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Before you listen to this episode of The Scene and the Unseen, I have a recommendation for
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Do check out Pulya Baazi, hosted by Saurabh Chandra and Pranay Koteswane, two really good
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Kickass podcast in Hindi.
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Economics is often called the dismal science and indeed most people find it very boring.
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GDP, inflation, fiscal deficit, this policy, that policy, who gives a damn.
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Even when it comes to something like the union budget, which gets so much media coverage,
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people look for one line takeaways that tell a simple story or just look to see what's
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The remaining numbers are meaningless.
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Now I object to this attitude.
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It should not be this way.
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The economic policies of our governments impact the lives of millions of people, can even
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destroy the lives of millions of people and have moral significance for that reason.
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I always say, for example, that some of Indira Gandhi's economic policies kept millions
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of people in poverty for decades longer than would otherwise have happened and for that
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reason deserve to be termed crimes on humanity.
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More recently, Narendra Modi's demonetization, which I repeatedly refer to as the largest
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assault on property rights in human history, was a similar humanitarian disaster in terms
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of the suffering it caused, leave alone the actual deaths.
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And all of these horrible economic policies are implemented using force through the one
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entity that has a legitimate monopoly on violence, the state.
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India is a democracy, of course, and the state is supposed to be subservient to the wishes
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And that makes it imperative that all of us common citizens pay more attention to economics.
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Economics matters, public policy matters.
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They affect our lives in a million ways that go unseen.
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Welcome to The Scene and the Unseen, our weekly podcast on economics, politics and
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Please welcome your host, Amit Bhatma.
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Welcome to The Scene and the Unseen.
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In the last few episodes, I've taken deep dives into history and philosophy, discussing
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books by the likes of Ram Gohar, Tyler Carvin, Steven Pinker, Gyan Prakash, Matt Ridley and
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I even had an episode on cricket with Harsha Bhogle.
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But no matter where I go, I'll always come back to economics because, hey, it's bloody
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Even today, I'm going to have an episode every few weeks that is an economics ramble.
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I'll just ask a couple of economist friends to drop in and we'll chat about the economic
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landscape around us and try to illuminate more unseen effects of the policies of our
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My guests today are both good friends of mine who have appeared on the show, and I hope
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they'll remain regular guests as time goes by.
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Vivek Kaul is India's most prolific economics journalist.
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He writes an average of 33.2 pieces every week for various publications in India.
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He's also written four books, The Easy Money Trilogy and India's Big Government.
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You can buy them all on Amazon.
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My second guest today is my good friend Kumar Anand, with whom I have had more cups of coffee
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than any other person alive.
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So when I die of liver failure, you know who to blame.
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Kumar is an economist who currently works with Naidisha and he also put together the
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Indian Liberals Project.
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Before I begin my conversation with Vivek and Kumar though, let's take a quick commercial
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Kumar and Vivek, welcome to the Scene in the Unseen.
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So Vivek, you kind of got here a little late because you were stuck in Bombay traffic and
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for that reason you haven't heard what I said about you in the introduction.
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You'll hear that when the episode comes out and for that reason also we won't have a particularly
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long episode today, maybe an hour or so and we won't go into some of the reader questions
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that we asked people to submit on Twitter.
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Those are for next time.
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This is going to be a regular feature.
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Hopefully you guys will kind of keep returning but that's enough of me rambling and let's
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get to the economics ramble part of it.
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Vivek, we are recording this on Feb 7th and the Union budget was just out last week.
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What were your views on it?
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I know you've written some 83 pieces on it already.
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No, I just wrote around 8.
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But that's not, I mean I'd written 11 a couple of years back and this year I didn't write
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So before we get to that, do you repeat yourself in these 8 pieces or do you find different
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Yeah, of course, of course it can't be.
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See, in an interim budget, it would be difficult to write 8 new pieces but in a fresh, in a
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normal budget, 10-11 pieces is pretty okay.
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There's nothing great about it.
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You can easily write 10-11 new pieces.
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Before we go back to the question, just to sort of digress, all the listeners obviously
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know that Vivek Kaul is the most prolific writer out there and you're writing some 50 pieces
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a week or whatever it is.
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What's your work ethic like?
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How do you manage to write so many pieces?
