"India Has 25 Years To Grow Rich Before It Grows Old " — Neelkanth Mishra, EAC-PM | Bharatvaarta

[00:00:00] Capital Is In Shortage And Labor Is In Surplus Which Is Where We Are Now Inequality Tends To Rise. What I Have Seen In Government Is That At Any Point Of Time On Any Big Decision There Are 150 People Who Don't Formally Need To Sign On The Document But Who Need To Nod. 80% Of Them Generally Don't Know Much About The Subject. When It Comes To Using AI, Deploying AI, I Think India Will Do Really Really Well. If Oil Prices Are Going To Be $85 Plus For One Whole Year, Then The Economy

[00:00:30] If Oil Prices Stay At $100 A Barrel For One Whole Year, You Have A $60 To $80 Billion Of... Namaste Sir, Thank You So Much For Making The Time. It's Been A Year Since We Spoke, A Lot To Discuss. I Want To Focus This Podcast On Something You Keep Talking About Often, Which Is That We Have To Grow Rich Before We Grow Old. But I Want To Delive On What It's Going To Take For Us To Be Able To Do That, Right?

[00:01:01] The Cost We Will Have To Bear, The Kind Of Policy Changes We Need, The Culture We Need. And How Should We React To Some Of These External Factors, Right? Geopolitics, AI, And So On. But, You Know, Something Topical To Start With. The Prime Minister Has Made Recent Remarks, You Know, On Urging The Citizens To Cut Down On Petrol, Diesel Usage, Use Public Transport, You Know, Non-Essential Foreign Travel, And So On.

[00:01:30] And Largely, You Know, I Mean To Balance Our Forex And So On. But, You Know, Is There A Larger Significance To This? And If You Could Also Talk About A Solution, You Know, That You Wrote About Today. Yeah, Roshan, Thank You For Having Me Again On The Podcast. This Is A Very Important Set Of Questions You Asked. On The More Topical Thing, I Think It's Primarily About The Dollar.

[00:01:53] Meaning That, Look, If Your Energy Prices Go Up And You Are Net Importer, I Mean You Net Import 48 To 50% Of Your Dense Energy, You Have What Economists Call A Significant Terms Of Trade Shock.

[00:02:11] So You Now Are Paying, So If Say Oil Prices Average $100 A Barrel About At An Annualized Level, $80 Billion Or 2% Of GDP More Than They Used To. Now, The Government In The Interim Can Cushion It By Significant Fiscal Interventions.

[00:02:36] Meaning Like In Urea, Whatever Be The Price Of Urea Globally, The Indian Farmer Will Continue To Get It At 5.3 Rupes A Kilo. Now It May Be Very Distortionary, It May Be Ruining The Fields, But For 16 Years We Haven't Seen A Change. But It Is Politically Too Difficult To Do It. But Anyway, The Point Is That There Is A Fiscal Cushioning That Can Be Done.

[00:03:00] Given That The Government Has Been So Disciplined On The Fiscal Side In The Last 4 Years Post-COVID, There Is Space. So If The Government Wants It Can Almost Perpetually, Well At Least For A Year, Keep The Fuel Prices And Everything The Same. The Challenge Is That You Still Need To Pay Dollars For That.

[00:03:24] And If Oil Prices Stay At $100 A Barrel For One Whole Year, You Have A $60 To $80 Billion Of Balance Of Payment Deficit. Meaning That You Need Extra $60 To $80 Billion. And That Is I Think A Very Unwise Thing To Do. So Meaning That That Balance Of Payment Deficit Has To Be Brought Down. The RBI Has Reserves. It Can Deplete Those Reserves And Sustain That. But That Is Actually Unwise And Unfair For Everyone.

[00:03:54] The Economy Needs To Adjust. So It Is Less About A Sacrifice. It Is More Adjusting To Reality. That If Petrol And Diesel Prices Are Going To Be Higher For Longer, Than As From The Purpose Of Efficiency, We Are Perhaps Better Off Letting Those Prices Show. Because More Than Exhortations,

[00:04:20] It Is I Think The Prices Which Are A Very Broad Based Influencer Of People's Behavior, Economic Behavior. So If We Let Petrol And Diesel Price, Now That We Know, See What Has Happened With China Intervening Heavily Through Inventory Releases, In The Month Of April They Released About 3.5 Million Barrels A Day. So About Nearly A Tenth Of Their Strategic Reserves For Release.

[00:04:48] They Are Very Worried That The World Is Going To Get Into A Massive Recession If Oil Is Not Provided. So What They Have Done Is They Have Brought Down The Physical Shortages In The Near Term. But In The Process Now The Oil Market Is Worried That The Chinese Will Have To Restock. And Therefore Oil Markets Will Remain Tight For A Much Longer Period. Now If Oil Prices Are Going To Be $85 Plus For One Whole Year, Then The Economy Needs To Adjust.

[00:05:18] People Need To Understand That There Is The Economic Cost Of Driving From Point A To Point B Versus Taking Public Transport Is No Longer Justified. And The Strongest Signal For That Is Market Prices. So I Think The Government Very Prudently Was Trying To Cushion The Economy From This Volatility.

[00:05:40] So Suppose They Had Let Diesel Prices Go From 90 A Litter To Say 140 A Litter Just In The Letting Market Prices Go Up And Then Or Reflecting What Was Happening In The World. And Then Two Months Later The Strait Of Ormuz Opens Up And That 140 Has To Become 90. The Economy Would Have Gone Through Unnecessary Volatility And Therefore It Was Prudent So Long As You Expected That This Was A Short-Lived Disruption.

[00:06:10] If It Is A Longer Live Disruption Then You Need To Let The Prices Go Through. But Yeah This Is A This Is An Important Adjustment That Needs To Happen On The Energy Pricing Side So That As An Economy Where We Are So Energy Deficient We Need To Use It A Lot More Efficiently. Right.

[00:06:35] Is Pricing The Only Constraint Or Is There Some Kind Of Wizardry That We Can Do On The Currency Side Of Things You Know Adjusting The U.S. Dollar, Indian Rupee Rates Somehow, Some Way To Sort Of Balance Our Forex And Stuff? The See There Are Only 2 Options.

[00:06:54] The First Is That You Manage It Through The Capital Account Meaning That You Somehow Attract Dollars So You Get A Lot More FDI A Lot More Foreign Portfolio Investment Or You Get Indian Companies To Borrow More In Dollars So The Dollar Inflow Happens.

