged manacles is extremely difficult. I think we basically have to wait till a generation passes and in the meanwhile make incremental progress in areas where we can cooperate.

Natural gas, defense technology, military to military cooperation, the expansion of military education, which is woeful in India. So concentrate on tangible practical steps and basically we just have to wait for a generation to pass.

>> Dinsha Mistree: That's depressing, but okay.

>> Dinasha Mistree: Education is also a good way you can learn about the education, very faithful.

>> Larry Diamond: Yeah, I'd like to ask about the relationship between politics and governance on the one hand and economic growth on the other. You have a GDP aggregate economic growth rate for like 2014 through 2023 of about 5.7%. But I, I looked it up just now. It could be wrong, but of course there was a huge spike down during COVID and then the burst up the year after Covid.

And I gather the economic growth rate last year was about seven and a half percent, which is really pretty good. Right. If India could grow at 7 and a half percent for the next 10 years, that wouldn't be Deng Xiaoping, but it and China in the last, in the 30 years after Deng came to power.

But it would be pretty transformative. But as we noted in our book, the other book, the Troubling State of India's Democracy, the state of India's democracy is pretty troubling. It is in a period of authoritarian drift. There's gratuitous assaults on civil society, the independent media and so on.

A lot of punishment of people who would raise uncomfortable questions about the rising arc of crony capitalism and corruption. You look at. At other countries that have got gone in this downward spiral, economic growth generally suffers over time. So do you have any reflections on that relationship and on, how India's economy is doing right now in the context of, and with the prospect of a third term for the, not very politically liberal and well, governing bjp?

>> Nirvikar Singh: That's a big question. I'll try and answer it as concisely as possible. The growth was earlier, seven and a half, 8%. The latest quarter was only 5%. So that's already raised some concerns. I think the, the bigger issue has been that while India has grown at 6, 7%, for a couple of decades, it's never even.

Well, once got, just once it got close to the double digit date rates that really allowed countries like China and South Korea to really break out of that kind of middle income trap and so, or, or get, really become, become transformed. If you look at the Assam Johnson Robinson cross country data, then the two big outlier, the two outliers are the two big countries, China and India.

And China is kind of above the line in terms of the relationship between democracy and growth. So China does better than that, cross country relationship would predict and India does worse. So in general, democracy and growth go together. China does better despite being authoritarian and India does worse.

And I think that has to do with particular political features and the size of the country. So in India's case, if I can just give you one example, how I think politics, democratic politics or the way it works in India sometimes damages growth prospects. Going back to the demonetization, when it happened, I was trying to understand why it happened.

And if you really wanted digital payments, there were much better ways to do it. The most plausible explanation I heard was that the timing of the demonetization and the nature of it was to basically wipe out the cash, the value of the cash stocks of all the opposition parties in the Uttar Pradesh state assembly elections and after that Modi's party won a landslide.

So this sort of tension between democracy at the national level and democracy at the state level and making it all work in a federal system. China handles it by being very corporate and hierarchical. But in India, sometimes these, these tensions. So the BJP has been consistently trying to get control of the states.

And in that process, demonetization is one example. In that process, sometimes the efficiency of economic policy is, is sacrificed. Now how do you fix this? I think at some level the national government just has to Kind of let go a little bit and allow the state governments, more political and economic freedom.

But that's, that's hard to do. And maybe after this last election with the coalition government, the BJP will, will kind of let, let off a little bit on trying to, control the whole country. I mean that they, they've got a, 500 year vision of what India should be in.

So, so in the short run, if they can kind of let go of some of that kind of desire for political control. So democracy is good, but when you have a large federal system, it becomes very complicated. That's my answer.

>> Dinsha Mistree: We've got Jack whose hands up, he wants to come.

>> Jack Goldstone: Yeah, thank you. I do think it's important to recognize that Modi did not do as well as he had hoped. In fact, his goal was to win such a large majority as to be able to alter the constitution if need be. And one of the reasons for that is if we look at where the economic growth is occurring in India relative to the population.