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No, so see what happens is, no, so I don't write 50 pieces a week, so in a good week
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I write around probably 10-11 pieces, in a bad week I write around 5-6.
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Kumar and I are suppressing our laughter, like 10 pieces toh kuch bhi nahi hai, koi
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So what you said in the intro.
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So basically, see, it's, it's, it's, what happens is in many pieces, like I wrote 3
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pieces for Equity Master this week on the budget and they were all…
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So basically I wrote one piece on how, you know, the fiscal deficit should not be taken
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Then I wrote another piece, while writing that piece, you know, the second idea on how
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FCI, Food Corporation of India is used to sort of manipulate fiscal deficit numbers.
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And then I wrote another piece on how FCI is used during election years to sort of,
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you know, benefit the political party which is in power.
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So if you look at the core idea at the, you know, heart of these 3 pieces, it was basically
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But given that, you know, if I had figured everything out at the very beginning of writing
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the first piece, I would have written only one piece.
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But what happened was, you know, when writing the first piece, I figured out the second
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one and when I wrote the second one, I figured out the third one.
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So it's like a Chinese box of rabbit holes.
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So you keep saying the economy, when you write on the economy, there are so many things that,
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you know, one thing leads to the, you know, leads to another and if you are curious enough,
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I don't think writing 6-7 pieces is a big deal because ultimately it takes around what,
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2 hours to write a thousand word piece, not more than that.
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So on that, and given that a lot of it is basically you're building on something that
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you've already written.
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So you're essentially, it's all there in your head.
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You're just, you know, rewriting, like if you were to ask me to write on the fiscal
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deficit, so 300, the basic 300 words on what is fiscal deficit, why is it important?
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I mean, all that is already there.
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So you're not like reinventing the wheel in the stricter sense of the term.
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So basically most columns that one writes are not written from scratch.
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So let's talk about the, let's shift attention from yourself to the budget, which was mine.
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So I just thought, you know, it was an out and out election budget.
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I mean, like interim budgets tend to be and what was disappointing was the fact that some
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good schemes were launched without any preparation.
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So take the biggest thing in the budget, which was PM Kisan, essentially an income support
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scheme for farmers, small and marginal farmers with landholding of around two hectares, which
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So now, you know, the basic problem here is that the government wants to give them 6,000
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rupees per year, 2000 rupees in three installments.
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And in order to ensure that they do it before elections, the scheme has essentially been
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initiated with a retrospective effect of from December 1st.
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So basically by March 31st, before March 31st, the first installment of 2000 rupees should
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have reached these farmers.
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Now the problem is how will you identify these farmers?
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I mean, who are these farmers who have, you know, two hectares or less or households,
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farming households basically.
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Now for that, you need the digital land records, which are not available through the length
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and breadth of the country.
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You know, a state like Karnataka has land records, but a state like Bihar, which actually
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needs this support, you know, there is nothing there.
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So or even Uttar Pradesh.
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So even, you know, these are the states which actually need, you know, need the support.
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The second thing is a lot of people have pointed out is that many of these people who own this
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land are no longer farmers, you know, I mean, they're probably living in cities and it's
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someone else who's farming on their behalf.
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So what happens to them?
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Then there's the other, there is a pension scheme, which has been launched for people
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in the informal sector.
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So just go back to the hand out to farmers, I mean, which comes to really 500 bucks a
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month for each of them over a year, which isn't much at all.
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So even assuming implementation could be perfect, you could identify all the farmers and actually
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Do you really think it would make much of a difference?
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I mean, see, it will not make, it will make some difference, you know, for, so, you know,
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again, to sort of, if you look at the income inequality that prevails through the length
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and breadth of India, now in a state like Bihar, which has a per capita income of around
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38,000, a 6,000 rupee payment per month will definitely make a lot of difference.
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Do you think it would make a difference in Bihar?
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But Kerala also has a lot of, you know, marginal farmers, because if you look at plot sizes
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in Kerala, agriculture plot sizes, they're very, very small.
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In fact, they're smaller than that, those in Bihar.
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So Bihar, I think the average plot size is around 0.5, 0.51 hectares.
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In Kerala, it's around 0.3, 0.33, something like that.
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And just off the top of your head, then what would you, what would you say are the chances
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that something like this can be implemented?
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So all these poor farmers in Bihar actually get the money.