[00:07:18] Or That You Learn To Export A Lot Or That You Learn To Export A Lot Import Less So Basically Managing On The Current Account Side So There Is A Current Account, There Is A Capital Account In The Capital Account As I Narrated The Three Types Of Capital That You Can Go After. On The Current Account, You Can, Without Letting The Rupee Weaken, The Only Way To Reduce Imports Or Increase Exports Is To Improve Productivity.

[00:07:46] So Basically Make Land More Easily Available, Make Power Prices Much More Efficient, Make Labor Much More Easily Available. But If You Can, Without Let's Do That, Then You Can, Without And, Without Let The Rupee, The And, Without Let's Do That, Then You Can, Without Depreciate. Because That Is The, Again, The Market Pricing Mechanism Where Everything Gets Marked Down In Dollar Terms And Then Your Exports Become More Efficient, More

[00:08:12] Competitive And Your Imports Become More Expensive And The Economy Then Adjusts Accordingly. If You Can, Without Let's Do That, Then You Can, Without Let's Do, Then The Productivity Metrics Then The Rupee Has Effectively No Bottom. But The Good Thing Is The Government Is Working A Lot On The Reform Side As Well. So Hopefully The Decline In The Rupee Does Not Need To Be Excessive. Right.

[00:08:40] A More Fundamental Question And Perhaps I Mean This Will, You Know, Address The Meat Of The Subject Which Is, You Know, After About Four Or Five Years We Are Going To Expose Our People To These Kind Of Shocks. Obviously There Is An Emotional Response. It Affects People's Lives Very Tangibly. Right. Now When We Say That, You Know, We Have To Grow Rich Before We Grow Old. Most Countries, I Mean We Can Think Of Whether It Is Like England During The Industrial Revolution

[00:09:07] Or America During The Gilded Age Or Japan Post Second World War And So On. There Is A Generation Or Two That Goes Through Absolute Hell. Right. So Which Is Long Hours Of Working, Decreased Consumption And So On. So That The Generations After That Benefit From It. What Is The Cost That We Will Have To Bear? It Doesn'T Necessarily Have To Be A Cost.

[00:09:33] Look, The Way You Framed It, You Are Right In That Large Part Of The Growth Acceleration Seems To Be, Tends To Be Concentrated In One Or Two Generations. It Was The, Not Just The Gilded Age Which Of Course Was Very Powerful But Also I Would Say The First Decade After The First World War, The First Decade Of The Interwar Period. And Then The 1950 To I Would Say 70 Period.

[00:09:59] Where There Was A Substantial Improvement In Productivity In The U.S. The Chinese Have Had, I Think, 1980s Onwards Till About 2015 Substantial, A Very Strong Growth. Very Suppression. Again, See, The Suppression Bit Is Something That The Way You Posited Or The Way You Asked The Question, I Think You Are Assuming That You Can'T Grow Without That Suppression.

[00:10:29] I Don'T Think So. Look, There Is A Difference Between Causality And Coincidence In The Sense That If At A Certain Stage Of Growth, Capital Is In Shortage And Labor Is In Surplus, Which Is Where We Are Now, Inequality Tends To Rise.

[00:10:58] Now, Is That Suppression Of The Poor? If The, And Especially Given That We Are A Democracy, This Cannot Last Very Long Because The People Will Then Vote Out The Government Where Inequality Is Rising So Rapidly. And The, So Long As There Is Real Wage Growth And,

[00:11:23] And Even The Poorest Of The Poor Are Improving In Their Quality Of Life. If The Inequality Is Rising, It Will Still Not Result In A Democratic Reversal Or, Or I Would Say, A Revolution.

[00:11:46] If It Is Only Suppression If The Elites Have Captured The Resources, Productive Resources In The Economy And Are Then Manipulating Them.

[00:12:01] So For Example, Take Some Of The Sub-Saharan African Countries Where You Have Prodigious Natural Resources And They Get Captured By The Elite And The Returns Are Kept Away From The Masses. Those Would Be Called Repression. But What We Are Seeing Today Is A Natural Part Of Growth. There Is No Other Way To Grow.

[00:12:32] So As Long As The Baseline Improves For A Large Mass Of People, It Should Be Fine. Then In That Case We Don't Worry About Inequality. Correct. That Is Just A Feature Of Growth. Exactly. So We Need To Be Conscious About Inequality. We Need To Continuously Monitor It So That To The Extend That It Can Be Minimized, There Are Efforts To Do So.

[00:12:57] So For Example, Despite The Fact That Between 2012-13 To 2022-23, Because 11-12 To 2022-23, This Is The Household Consumption Expenditure Surveys Snapshot That I Am Talking About. So During That Period, Consumption Inequality Fell Very Sharply.

[00:13:19] And Remember That Even At That Time, Labor Was In Surplus And Capital Was In Shortage. But We Still Saw That. The Reason Why That Happened In My View Was That We Focused Aggressively On Improving The Productivity At The Bottom Of The Pyramid.

[00:13:43] So Providing Everyone Electricity, Access To Roads, Phones, Pukka Houses, Toilets, And Now Even Solar Power. So If You Pipe Water, Cooking Gas, Dense Energy Is A Very Important Driver Of Productivity.

[00:14:05] So If You Help Their Productivity Through These Roots, These Mechanisms, You Can Actually Have Slightly More Equitable Growth. The Question To Ask Is What Next In Terms Of Helping Productivity For Them?

[00:14:24] You Know Using AI To Provide Better Education, Better Skilling, Having Much Fairer, Say, Exams Which Act As The Channel For Diffusion Between The Elites And The Non-Elites. To Give You This Political Framework Which I Find Very Useful.

[00:14:49] You See Whatever Be The Form Of Government, Whether It Is An Autocracy, Communist Government, Single Party Government, Democracy, Oligarchy, Whatever Form. It Is Always About 10-15% Of The People Ruling Over 85-90% Of The People.

[00:15:15] As Some Political Theorists Say, The Revolutions Only Change The Elites. They Recycle The Elites. The Structure Remains The Same. Right. And Revolution Happens When See Over A Period Of Time, Elites Of Course Try To Perpetuate That Their Progeny Remain In The Elites.

