How India's Economy Can Break the Mold

Grand Tamasha

Breaking the Mould: India’s Untraveled Path to Prosperity is a big new book by the economists Raghuram Rajan and Rohit Lamba. The book is both a critique of India’s development model as well as a manifesto for reform.

Most notably, it challenges the conventional wisdom that India’s primary goal should be to transform the country into a blue-collar manufacturing powerhouse. Rajan and Lamba argue that India cannot duplicate China’s development model, but it has the opportunity to leapfrog by focusing higher up the value chain.

To discuss the book’s ideas and its policy implications, Milan is joined on the show this week by Rohit Lamba. Rohit is an economist at New York University-Abu Dhabi and will soon be joining the Economics Department at Cornell University. He’s twice worked in the chief economic advisor’s office in the Indian Ministry of Finance.

The two discuss what the critics get right about the Indian economy, why India cannot blindly follow the Chinese model, and how India can pivot “from brawn to brain.” Plus, Rohit and Milan discuss the manufacturing versus services debate, India’s inward economic turn, and what India must do to upgrade its human capital.

Episode notes:

1. W. Arthur Lewis, “Economic Development with Unlimited Supplies of Labour,” The Manchester School 22 (1954): 139-191.

2. Rohit Lamba and Arvind Subramanian, “Dynamism with Incommensurate Development: The Distinctive Indian Model,” Journal of Economic Perspectives 34, no. 1 (2020): 3-30.

3. Devesh Kapur, “Why Does the Indian State Both Fail and Succeed?" Journal of Economic Perspectives 34, no. 1 (2020): 31-54.

4. Devesh Kapur, “Exit,” Seminar 677 (2015).