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So which is, see, that's the irony of the whole situation.
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You know, states which have better land records actually do not need these schemes as much
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as states which do not have land records.
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So you know, in an ideal world, this should have been done in May 2000, July 2014, when
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the first budget was presented.
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And the next two years or whatever time it would have taken should have been spent in
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building these records, in building this database.
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Like the government went around, you know, building the Aadhaar database or opening Jan
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This should also have been done on a similar war footing.
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Then you know, it would have made, it would have made some difference.
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Except now when they're desperate for votes.
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And I don't see how it's going to be implemented in a period of less than two months.
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Kumar, what are your sort of views on handouts like this?
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I'll just go back to the question you, the secondary question that you had asked related
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to the income support, which is, will 500 rupees per month on the average will make
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I think it will make a big difference, a huge difference because the money in your pocket
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that you receive from the government or when you earn, always makes a difference to you
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So for someone who does not have anything, 500 or 2000 rupees on the margin is a, it
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could be a big, big amount.
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You know, imagine if you don't have anything, those first hundred rupees is what will get
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you your lunch or breakfast, you know, not on the margin.
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So again, just to take his point forward, now, Bihar, the per capita income is 38,000,
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So per capita is essentially the mean that we're talking about.
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The median income would be even lower.
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So the income of an average Bihari would be much lower than the per capita income in the
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So let's say someone who's making 20,000 rupees a year or 15,000 rupees a year, I mean, 6,000
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rupees is a huge, make a huge amount of difference.
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So it just depends on which part of, there are large parts of India where this is needed.
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And what government is estimating, I think is about 12 crore families it will cover.
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So which is about half of the households, the entire household, there are about 25 crore
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families in the country.
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So 50% of the households will get covered at this.
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So to me, it looks like a big scheme, well implement, whether it will get implemented,
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whether everyone will receive the money is a different question altogether.
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So I'm not very hopeful about that.
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So before we go back to the budget, this is actually a good time to sort of take a diversion
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for a moment and talk about the Congress's promise of the minimum guaranteed income
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Because that again appears to be a similar way of not actually caring about fixing structural
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problems, but here's a handout and we'll bribe you and get your votes and whatever.
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And Kumar, I know you wrote a very long essay recently for a French publication on the UBI.
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And this of course is not the UBI, but can you share some of your insights from that
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and therefore what you think about this?
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So I think people who are policy wonks have started describing these programs as QUBI,
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Quasi Universal Basic Income.
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So both Congress's proposal week before the budget came out and now the BJP's proposal.
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The Congress proposal, I would say on the margin is worse than BJP proposal because
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what they are saying is that they will identify a poverty line and anyone falling short of
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that, they will provide the bridge.
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So suppose if I have said that one lakh rupees is the per annum income is the one where everyone
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should get, if you are falling short by 50,000, I'll give you 50,000, if you're falling short
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by 80,000, I'll give you 80,000.
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Now what that means, the guy who is deciding how much money you are falling short of…
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Tremendous discretion, corruption.
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So in fact, the next job that I will be looking for is that if I can be the person who decide
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how much you are making and therefore the bridge to certify it.
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I mean the system can be framed so hard.
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So of course, and in all of this, the big challenge is the fiscal constraint.
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So once you start on this road, a country which is developed with per capita income
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of 40,000-50,000 US dollars can think about doing it.
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As part of the research when I was doing on UBI, I learned that Hillary Clinton very seriously
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considered running on the platform of UBI and abandoned it because the numbers didn't
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They certainly don't add up for India and once you start, every budget you will see
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more and more promises in terms of numbers.
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My largest philosophical question is there's always going to be a trade-off between growth
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Do you grow the pie or do you redistribute parts of it?
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And that is a trade-off which when a poor country like India whose first imperative
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is to remove poverty, I'm not sure if that's sort of a trade-off we can afford to make
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on the side of redistribution.
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We need to grow wealth first and what are your sort of feelings on the broad, this philosophical
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outlook that we will do handouts and we will bribe voters the best we can to get their
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votes and ultimately nothing really changes the poor remain poor.
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So this brings me back to the budget speech which I was reading and I've read it carefully
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One thing that stood out for me more than the income support for the farmers or the
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pension scheme for the unorganized sector laborers is 143 crore LED bulbs were distributed
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by the government, subsidized or in some form or the other.