It's quite striking that by far the leading engine of growth is in the south, which is largely Dravidian in background and has never been as enthusiastic for the rabid nationalist Hinduism that characterizes the bjp. Meanwhile, the really traditional Hindu heartland in the northwest has been economically lagging and in fact disappointed that they have not been able to share in all of the promised benefits of the great modern India.

So, this has hurt Modi regionally in both areas. And I think the fact that Modi now has to deal with regional divisions, his party has not won as many state governments as he has hoped means that democracy is kind of reviving and pushing back. Like you, Larry, I was distressed at the general direction of strongman ethno nationalist government in India, but I think it's hit at least a pause.

And I hope that the pattern of economic growth is going to give strength to more independent minded groups and require the coalition to have a broader national view.

>> Tom Finger: Thank you. I think that is a very useful set of studies. I appreciate the effort to integrate here a little bit that for India to achieve a more significant goal in international stair to be, to make the successful future nearer rather than more distant.

What are the kind of critical nodes or the weak links or the choke points that must be addressed? Jack's presentation suggests some of them to me that an aging population is going to take a lot more money for healthcare because elder people have expensive health needs. Elder care, if you're going to draw more of the educated people, more women into the workforce that can't be taking care of grandma, that kind of thing.

The education, the Zero Sum Budgetary Act. So, the questions are, what do you see coming out of the study as the most important foci of government detention? Do these problem opportunity areas have the right prioritization now? What kind of policies would it take to address them?

>> Dinsha Mistree: I'll swing first, I guess.

So I think on demography, on education, on policy, these are all critical areas and you need different kinds of policies to address them. But demography, I think honestly we're not going to see very much from the government by way of say, promoting more fertility or anything like that.

There are just not a lot of levers that they can pull there. On education there really is. They've set up, this has been pretty much over the last 20, 25 years, set up schools across the country and they've actually started to fund it in quite a considerable pace.

The challenge there, of course, is that the teachers don't show up. That just the reach of the Indian state. You have a lot of basically just bad education or non-education happening. About 25% of teachers, public school teachers don't show up to teach in India on any given day.

And so, you think about. That someone's being paid, they're not showing up. Getting that right doesn't require any great policy. It's just more about implementation. So those are, I would say, more of the kinds of challenges. I would say one of the other big potential bottleneck challenges that India has to think about.

It's a large and diverse country, 75 years even, even before then, keeping that together as one country with all the different ethnicities and all the different challenges and struggle, that's always been India's challenge and it's is going forward. That's going to continue, I would expect, I mean, I hope that this doesn't happen. 

But localized ethnic violence has been part and parcel of India. You can imagine these kinds of things flaring up, and that they have in years past. That could be a real adamant to India's growth, to India's place in the world over the next 10, 20, 30 years. And it's just a very hard thing to sweep under.

So I don't know what to do in terms of policy for that kind of thing. But that's something that I would definitely watch out for as a bottleneck to India's prize that we've been talking about. Anybody want to have anything?

>> Sumit Ganguly: The only thing I would add is India's historic and continued lack of investment in public health.

That is private healthcare in India for those who can afford it and those who have insurance is world class. And I speak from experience, having found myself stranded two and a half years ago in New Delhi. And the quality of care I received was comparable to anything I could get in the United States, but I had to pay for it.

And conditions in, even in the All India Institute of Medical Sciences in New Delhi, which is has some of the finest physicians in the world, the conditions are Dickensian because of the overwhelming number of people who go there for care and the lack of investment in, in those major primary care hospitals.

You have people literally sleeping on the streets outside aiims in New Delhi waiting to get in to see a doctor. This is untenable and this is good. This will have a huge sandbagging effect on India moving ahead unless it puts this on a war footing. And this is not a BJP problem, this is the result of underinvestment over decades.