[00:15:45] Now, If You Make The Boundaries Between The Elites And The Non-Elites Too Rigid, And So Over A Period Of Time, What You May Find Is That In The Non-Elites There Are People With Exceptional Skills, Exceptional Training, Exceptional Knowledge Who Have The Ability To Be Elites, But They Are Accumulating In The Non-Elites And You Barred Them From Entering. And In The Elites There Is Natural Depletion. I Mean Someone May Have Totally Useless Progeny

[00:16:13] Or Even If After Trying They Are Not Able To Do The Right Stuff Or May Not Have Kids Or Whatever. So That Number Dwindles. So It Is Almost Like Pressure Building Up That And Then It Bursts And That Is When The Revolution Happens And Then There Is A Flood Of Elites Into From The Non-Elites And Some Of The Elites Get Downgraded To Non-Elites. And That Happens But Again It Is Then The Same Animal Farm Kind Of Culture Starts To Settle And It So

[00:16:45] So An Example Like Gaokao In China Say JEE Or UPSC Or NEET In India These Are Very Important Channels For The Non-Elites To Become Elites. Social Mobility. Social Mobility. And If If These Are Seen To Be Unfair Then Revolutions Happen. If If If You Can Make It Even More Equitable.

[00:17:14] See For Example Till Till Till 30-40 Years Back If You Were Going Up In A Village You Couldn't Even Get Access To Any Of The Good Books Required To Prepare For Some Of These Exams. Even If You Were In A Small Town Where I Grew Up You Would Get These Books With Like A Two Month Three Month Lag And You Go Tell A Bookshop That I Want This Book And They Will Say Oh Fine I Look For It And Then You Keep Going Every Week To Check Did You Get It And You Were Not

[00:17:43] In A Big City You Had It For Granted Right So There Was A Natural Privilege That Came From Being Part Of A Good Family In A Big City Today Those PDFs Circulate In WhatsApp Groups Telegram I Don't Not On Telegram But But Yeah But Those Things Circulate Very Freely Right And So That's Great Because Then The The Opportunity Is Much More Equitably Distributed So That's The Point I'm Making That

[00:18:12] If We Keep Making Efforts That To The Extent Possible We Don't Have Artificial Barriers I Think Some Increase In Inequality Is Not Well One It Is I Think Unavoidable To Some Extent But It Will Also Not Be Very Disruptive Right So To Improve This Baseline Right I Mean If You Think Of Hard Assets Soft Skills And Good Policy Right I Think This Government Has Done Phenomenally Well On The Hard Assets Side Of Things In Terms Of Roads Water Electricity

[00:18:41] And So On And So For Infra And What Not On The Skills Soft Skills And The Policy Side Of Things I Think Policy As Well I Mean We've Tried To Take A Stab At It We Have Not Been Able To Do This Factor Reforms Or Whatever But We Have Done This Like A GST Or PLI And So On Right But The Middle Right Which Is Let's Say Education Healthcare And Those Kind Of Things That Seems To Be Something Which Is Not Very Politically Helpful

[00:19:11] For Governments Because Any Investment You Do On All Of These It Shows Up Maybe 10 Years Later When You May Not Be In Power Right So Absolutely And This Is The Biggest Challenge For Most Economies Who Try To Cover The Development From Lower Middle Income To Upper Income In A Very Short Span Of Time And Especially Large Economies So To Give You Numbers Here

[00:19:42] India And China Are Trying To Cover The Distance From Lower Middle Income To Upper Income In About 60 Years Give Or Take And This Is A Distance Which Was Covered By The Developed World In About 150 To 200 Years Now Which Means That You Have To Grow At 3x The Pace 2.5 To 3x The Pace And What That

[00:20:12] Does Is That Certain Natural Social Shifts That Would Happen So For Example Till I Think The Early 2000s The Chinese Didn't Realize That High School Enrollments Were Bad They Were So Busy On Reforming The Economy That They Missed The Fact So They Have A Very Large Percentage Of Their Adult Population Today Which Which Can Can't Do Services

[00:20:42] So There Were People Who Were Laid Off Or Because Per capita Incomes Went Up Labor Intensive Manufacturing Was Lost To Vietnam And Bangladesh And Hopefully Now To India And The People Who Worked In Those Factories Can't Run Excel Sheets Because They Not Studied Beyond 10th Class So Their Upbringing At Early Young Age So There Is Something Called A Bailey Test

[00:21:13] Which Is Measure Of IQ In A Sub 5 Year Old Student Or A Child There Are Provinces Where Nearly Half The Children In China Fail The Bailey Test And It Is Not A Reversible Change In The Sense That A Reversible Problem Meaning That It Is Not That If They Are Below The Required Grade On The Bailey Test At Age 5 That At Age 12 Or 14 They Will Be Able

[00:21:42] To Catch Up So China Has A Huge Problem Because They Couldn't Manage So They Have A Fantastic Top 20 With Access To Technology Significant Financial Repression Which Gives Them A Lot Of Access To Financial Resources And Of Course They Managed It Wonderfully Well Massive Research Institute Academic Excellence And All That But They Still

[00:22:12] Have The Bottom 50 60 Percent Which Is Struggles To Get Involved In This Fast Growing Economy Now For India The Healthcare And Education Challenges Are Equally Extreme So We Have An Embarrassingly High Proportion Of Stunting And Malnutrition And Despite The Free Grains

[00:22:42] And Everything Else That Is Happening Those Numbers Are Not Changing So Maybe It Educated Mother Is Absolutely Essential For Early Childhood Health And Early Childhood IQ Development And So The Fact That

[00:23:12] Secondary School Enrollment Higher Education Enrollment In India Is For Women Is Now Going Up Very Rapidly There's Some Way To Go Though And It Is Now Better Than That For Men Is A Significant Achievement So We Are Making That Progress But As I Was Saying Because You Are Doing It In China For Example What Happened Was That Both The Parents Because They Were Factory Workers And They Were Such Big Opportunities They Left Their Children With A

[00:23:41] Grandmother Who Of Course Would Have Given A Lot Of Love And Affection But She Would Not Bring Them Learning Language Requires That You Keep Talking To The Kid I Don't Know If You Have Seen This I Used To Find It Very Irritating But I Now Realized It Is Very Valuable Is That With My Kids Both The Grandmothers Would

[00:24:11] Keep Babbling Saying Something What Is That Phil Understanding Right But There Is They Are Actually Focusing I Mean If You See They Squinting And Seeing How The Mouth Is Moving And They Are Learning Language At That Age If You Are Not Talking Like That You Actually Are Making

[00:24:41] Slowing Down The Intellectual Development Of The Child Now When Or Giving Deworming Injections Or Basic Things 10 Cent A Year Kind Of Cost But If You Don't Do It The Child's Development Slows Down And Once You Lost It At Age Five It Is Very Hard To Recover It Later Now If You Tell The Grandmother Why Did You Do This My Kids Grew Fine But Those Kids Grew Were Fine Because They Were Working For Factories

[00:25:12] For Manual Labor And You Know So If This Development Happens Over Eight Ten Generations The Social Shift Can Afford To Be Slower Meaning That Slowly Grandmothers And Mothers Start To Know That Look At Age One You Have To Start Babbling To The Child Otherwise Its IQ Development Will Slow Down But If You Do It In Two Generations It Is Too Slow Because The Grandmother