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That means 1.1 bulb for 130 crore Indians.
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I never received that bulb.
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No, but that hardly means anything but these bulbs were available if you wanted to.
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It's not a point of the amount of money, it's also a point of your mindset.
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Yeah, that's the point I'm trying to make is that and once you start, it just kind of
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a bulb sort of went in my own head and you started reading some of the other paragraphs.
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So you did get a free bulb from them.
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So once you start reading all the other sentences, you realize that how a lot more attention
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has been given to the provision of private goods which you would assume that people would
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take care on their own, will provide work for it or whatever and provide for themselves.
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And the things that the government should be doing are public goods, national defense,
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law and order, et cetera, making sure that contracts are enforced, et cetera.
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Those are the job of the government and they will do it.
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Budget is entirely looks to me is focused on provision of private goods.
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Some of the things that are LED bulbs, of course, 6 crore LPG cylinders, you'd assume
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that is a classic case of a private good, building houses, building toilets as part
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of such a Bharat mission, which you would assume that if you really want to take care
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of sanitation and cleanliness, the way to fix it would be rather look at the root cause
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of it, whether it's property rights or devolution of power to the local governments, but rather
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than running a national mission on it, electricity connection and of course food grain, et cetera.
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It looks like you are engaged more and more increasing every year in the provision of
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The budget looks like to me that and which brings to your point, which is again the classic
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case of redistribution, you know, so almost all of this is financed by taxes one way or
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the other, whether it's inflation tax, deficit financing or through, you know, just tax revenues
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I mean, I wrote a piece about this in the Times of India this Sunday.
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So where I repeated a limerick I once wrote for the Times of India, which I'll repeat
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here, which is the limerick is called politics.
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And this is how it goes, a Neta who loves currency notes told me what his line of work
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We steal people's money and use some of it to buy their votes, stop code.
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And my contention in that column was that in India, all good politics will ultimately
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be bad economics because that is what sells and gets you votes.
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Do you agree with that Vivek?
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Why specifically to India?
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Sorry, would you say that it's true for all countries or is it particular to India?
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That's a good question.
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Yeah, the nature of politics.
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I think we wrote a piece on politics is equal to bribery sometime ago looking through public
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church lands and I think that would be true for all countries and not all democracies.
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It is rational for voters to remain ignorant about economics and therefore they will.
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And voters tend to think in zero sum ways and therefore, you know, handouts are attractive
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to them and they're not really short term.
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The scene, the unseen is far away and Vivek is twitching.
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No, no, but basically, you know, I don't complicate things as much as Anand did.
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My take is very simple.
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Basically Narendra Modi, the way I look at him, you know, he is essentially a narrative
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People call him a nation builder, but he's basically a narrative builder and he has been
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losing track of the narrative over the last four, five months.
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I mean, there is no denying that.
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I mean, you may, one may not like Rahul Gandhi, but he's come back forcefully over the last
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So this speech by Piyush Goyal and to his credit, he did a much better job than Arun
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Jaitley possibly would have was essentially an attempt to get control of the narrative
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And which is why he sort of went back, you know, went to, you know, if you look at the
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speech, it's essentially a summary of what Modi has supposedly done, how he projects
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I mean, it's just that there's nothing more to it.
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You know, he's talked about all, you know, all the talking points are there beyond that.
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It has talking points, which Modi can go and sell to the audience in the next three to
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four months, which not four months, but two to three months, which he will definitely
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be on the road and we'll be communicating with the people of the country directly.
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So it has given him these talking points, you know, you have the income scheme, then
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you have the pension scheme and everything else that he is supposedly done.
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I think it was nothing more than a good pre-election speech, which the finance minister did a commendable
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job of, you know, executing.
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So you know, even look at, I'll give you a very simple example.
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Now let's, you know, he talked about how the defense budget for the first time was crossing
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three lakh crore and everybody clapped.
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But then what was the defense budget up until now, you know, I mean, and if you look at
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the numbers, the increase is just, you know, a couple of percentage points, which is lesser
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than the prevailing rate of inflation, right?
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Where is this money going to a lot of this money in the so-called defense budget now
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goes towards salaries and pensions.
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It is not going towards, you know, what is, you know, actually most of our weapons, I
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forget the figure, but it's more than 90%.