>> Nirvikar Singh: If I could just give what I think are the two biggest barriers and these are the sort of fundamental anxieties that drive Indian policy. One is the anxiety of, staying together and the other is the anxiety of foreign exploitation. So if India could get let Go of those two anxieties, be more open and allow more decentralization.

I think a lot of good things would flow from those, changing those anxieties.

>> Dinsha Mistree: Right, we've got Norbert quick and then two comments in the chat, and then I'll come to you.

>> Nirvikar Singh: No, yes.

>> Dinsha Mistree: Okay, we'll start grouping this part to take over.

>> Kharis Templeman: Okay, so since we're on this topic, right, demographic development, and you pointed out, Jack, very well, where there's going, the state of where it's going and what's the status today.

But, most important, also relevant to the US is terms of STEM and people coming here and STEM flow and all these people we need for US economic development here in technology. What's the vision in India on what's a stable society? I mean, you clearly showed something that's not sustainable.

We talked about that. But does the government have a vision on where it's supposed to end up and how to get there? Or are we going to do the Chinese thing, right, one baby for 20 years and then suddenly make more, which is not really a policy. So is there a vision and then what.

What does that really mean? Are we gonna expect, from your point, a continuous flow of people from India into United States and the rest of the world, or is it going to change?

>> Jack Goldstone: I think that.

>> Kharis Templeman: Yeah, want to follow up on Shmit's point about expanding India's role in the Quad.

>> Nobert: And interested in specifically what you think would be the most useful to do that. And closely related to that is do Indian leaders see in their national interest to expand their role in the Quad?

>> Dinsha Mistree: Let's start with Norbert's question. Jack, I think you were. The best place to ask here.

>> Jack Goldstone: Yeah, of course, the two actually go together. India sees its role in the world as a rising superpower and it is generally pro natal. It is a little bit concerned that fertility has fallen below replacement. But I believe the Indian government's view is as the economy gets stronger and more people are lifted out of rural poverty and more people have formal employment that that will have a positive impact on fertility.

I don't think they ever expect to go back to three or four children per woman, but they've got good demographic momentum with them, with themselves now. They have these large youth cohorts that they need to make productive. And the fact that fertility is around 2.0 is around 1.9, that's probably fine.

Now, I think if fertility were to drop suddenly, that is, if they were to follow China with fertility falling down toward one child. Then I think we'd see some government policies designed to promote families. But for the moment, I think they have kind of a laissez faire, let growth take care of things.

We're in a much better position demographically than any other major power in the world, and they're fine with that.

>> Dinsha Mistree: The point?

>> Sumit Ganguly: Yeah. Historically, India's major fear was the militarization of the Quad. And there was a lot of foolish and loose commentary in the Indian press that this is going to become an Asian NATO. 

That's lawful, but nevertheless was there. The spring of 2020 had a marvelous effect on India. When the Chinese made important incursions in Ladakh, in extreme northwestern India, along a disputed border. Since then, India has become much more interested in the military dimensions of the Quad. They still want to have this fly below the radar because the Indian political elite is absolutely petrified of the PRC, and so they're trying to square the circle.

On the one hand, yes, the Quad is very important. The importance of deepening military exercises, intelligence sharing, access to Indian bases in the Indian Ocean. But at the same time, acutely aware that the PRC is watching like a hawk, and. They are afraid that as George Bundy said during the Cold War Plykus are like streetcars.

Well the Galwan Valley is a streetcar. There's another one coming.

>> Paul Raj: My name is Paul Raj, I'm a hemritis from E department. I'm actually I worked in India till age of 47 but I'm back there now for the last 20 years gone with many things. I chair the two big government labs which computing and telecom.

I'm also the chairman of committees which fund startups in this area. So I kind of been going back in there pretty often. I would just come back to say that to a guard observation that Sumit mentioned that in 1991 India became unfettered and absolutely and a lot of things have improved.