[00:25:41] Is Still Used To Bringing Up Kids The Way It Was When Everyone Used To Do Farming And I Think So When You Go Through This Accelerated Shift There Are Very New Sets Of Challenges That Emerge And This Has To Be Done At A Massive Scale It Some Opportunity

[00:26:10] In Addressing Some Very Hard Problems For Example The Per Capita Or Sorry The Percentage Of State Government Expenditure On Health And Education Education To Start With In UP And Bihar Is Much Higher Than That In Kerala Okay But The Per Capita Spending Per

[00:26:40] Student Spending Is A Fraction Of That In Kerala Because The Per Capita GSDP Is So Low And There Is Therefore Fewer Resources The Pupil Teacher Ratio Is Much Worse The Ability To Enforce Teacher Attendance Is Very Low The Pedagogy Is Outdated You Have To Work With Suboptimal Teachers Meaning The Teachers Themselves Are Not Well Trained And These

[00:27:10] Are Things That I Think States Have Struggled With Because How Do You Find Skilled Teachers And How Do You Find Motivated Teachers And How Do You Incentivize Teachers And Even A State Like UP Has Struggled Despite Yogyak Yath Yithinath Having Phenomenal Intent And A lot Of Political Power Even He Has Been To Discipline The Teacher

[00:27:40] Unions In UP Because When He Said We Have To Biometric Attendance Have To Make Sure That Teachers Attending School They Just Revolved

[00:28:19] They set up think tanks. They're people who persist with these kind of problems, work with the state government, start to solve some of these problems. But that also is a somewhat slow process in the sense that there is a natural, if you see compounding effect, that you have a certain number of entrepreneurs, a certain number of think tanks. How many people can they go and affect? How will they unlock systems? What AI and these technologies do

[00:28:48] is dramatically bring down the unit cost of education. They also enable adaptive education. So if you are in a class of 40 and you're the only bright child, but 35 of the rest are not interested or have not learned, no worked hard, you are pulled down to their levels. But in online learning and AI-assisted learning, you can solve some of these problems.

[00:29:16] So I think the opportunity, we cannot give up. You're absolutely right that there's a lot of work to be done there. But I must say that with the advent of AI, these are the areas, healthcare and education, where I think that the most transformative impact can be had. And the effort should be for all state governments because it's finally state subject. There's only so much that the central government can do.

[00:29:47] And I do believe that some of the more progressive states are actually working very hard on these problems. Right. Yeah. I think on the... I really feel that we need a very, very tiny fraction of folks who are at that level that you're talking about. Right. I mean, Maslow's Pyramid and very, very top. Right. Before we get to... I mean, we don't need an Elon Musk or a Jeff Bezos. Right. But maybe like a couple of orders of magnitude below. Yeah. Yeah. Enough of that, given our population, right, can make a significant difference.

[00:30:17] Yes. For sure. Right. And of course, I mean, AI can help us scale on capacity and so on. Yes. For sure. Yes. We're trying to do all of this when we are a loud, noisy, opinionated democracy. Right. Again, you know, we reference China more than a couple of times. Right. Things can happen, you know, at a phenomenal speed, but also massive repression and, you know, those kind of things. Right. Is there something that we can learn?

[00:30:44] Is there a precedence for us to learn from other, you know, countries that have had similar circumstances? Well, not the same scale and complexity, but something that we can learn from them to do things right. You know, there's this statement ascribed to Zhou Enlai against China, which apparently he didn't say, but it is ascribed to him that when he was asked about the impact of the French revolution,

[00:31:12] he said it's too early to decide. No, but see, I don't think even if he said it, he was joking. See, there are things that, see, countries and civilizations potentially live forever. And so restless as we may want to be,

[00:31:36] I think it is important to have these natural checks and balances. Now, it doesn't mean that we somehow surrender ourselves to a lower pace of growth than what China achieved. I think it is possible to be disciplined and still drive that level of growth. Meaning that a very large part of economic growth in China in the last 20 years was driven by real estate.

[00:32:05] The construction of buildings and, you know, huge townships, which many of them, no one lives in. There are satellite cities that were built for office complexes or huge buildings, beautifully constructed parks, not a single person. And they could do that because it's a state-owned financial system.

[00:32:28] So, you build, so that creates GDP, creates incomes, and then, you know, it creates its own virtuous cycles. But if something does not work, you can socialize the losses because the losses are distributed over all the financial systems, which is the model that they've used. And it's a very wasteful model. It has so far helped them very well.

[00:32:54] I mean, they've become very prosperous on a per capita income basis. The state, the government has a lot of power. It wields enormous leverage over large parts of the world because it's of its manufacturing dominance. So, clearly, a lot of positives have happened. But there are structural weaknesses that are emerging. And you never know where they may be in the next 5, 7, 10 years because the excessive leverage,

[00:33:24] the over-reliance on construction is something that is starting to slow down. So, look at it on the other side in India. So, we have a long period of growth because of highway construction. So, national highway construction goes from 2,000, 3,000 kilometers to 12,000 kilometers a year. And suddenly, everyone is clamoring that, oh, we've built too much and that these are not viable. And there's a natural correction. Now, it is quite possible, and I do think so, that this correction has been premature,

[00:33:53] that we are perhaps being too cautious on returns. But the fact that these checks and balances exist is a sign that we will have very few roads where we've spent billions of dollars, but no one is driving on them. Look, the construction of roads creates income. But if no one ends up driving on them, that's a waste of the country's resources. Now, there is no free lunch.

[00:34:21] And at some point, it comes back and hits you. So, there is some merit. So, as you said, it's a noisy democracy. Everyone has a voice and all of that. But it does, in the near term, mean that you're taking much longer to solve problems than you would have if you were in an autocracy or a single-party country like China. But, you know, it keeps you balanced. It keeps you more sustained.

[00:34:49] But at the same time, I do think that our policymaking needs to be a lot more adventurous. Meaning that this fear of going wrong, that if it goes wrong, this damage will happen, is something that I think has been a bit of a drag on growth.

[00:35:16] So, the example I keep giving, I don't know if you heard me say this, but, you know, if you drive at 20 kilometers an hour, it's very hard to have an accident. But it takes a long time to get from point A to point B. But what Chinese have been doing is on a bumpy road driving at 80 kilometers an hour and repairing things on the fly. It's always dusty, noisy. You're always solving crises. But at the end of 10 years, you realize you've covered a long distance.