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Most of the weapons the Indian army has are hopelessly outdated by decades.
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So, you know, so if you look at how the entire speech was structured, it was essentially
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structured to catch attention of people.
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It was structured to help the media, you know, if you look at newspapers these days, they
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are, there are special editions designed for the budget.
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And if you look at those pages very carefully, there are boxes, which, you know, in which
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point bullet points have to be filled.
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So these, it was basically, you know, the speech was very, very bullet point driven
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so that, you know, the media could, you know, catch on to these bullet points easily and
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repeat it, you know, during the course of the day or the next morning.
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The other point is, you know, in an interim budget, you don't make, you know, big changes
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like this, you know, like the income support scheme, but the BJP did it.
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And in fact, I was on TV on the budget day and the BJP spokesperson, in fact, two BJP
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spokespersons at different points of time justified it by saying, but the Congress did
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this in 2014 and did this in 2009.
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And you know, there is a line, which I like to sort of repeat and it's a line from the
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movie Diwaar, which is like, Auro ke paap ginane se apne paap kam nahi ho jaate hain.
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So, you know, two wrongs don't make a right.
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Bollywood's articulation of what about it.
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So, you know, two wrongs don't make a right.
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So, essentially this was an out and out election speech, election budget designed to help
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Narendra Modi and the other BJP leaders to sort of get talking points, which they can
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pick up and go talk about at, you know, various points.
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In fact, if you watch TV on the budget day, you would have realized that all BJP spokesperson
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were basically saying the same thing.
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They were not answering the questions.
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They had these three, four points, which they were just going and building the narrative.
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So, it was essentially nothing more, you know, just another exercise in narrative building.
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Also to sort of, you know, the limerick, you sort of talked about, you know, politics.
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There is a very nice line.
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There was a Shah Rukh Khan movie many years back called, Oh darling ye hai India.
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So, there is a very nice song in that movie.
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And I mean, I don't remember the song, but there's a nice line in that movie, in that
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song, which goes, jo bacha nahi, wo baat diya, you know, Oh darling ye hai India.
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So, what we haven't even saved, we have already distributed or at least planned to.
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So yeah, there's another point I wanted to make.
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So, so the Congress, you know, minimum income guarantee scheme, big 19, you know, which
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stand, you know, mixed, I don't know why someone else would have also, but I use it in a piece
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So, I don't know if someone.
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So it is your term, like pakoronomics too, who just knows of my show know this pakoronomics
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So, make 19, I think, you know, I look at it in a slightly different way in the sense
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that I'm not just talking about the Congress's scheme, but the entire scheme in any income
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support scheme, I mean, I think it's, I mean, I wouldn't have said this a few years back,
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but now I think having looked at enough data and enough Indian economics, I think it's
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necessary because you have parts of India, which will never catch up with other parts
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You know, if even if Bihar grows at 11%, I mean, it will, if Karnataka stops growing
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today, Bihar will probably get there in another 15 years.
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You know, whatever, if, you know, India is a nation, you know, attempts have to be made
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to help parts of the country, which are not growing at an adequate speed and which have
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I think, I think the larger point there is that you are right that in states like Bihar
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and all people are in poverty, it's our moral imperative to get them out of that.
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And that's completely right.
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But whether they catch up with Karnataka or not is not an issue.
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No, my point is the divide is just way too big.
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I wouldn't look at the divide.
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I would just look at the absolute numbers and you're right.
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The absolute numbers are abysmal, but to talk about it in terms of the divide is completely
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I'd rather talk about poverty than inequality because the two are very different and India's
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I mean at one level, yes.
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So what the point I was making was that now obviously, you know, you need a lot of money
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So this minimum income guarantee scheme, even though the details available are very sketchy,
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but from the way they've been talking, it would definitely cost more than 75,000 crore.
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Obviously, there are problems with the scheme as to how do you identify, you know, I mean,
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let's say the cutoff is 50,000 points, how do you figure out, you know, the person eligible
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is making that kind of money, especially in the informal sector where payments are in
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cash and also payments tend to vary.
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It's not like you get the same amount of money every day or every week.
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So how do you figure all that out?
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You know, it's easy if all the money is coming into a bank account and then you can, you
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know, do some 180 day average or something like that.