You go to India today, certainly the airports, the infrastructure dramatically improved and GDP is going up but of course per capita GDP remains a big struggle. But I would argue that in technology that prison that we were in in 1991 has not lifted it is still in a very big prison.

I see it in the first hand. I'll just give you just two examples. Jack mentioned for example that the IIT y world flash university absolutely true that we are world class at undergraduate level but if you look at. It's not entirely fair but look at rankings in terms of universities which contribute ideas which change the world whether it's in sociology or whether technology Indian rankings are very low.

The very top university in India is. I just gave a talk there 10 days ago because I was in town in Bangalore and people. I wanted people want me to talk about deep sequences rising in the count. Why don't we talk about where is the 3 person chatgpt I know a little bit about it, I gave a talk but it's a wonderful university.

We go to their website they will themselves say their ranking in the world is 140 in the world 140 and the other ranking I put them at 270. This is the top university in India. So when we say we have suddenly done a great job undergraduate many of them landed up here, ran a great job but India is not there.

So just come back on this issue about my current involvement. I work at the highest level the Prime Minister and the two ministers there. One issue of Naples I keep facing is the funding of startups, the semiconductors. The government funding is such that if somebody has a bright idea for a new architecture for a chip.

What we say under Shemon he says that you go and find their own money Sell your house, get a bank load somehow get money for your. You start your company. After you spend the money, we'll refresh. I've gone back to India many times saying this cannot work but I want to be able to change.

But there's lots of things to fix Mel.

>> Amrutha Nair: Now you spoke about the health infrastructure in India. Do you think it's a problem of very severely under penetrated insurance schemes like for example hat I've heard is a very ineffective government scheme. And hence people sort of throng the government institutions for free service and do not really access the health facilities available in the private sector.

So penetration is really, really poor. Do you think that could be one reason and is there any way that it could potentially influence that?

>> Sumit Ganguly: I think the Modi government has been trying to address this but that it's in an incipient stage. But I think Nirvikar is in a far better position to address your question.

>> Nirvikar Singh: Yeah, no, you're absolutely right. I think the access to healthcare depends very much on income because there is a lack of adequate health insurance. And Sumit said the government has been trying for a long time to kind of create a national health insurance scheme. It's progressing, but it's got a long way to go.

>> Dinsha Mistree: We'll see in this survey that health spending as a percentage of GDP has actually dipped over the last 10 years. I would expect that to continue. You also see a concrete rise in what's called Ayush, Ayurveda, yoga, homeopathy. Basically local Indian medicine, which now actually I think has about the same amount in terms of budget as the health spirit.

So you're thinking about where might that money come from. I'm all for India domestic health. I would love to see it subjected to regular, routine western style medical practices. But there's a huge amount of money sitting there for these kinds of things.

>> Amrutha Nair: Yeah, like some states in South.

I know Jack pointed about the divide between North and South. Some states in south have very, very effective health and highly functional, useful one.

>> Nirvikar Singh: I think the public private sector issue is also relevant here. Just like Dinsha said that teachers don't show up in public schools, government schools, doctors don't show up in government hospitals. 

And so again, a comprehensive health insurance scheme which they've been trying to introduce. Would deal with some of those institutional and incentive problems which plague the Indian economy in many areas.

>> Dinsha Mistree: So I think what you're seeing from all of this is that there's a hunger and appetite to learn more about India, hopefully for especially for US people to engage more with India.

So we were really thankful for having you. I'm sorry, I'm sure we didn't cover all of your questions. Sumit's teaching a class in the spring if you want to sit in on and hear even more on the domestic political economy of India. One of the first policy classes Stanford blew it bad.

I've been at Stanford for 10 years. One of the first policy classes we've had on India since I've been here. So we're really honored you could join us. Hopefully we have more to come. Hopefully you all get involved as well. So thank you. Thanks to Jack and Nabar.