[00:35:46] And I think that willingness to experience the unknown in terms of policy, and let's try and see what happens, so far has been a bit lacking. Meaning so far, meaning that in the last, I would say, 20-25 years, maybe 20 years, we have seen, you know, like between 2004 and 2014 for sure,

[00:36:14] I think the objectives of the government had shifted. Post-2014, we have seen, in fact, I used to write in 2015-16 that this is like a house under construction, a house under renovation, that, you know, year-on-year numbers are useless because sometimes GST is in the end, demonetization, sometimes some real estate adjustment that is happening, RERA is happening. And then, of course, there was COVID.

[00:36:40] But I think the time now is for us to, you know, experiment with a few things. For example, look at what UP has done with freeing up the FSI for hotels, that are the permission levels for hotels. So there is, from what I hear, a proliferation of two and three-star hotels in UP because the land prices have reduced.

[00:37:09] Yeah, effectively land prices have reduced and the permission requirements have become easy. So you don't have to sort of wait for years to get a permission or, you know, bribe a lot to get permission so you can. Now, clearly there are people who are upset that, oh, the poor quality hotels are getting constructed. That's how the markets work. So the hotels that are poor quality will not get business. Right? So this is how markets work.

[00:37:36] So, and frankly, I mean, so long as there are no safety and law and order issues and there are other kinds of concerns that can emerge, but or maybe buildings start collapsing, construction quality is bad or whatever. But so long as we can control for that, why should we be, you know, gating the supply? And this is part of the reason why tourism in India is so expensive, that Indian tourists find going to Vietnam or Cambodia a lot cheaper. Sri Lanka. Sri Lanka.

[00:38:05] So, so this is, so anyway, so I think I, I think at a, at a broader government level, I'm starting to see a lot more risk appetite come in. So, for example, Andhra Pradesh giving DISCOM license to data centers or giving land 50 year lease, one rupee an acre.

[00:38:32] Land use conversion becoming free that you can buy if you want agriculture land and use it for whatever you want without seeking any sort of government clearance, which was of course a form of rent seeking. So, the fact that states are at least willing to go down this path is itself quite, quite phenomenal. So, I'm starting to see, you know,

[00:38:59] that, that governments, vote at the center and the state are starting to take risk, reform risk. And like, you know, the decriminalization that happened, that Jan Vishwas built too, where 750, 800 potential violations were decriminalized. These are all good signs that the government wants to do reform.

[00:39:25] And I think some, yeah, so, so when we compare ourselves to China, there are many things that we shouldn't do. Like, you know, only a focus on growth targets over the next three months or six months, as much as it is tempting to do so, it can drive, you know, I would say problems or it can create problems that show up only after five, ten years.

[00:39:57] But what we can learn from them is the willingness to take policy risk. Because being too risk averse is, means that you grow very slowly. So, is the right abstraction to look at the state and maybe not the center, maybe like look at this kind of competitive federalism, right? I mean, let Andhra go out and do the best for its people, so on and so forth.

[00:40:25] As I'm saying this, I mean, people will for sure say, this is the Union of India and you're all of that. But then, I mean, why not, right? I mean, why not let Gujarat do the best for its own folks, attract FDI and get people to invest and have certain laws for itself that can increase productivity? Then is that the answer? There is a lot of merit in what you say. And I totally agree that that is the model that can drive, I would say, sustained growth.

[00:40:56] And there are many reasons why that works. The first is that most factors of production are directly under the control of the state government. So, land is a state subject. Labor is a state subject. Electricity, power distribution, cost of electricity is a state subject. Environmental pollution related issues are state subjects.

[00:41:25] So, it is unless the states start to facilitate set up of businesses, the center can't do much. And so, first is that many of these changes need to happen at the state level. Second, that from starting off, paranoid that India would break apart. In the first 25-30 years after independence, we were very worried that,

[00:41:54] because most people thought India wouldn't survive as a country. So, the leaders were very afraid that, you know, we shouldn't have superiors tendencies and we should, you know, have a union which was paramount. Today, now that we have the confidence and so the states now are starting to become the centers of a lot of action.

[00:42:21] So, states like UP, Odisha, Andhra Pradesh, Tamil Nadu are starting to appear as beacons of reform and investment growth, etc. The next level of growth needs to happen. So, the districts in each of these states are bigger than provinces in many countries. But there is no administrative or fiscal freedom to them. And so, even the process of urbanization, so there is very limited stuff that the center can do.

[00:42:51] See, the fact is, a large part of the infrastructure India needs in the next 20 years has to be urban infrastructure. And while the center can provide some incentives, can provide some funding, it is finally the states who need to decentralize. And it shouldn't just be that the chief minister needs to control each and every city because there is so much money to be made

[00:43:21] in the real estate markets and so on. So, if you want to really create vibrant cities, which is very important for India's next level of growth, you need to focus on states and get chief ministers to maybe give independence to district magistrates in, say, four or five. You may not be able to do that in, say, all 75-80 districts in UP because you may not be able to trust the bureaucracy everywhere. But you can choose

[00:43:50] maybe 10 bureaucrat zones and have handpicked bureaucrats driving that. The third is that nothing works like competition. So, the reason market forces work is that, you know, if there is a pressure to compete, that if you don't do better in productivity and efficiency than your competitor, you lose out.

[00:44:20] And it is that which keeps companies on their toes. The moment that pressure of competition goes, growth slows down and there is a bit of stagnation, not a bit, quite a bit of stagnation in economies and companies also. So, competition between states in terms of, I mean, it can become too intense also at some point, but at this stage, it's too little.

[00:44:49] So, I think we have to move in the right direction. And one very interesting comment that came from, I'm not saying that we should replicate that, but there's this expert, Edward Lutwak. He said that the death of Europe happened when they stopped fighting. So, his thing was, and so long as the states were competing and jostling with each other,

[00:45:19] they were innovating. I mean, look at, for example, I'm not saying that we should start fighting with each other, but the point is, look at what Ukraine has come up with. They are now doing attacks which are human-free, completely AI-driven, drone-driven. They have come up with, you know, paper drones which are deadly. There's a kind of innovations that are starting to happen

[00:45:49] because when you have pressure, you're forced to innovate. Right. And all the artificial barriers in your mind just have thrown away. And so, it was, according to him, the fact that post-Second World War, a peace zone was created. Now, all of your energy is just going into solving problems like bureaucracy and diversity and environmental issues which are all important but they have taken away from the pressure of growth

[00:46:20] because then you're not competing. Right. And so, having healthy competition between states, so, for example, if, say, Maharashtra is very deeply upset that data centers are, you know, making a beeline for Andhra, maybe it will start offering, you know, cheaper land and cheaper electricity and better terms and starting to attract them. So,