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But having said that, you know, I think it's also one, if the country were to look at a
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bigger income support scheme, I think it sort of makes sense because, and you know, we obviously
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have to fund it properly because that bill there would run into lakhs of, you know, it
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would easily run into 9, 10, 11 lakh crore.
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Now, so how do you fund something like that?
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And if, you know, in order to fund something like that, the only way is to, for the government
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is to sell all the assets that it has been sitting on what Mr. Anand's current employer,
#
Mr. Jain's been talking for a while.
#
So I think it's a reasonably good idea, but obviously it will not happen because no politician
#
worth his salt will do anything like that.
#
So if someone were to do it and do it properly, it would be an excellent way of curtailing,
#
you know, India's big government, which is in places which it shouldn't be.
#
I mean, the government should basically be concentrating on five, six basic things, defence,
#
external affairs, railways, roads.
#
As you keep saying, a strong and limited government instead of a weak, but vastly spread out.
#
But this is again a utopia, a utopian dream.
#
It's not going to happen.
#
And what will essentially happen is we'll have all these half-baked income support schemes,
#
which will operate on top of all the schemes that we already have.
#
Now, you know, this is a point I made in my Mint article.
#
So basically what, you know, Praveen Chakravorty has been saying is that, you know, they'll
#
be rational about the entire thing.
#
So obviously it means that, you know, they'll look at new ways of raising taxes and they'll
#
also look at ways of cutting down on current expenditure.
#
Now if you look at current expenditure, you will have to cut down on things like food
#
Now it's easy to talk about cutting down food subsidies, but the moment you start getting
#
into it, there are too many problems that crop up.
#
Now the first thing that will happen is that, you know, how is food subsidy offered?
#
It is offered through Food Cooperation of India, which buys rice and wheat directly
#
from farmers at a minimum support price, which the government announces.
#
This is then distributed through the public distribution system at a very low price to
#
meet the needs of the National Food Security Act and other welfare measures of the government.
#
The government then compensates the Food Cooperation of India for this subsidy that it offers.
#
And now if the food subsidy were to be cut down, then, you know, by its very definition
#
FCI would also have to cut down on procuring, you know, rice and wheat that it does.
#
If it procures less, then what happens to all the, you know, infrastructure that it
#
What happens to the public distribution system that is in place?
#
These are not easy, you know, there are too many entrenched and there are states where
#
the public distribution system actually works pretty well.
#
What about those states?
#
I mean, so why, you know, I mean, there will definitely be protests also, you know, I think
#
the two pilots which have happened for distributing cash instead of food happened in Pondicherry
#
and Chandigarh and I don't think they have, you know, received, they've been very successful
#
because the system that is, you know, is currently there is so well-entrenched that they've basically
#
managed to pull down the experiments.
#
So Kumar, let me cut to you here, since our friend brought you into the conversation himself.
#
Thanks for the plug, Vivek.
#
So you work for Naidisha, which is started by Rajesh Jain and I did an episode with Rajesh
#
a long time back where he explained his Dhanvapsi idea.
#
Another thing, what I have always thought about such handouts is that they are and ultimately
#
the UBI is at a vast level, just extremely unfeasible, the numbers don't work and there
#
are ethical issues with them as well for the large scale coercion that they involve.
#
But your point, what you guys say in Dhanvapsi is that this, you don't need to redistribute
#
to have a UBI, that you can have a UBI feasibly if you just look at all the unused property
#
that the government sits on, which is technically the property of the people and it has no business
#
being lying idle when it's not being used by the state.
#
So the state should sell it and use that money for the welfare of the people to whom it belongs.
#
Tell me a little bit more about that briefly.
#
The point is here is I'll go a little bit back in the history.
#
So since independence, we pursued the central planning model and the five-year plan.
#
And what we did to do the Soviet model planning, the big difference between Soviet Union and
#
India of course is that India was a democracy while Soviet Union was not.
#
We had private property as a fundamental right, property rights as a fundamental right, but
#
Every resource there belonged to the state.
#
So to pursue planning, the only way you could do those planning if resources are available
#
So in this period of time, the Indian state has continued to accumulate more and more
#
So you'll remember the recent piece that I did for Prakriti with my colleague, Rishu,
#
which is about how the number of CPSCs has grown over the years.
#
In 2013-14, when the current government came to power, it was 290.