[00:46:50] those are, you know, the easing of labor laws, the incentives given for industry to set up factories. Some of these, I think, these changes need to happen at the state level. And what is very interesting is that there is a very vibrant, I would say, very fertile ecosystem of bureaucrats who may belong

[00:47:19] to a state cadre but they also hold loyalty to their batches. So, it's actually, it's very surprising and how efficiently it works. So, they will still be connected to their batch meds and so, someone could be in Odisha, someone could be in UP, someone could be in Rajasthan and say, you know what, in our state we are doing this policy, oh, very interesting. So, and then you take that and try to copy-paste into some other state. What we need to do is perhaps do it faster

[00:47:53] from what I hear, the power distribution reforms that Odisha has done are absolutely transformational. But, of course, there are political challenges in implementing it in other states as well, but if, say, five or seven big states implement that, I think a large part of our problems will get solved on the power side. So, for all of these big changes, do we need like a nice juicy crisis?

[00:48:23] Because, I was just reading about some of the politics and the economics around the 91 reforms, right? And, I came across this lovely phrase which is optimal crisis, something that forces a change but doesn't wipe you out. right? Now, we have a whole buffet of crises to pick from, right? Do you think that something like this will actually force a change and get us to do some of the hard stuff? So, last April,

[00:48:53] there was five, six of us were meeting the Singapore president, President Tharman Sharmugratnam and he made a very cryptic remark. He said, you know, India's tragedy is its large size and its glorious history and so, we kind of, all of us agreed on the large size and the glorious history but we wondered why it was tragic. So, his point

[00:49:22] was that this is why you don't change. People change when there are the existential risk. Like, you know, you can keep telling someone that you should work out, you should be healthy, don't eat this, don't eat that, till they get a medical scare, they don't change. Societies are something like that, that they work like something like that, that they, so big shifts, big changes

[00:49:52] happen when, because see, at any point of time, there is vested interest in the status quo. People who are used to a certain amount of income, there are people who are used to a certain hierarchy. Positions, cynicars, everything. Correct. So, if you are seen as disrupting that, there is a natural resistance. And what I have seen in government is that at any point of

[00:50:22] time, on any big decision, there are 150 people who don't formally need to sign on the document, but who need to nod, meaning that they need to agree with what is happening. 80% of them generally don't know much about the subject. And I don't mean it cynically. It is like whenever you get into a leadership position in a company, you will be asked to take decisions on things you know nothing about. So, you would wonder why are you asking me this?

[00:50:51] But someone needs to take a decision. And so, this I think happens very often in the government also. And so, the consensus formation happens very easily when everyone is focused on one problem. That look, energy availability, the fact that we import so much of dense energy, the fact that only 15% of India's energy consumption is in the form of electricity. China was here 20

[00:51:21] years back. China is now at 25-27%. Japan is at 32%. Why aren't we electrifying faster? Why is our power pricing so distorted? Now, these are questions we've been asking for 30 years. At least electrification question I've been asking for a decade, but that is the power pricing question I know has been asked for 30 years. But it was too politically difficult. But it is only when you come under

[00:51:51] pressure, and you realize that, oh my God, if we are not doing this, we are paying through our nose for oil and gas that we import, change will happen. So, you're absolutely right. I think the crisis forces consensus to be built because the people who are opposing understand understand that this is, even if they don't understand,

[00:52:20] at least they understand that, they don't understand the reason behind it, they understand that if they stand up and oppose, no one is going to listen to them. And the people who are driving that reform have a stronger voice and they try to push it through. So, you need a crisis, though I think there are things that can be done even without a crisis. So, the implementation of GST did not need a crisis. It was a huge policy risk. Massive political consensus

[00:52:50] and so on. Yes, it required significant consensus building. It may not have worked. The risk was that you could have lost a lot of revenue. And the state would have shrunk and it could have created a lot of inflation. I mean, many ways it could have gone wrong, but it didn't. And that's the kind of policy risk I'm talking about. I think more of those, I think the potential growth then starts to go up.

[00:53:21] As of now, are there other tough reforms that need to be undertaken? Absolutely. If we like, you know, funding cities, now, the link between balance of payment crisis and urbanization may not be very clear to everyone. Meaning, ours is linked. They are linked because if your cities are more productive, if your cities are more efficient, you can

[00:53:51] manufacture faster, you can get talent concentrations. Why do cities work? because a lot of people, talented people, dense population clusters come together and then they innovate faster, they solve problems faster, they can collaborate faster. And if you can't have efficient and large cities, you miss out on that. So, you'll realize that there's this pattern of, you know, you feel that when you go from,

[00:54:20] say, a small town like Bokaro, where I grew up, with 5-7 lakh people, you come to Bombay, the pace of change is, the pace of life is so much faster. And so, it is that because you're living in a larger city and you are by force to be able to afford to live there, meaning the cost of living is much higher, you are forced to

[00:54:50] interact, work harder, of course, and interact with a larger number of people. your interactions are also a lot more faster and transactional. So, people think people are selfish, but that's the cost of living in a big city. So, there is a certain structure of life, structure of interactions which drives productivity. And so, having more cities where there is the hard infrastructure, the power,

[00:55:20] the connectivity, opportunity, all of that is extremely important. And once you have that, then you can be innovating, you can do more R&D, you can have factories which have very differentiated products, you can provide services which no one else can, and that then, again, is a direct bearing on your balance of payment. So, I would say that while there is an emergency

[00:55:50] measures, there may be some emergency measures needed in order to get a few tens of billion dollars of capital in so that the balance of payments, at least for this year, is adjusted. But from a medium to long term perspective, I think we have to completely prioritize productivity, urbanization, reduce regulations. So, yeah, and all of these things happen only when there is a crisis. So, going from let's say

[00:56:20] GST and PLI to something more wide-sweeping like, let's say land, labor, judicial reforms, or even like reforming the bureaucracy and so on, right? I mean, we won't take one at a time, but then for all of these broad reforms, what is even the starting point, right? I mean, because there needs to be like massive political consensus, there's going to be massive displacement in the short term, right? There are going to be political consequences

[00:56:50] as well, right? So, I heard Prime Minister Narasimha Rao famously said in the 91 time that not a single worker will be fired, right? Or will be let go of. It's another thing that, I mean, our, what is that, hiring as well didn't go up in the following three, four, five years as it should have with all the capital that we attracted, right? So, it seems like a very hairy, complex problem to even get started on any of these axes, right? Is there a common antidote or a prescription that you would have for any

[00:57:20] of these to get started? The first is, as we discussed earlier, you can make it more bite-sized. Let the risk-taking happen happen in smaller sectors. So, you don't have to necessarily do it at the central level, meaning at a national level. You can let state governments drive some of the reform. This is exactly how even China has done it. There's something to be learned there, that you do these experiments, policy experiments in one province

[00:57:49] and if it succeeds, then, copy-paste it into others. You can even move the people from there to drive the change everywhere. Like, for example, the Delhi Metro Rail Corporation has been running the Metro Rail projects across the country. So, you have one good Metro Rail project and then suddenly 20 other cities benefit from that expertise. But you have to make sure that those changes are being experimented upon somewhere

[00:58:20] and make sure that someone is evaluating the consequences of that and amending it and then trying it again. Once it starts working, then copy-pasting it everywhere else. So, I would say the most obvious way to handle the policy risks that you attempted in a smaller sector, a smaller state and then copy-paste it elsewhere. Especially on things like land and labor, which is finally a state subject.

[00:58:50] these are state subjects. There is, I don't think, much opportunity to do big reforms at the central level. Even power distribution reform. It is something that state governments have to do themselves. And different states will try out different things. So, as I said, Andhra Pradesh can try out giving a data center a DISCOMM license. Maharashtra can try

[00:59:20] to sort of create a separate SPV, which holds all the losses from selling subsidized power to households and farmers. And then have a DISCOMM which is viable and profitable and try to list it. So, once you do that, then it becomes very hard to then merge it back to that SPV. Right. So, again, for most people, this is too slow a change.

[00:59:50] The way I see it, at least they're moving in that direction. And so, different states try out different things. And maybe Odisha, which has actually done very well on the DISCOMM side, power distribution company side, their lessons are now being used by the central power ministry to educate the state government that look, this is how things have been done. So, some of the reforms that are happening under

[01:00:20] the Dr. Somanathan committee and Rajiv Goppa committee, these actually are designed along this pattern. Meaning that last year, the Somanathan committee listed down 23 reforms. they included things like allowing women to work the night shift in services sectors. There was a requirement

[01:00:50] of 15% of land in a factory being allocated forcibly to greening. They said this is not necessary now. Some 16-17 states accepted it, which means that in those 16-17 states, factories now have 20% more land than they used to. 85% became 100%. So, they have listed those and 76% of the reforms were accepted.

[01:01:20] 10% are under implementation already. 76% have been implemented, 10% are under implementation. So, 86% effectively were accepted by the states. standards. This year, they have taken a new set of reforms. And, for example, I think partly acknowledging that government schools beyond the point actually are a cause of inefficiency. They are freeing up the requirements to set up private schools.

[01:01:50] So, for example, why do you need a mandate that you must have a playground to be able to start a school? So, while it is important for kids to play, why mandate it? So, let the parents and the students take a call. So, there are some certain very important things that are happening where the states are being advised, being counseled, and positive examples from states are

[01:02:20] being made available. Some of this is very nerdy, in the weeds kind of reform. But I think the 3, 5-year, 10-year impact can be quite significant. So, it may not be visible, but it's underworks, and its impact may show up positively in bite-sized chunks, let's say. So, we have spoken about one of the external factors, which is this whole geopolitics piece, and there I feel like the

[01:02:50] rule-based order, actually the positive thing is we'll get to renegotiate some of our relationships, and perhaps we may do a better job at this point of time, considering that we're larger, we're growing at a much higher pace and so on. So, it may be a positive for us. But then, when we think of AI, we spoke about how it can help us bridge capacity, for instance. But it also feels like we have our manufacturing sector, which is not completely developed. Now, our services is, at this point,

[01:03:20] of course, it has been thriving, it's kind of helping us out. But AI might threaten services, right? So, how do you see the impact of AI on India as a whole? So, there is, there is, so AI has value in generation of intelligence, where India is mostly absent. investment. So, AI, you know, the trillion dollars of CAPEX that is being planned,

[01:03:52] the fact that we don't have GPUs, we don't have semi manufacturing, we don't have memory, we don't have large language models. So, there is a lot that we don't have, and that's clearly, and we don't have the venture capital to even fund that. So, our best models would get $50 million of funding, maybe $100 million of funding. The US large language models get $30-40 billion every six months. So,

[01:04:22] it's like a thousand time more investment. while we may be better off at using that minimum dollars, but, and it's the same problem with China. It's not that China is much better off. They're much better off than us, but compared to the US, they also can't afford to have that level of risk capital. Right. Because their funding also can't be of that scale. Whether it is needed or not, time will tell, but anyway. So, on the generation of intelligence, I think we have a lot of catch-up to do, but as of now, it's not a

[01:04:52] big driver of economic activity. So, we are funding models like Sarvam and Bharat Jen, which I think in a couple of years' time will become quite powerful and useful for the country. We have startups which have venture funding. Even some of the funds that RDIF is evaluating have invested in semiconductors. In fact, that's one of the focus areas that the RDIF

[01:05:21] is targeting. We have transformer companies because there's a big shortage of transformers in the US because power supply for these data centers is a huge issue. There are Indian transformer companies which are massively increasing their capacities and their revenues will rise in the next couple of years. So, we are working on those, but I'm not sure that in the next 3-5 years it will be very substantial. On the deployment of AI, because see, it's not just the generation

[01:05:51] of AI is like setting up a highway or building a highway is GDP. But then using that highway also adds to GDP. And so, we are not part of building the highway, but we are definitely going to be driving on that highway. And we are already starting to drive on the highway. So, across a range of firms and across a range of sectors, the unit cost adjustments, so to

[01:06:21] explain what I mean, if, say, banking as a sector, if you only had branch banking and it cost 100 rupees per transaction, there was a certain percentage of people in the population who could get access to branch banking. Now, if you don't have a bank account, it becomes an issue, it becomes a productivity destroyer.

[01:06:49] now, it was a virtuous cycle where over a period of time you would see incomes growing slowly, more people getting access to bank branches and banking bank accounts and therefore growing their economy. It was when you were able to bring unit costs down from 100 rupees to 1 rupee, that suddenly everyone got Jan Dhan Yojna, then you build UPI and those were very transformative changes that happened. AI will allow us to do

[01:07:19] many of those changes. So we discussed education and health, but it could be an urban design that, one of the reasons why city governments are not given capital because they don't have anyone other than sweepers and clerks. So if you can't even design a small bridge, why should the government give you money? But now with AI tools solving those problems or look at some of the ads that get thrown by some of

[01:07:49] these generative AI companies in India, those are, I don't know how helpful they really are in real life, but the use cases they are demonstrating are actually very good examples of how AI can help. For example, if you're a small wall manufacturer in UP, how do you know which customer to approach in Europe? It mostly tended to be serendipity that you met someone and he said,

[01:08:18] oh, you have a great product, why don't you come and see us? Or you go to an exhibition or some trade show and throw your visiting cards and seek someone out. But here, you can get access to that knowledge. You also get access to what are the requirements? I mean, there's this funny ad about this lady who goes to get a home loan, you must have seen that, you know, and the guy who she goes to is packing his lunchbox and very

[01:08:48] gleefully about to stand up and say that, I'll just say, did you get these 15 documents or not? And very often she will not have that. So he was, and then she just starts throwing. But you know, these are funny ads, but actually they're real productivity enhancers. Not about home loan documents, but I'm saying that just knowing the process, what certifications you need to be able to sell to Europe, how do you get access

[01:09:16] to supply chain, how do you get access to dollars to be able to import something so you can export. All of that is expertise which was missing. But now it is just like, you know, the PDF of exotic maths and physics books to prepare for JE is now circulated and available everywhere. You have this intelligence available everywhere. So I think when it comes to using AI, deploying AI, I think India will do really, really well. You don't think it will threaten our

[01:09:46] social mobility in some sense? Because right now we are in this weird transition phase where we don't know what skills are going to be relevant. And so the old ways of study, get a degree, get a job, get married, maybe a car, house and so on, that ladder seems to be on very shaky ground at this point. I am not so sure. It will be a turbulent time. It is not to say that there won't be readjustments.

[01:10:19] But outside of a few sectors, I don't see that big a change in the sense that out of 620 million workers in India, there are 5.5 million workers in IT. There is another 2.5 million maybe GCC and BPO and all that. And there is about 3 million people in banking. A few lakhs of lawyers and media. So that's about it. 20 million. So, no, they generate a lot of income.

[01:10:48] But the point I am making is that so long as it is not leaking outside the country, it is all going to get like, you know, if say banking suddenly cost to income ratios drop from 40% to 30% because you are able to target customers better, you are able to evaluate customers more efficiently, you are able to give more loans, you can generate more income from the same set of people. That's great for the economy. So, it may mean lower margins,

[01:11:19] because some of this will get competed away, but it can be very powerful. Now, the social structure, see the hierarchy formation, frankly, humans are very good at. You look at kids on the playground, they form hierarchies on, again, want to use crude stuff, which boys do, but who has how long a hair, whose hair is curly and whose hair is straight, girls will do that. So, hierarchy formation will be

[01:11:49] able to manage. I don't think humans are, that's never been a problem for us. That's in our genes. Those things I worry less about. Will there be a lot of disruption? Maybe not. Because what you're realizing, even in the software development community, is that the best users of generative AI coding tools are the star developers. The mediocre ones do

[01:12:18] sloppy code. So, I think, see, it's going to be a learning curve. I think what I like to say is that the org boundaries will shift, meaning after Jack Welch did the outsourcing boom in GE, 30 years we've been seeing steady increase in outsourcing of IT. As the sprints become shorter, meaning from business requirement to deployment is one week,

[01:12:49] you would want to keep it inside the firm, not outsource it. So, GCCs may become more sort of bigger employment generators than IT services companies. You never know which way it's going to go. So, there's going to be uncertainty and churn, but I'm not very negative on the impact of this on the economy. At a net level, I think we will be big beneficiaries. Final question, which is that as societies become richer, they also become sort of demographically

[01:13:19] a little more fragile. I listened to some of the discussions on the female labor force participation that you mentioned. But there is also a case where if you look at Korea or Japan or China, the TFR is precarious at this point of time. So, how do we avoid that? How do we make sure that our society as well is... Find an enemy. So, the economy where... So, you know, that impossible

[01:13:49] E's, three E's of demography, ego, economy, and ethnicity. So, if you have high ego, you'll have fewer kids. But if you... I mean, if you give yourself too much importance, you'll have fewer kids. But if you want a stronger economy, you don't want to have more kids. So, you can balance either economy or ego. If you want to balance both, so you want to do well in the economy, but have fewer kids,

[01:14:19] you have to let go of ethnicity. So, you let immigration happen, which is what the Americans do. But if you don't allow ethnicity dilution, then you get stuck in the Japan and Korea and China model problems. The other issue that exists in these societies versus, say, US, in the US, 50% of kids are born out of wedlock. Which is a crazy number, right? I mean, unthinkable in some sense. It has been

[01:14:49] happening for decades. I know, but it's shocking for us, right? Most people in Asia, including North Asia. And so, if you can't have kids out of wedlock, and the women don't want to marry because it is too because of the cultural norms. Again, this is where if you do accelerated economic development, the culture doesn't change as fast. The women are still supposed to be doing the dishes and compromise between the two husband wives. Someone has

[01:15:18] to compromise the wife will have to do that. Why should I do that? I've studied as much, I'm as smart as this fellow. Why should I just give up? So, they don't want to have kids. And you can't have kids out of wedlock, so they don't marry. So, they don't marry, they don't want to have kids. kids. So, the Israelis have managed a fertility of over three, despite very high per capita income. That, as you can imagine, whether you're surrounded by enemies,

[01:15:50] then I guess we shouldn't be laughing about it. point is that, so socially, I think if we learn from what the Americans, Claudia Gorlin's career and family, the reason why we wrote that report on female labor first participation, it was very inspirational. What they went through over 100 years, we need to go through in 30 years, because as I said, we have to do two and a half, three times faster. So if

[01:16:19] they solve the enrollment and the cultural norms and the marriage penalty going away over 40 years, we need to do that in 15 years, they're still struggling with motherhood penalty, because the motherhood penalty that, you know, the moment of, so boy and girl graduate out of college, they're earning the same amount, and they keep doing, the girls that don't become mothers keep earning like that, but the girls who become a motherhood penalty.

[01:16:50] How do you minimize that? If you can't minimize that, then fertility will fall. And so this is the conundrum, but there are solutions to that, you know, you work on, of course, overall job creation, but also create part time work. So there, see, if you identify that as a problem and there is a fair amount of consensus, you will never get a 100% consensus in a diverse place like India.

[01:17:20] But if you have a fair degree of consensus, you can start solving some of those problems also. Okay, on that optimistic note, we'll end the conversation. Thank you so much, sir. This was a fascinating, fascinating chat. Obviously, one can talk to you for hours, but you've taken time out of a very, very busy day, month, year, perhaps. So thank you so much. I'm very lucky to get opportunity to work. Thank you. Thank you for having me.