#
And as of 31st March 2018, the number stood at 339.
#
So they have added more than about one CPSC every month that they have in power.
#
So the state has continued to amass more and more resources in case of CPSCs, land, minerals,
#
So you nationalized all that.
#
70% of the banking business is not accounted for here.
#
So if you take all that into account, then the ballpark figure that we have is that at
#
the rate of one lakh rupees per Indian household, you'll be able to finance the return of this
#
Remember, I'm calling it return of wealth.
#
That's why it's called the term Danwabsi and not a universal basic income, which is financed
#
out of taxes or some sort of redistribution.
#
It is redistribution, sort of, but taking away from the state itself, which over many,
#
many years has continued to amass and currently which is lying either unused and was still
#
So you monetize it, put them into a fund which is different from Consolidated Funds of India,
#
and use that fund only for the purpose of returning it back to people.
#
So it's not used for government's current consumption purposes, but money directly hands.
#
So we call it the right way of doing UBI, just to get into the conversation on UBI,
#
because people are talking about it.
#
And as we discussed earlier, that how India absolutely does not have the fiscal bandwidth.
#
This is one way that you can do it.
#
So all the resources which are lying idle.
#
But as Vivek rightly said, you know, politically, it looks quite improbable.
#
But at the same time, if enough people talk about it, and if people start looking at it
#
and demanding it, then I don't think it will be, you know, an impossible thing anymore.
#
On that incredibly hopeful note, let's take a commercial break.
#
It's been another awesome week on the IVM Podcast Network.
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On Cyrus's, Cyrus talks to comedian Neville Shaw about going to the same school as Freddie
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On How to Citizen, Meghnath and Shreya speak to comedian Abbas Mohamed, that's our very
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They try to understand our free speech laws and what exactly is dissent.
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On the Filter Coffee Podcast, animal activist Anand Siva joins Karthik Nagarajan to talk
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about animal cruelty and environmental conservation.
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On Geek Fruit, Tejas and Zinkar are joined by producer Janam to discuss the mind-deafening
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films of Christopher Nolan.
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They talk about his beginnings, his first films and the moment where he became the modern
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We have a Valentine's Day special and advertising is dead.
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Varu's guest is none other than his wife Pooja Jauri, who is also CEO at The Clitch.
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They talk about how they balance their personal and professional lives, how she's made creative
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people work under structure and a lot more.
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On Golgappa, Rajshri Deshpande of Sacred Games fame talks to Tripti Kamkhar about taking
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up challenging roles as an actor and her social work initiatives.
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And with that, let's get you on with your show.
#
Welcome back to the Scene on the On Scene.
#
I'm chatting with Vivek Kaul and Kumar Anand.
#
Moving away from the immediate for just a moment, I prepared a bunch of questions I
#
wanted to ask you guys and I'll start with you Kumar.
#
One economist all Indian policy makers should read.
#
I was reading this book again recently and I think for them to understand and the simplicity
#
of it, I think Milton Friedman, it would be free to choose Milton Friedman.
#
It's the simplicity with which he explains things.
#
So I think even a policy maker, politician or a bureaucrat will be able to grasp it.
#
And he had the best rhetoric.
#
So what about you Vivek?
#
Economics in one lesson Henry has read.
#
Which of course is based on Bastia's famous essay after which the show is named the Scene
#
Basically to understand the simple fact that there is no free lunch in economics.
#
And the scene and unseen effects of everything.
#
Both answers after my own heart and of course Friedman also has the excellent TV series
#
Which are the two iterations of 1990-1990.
#
And by the way, in one of the episodes he has come to India also.
#
He was in India thrice and this was his second trip where he was shooting as part of Free
#
He was a great thinker.
#
So just look up Milton Friedman's stuff on YouTube, it's quite fantastic.
#
And Henry has laid economics in one lesson of course which is based on the Frederick
#
Bastia essay that which is seen and that which is unseen which is just really bad translation.
#
It could have been translated more simply.
#
I don't think Vivek would have given it that title.
#
My question was one economist or Indian policy maker should read.
#
The next one was one book all India policy makers should read but both of you actually
#
I would like to add, I think the Indian politicians and economics should also read this book called
#
India Unbound by Gurcharan Das.
#
I also had the book in mind.
#
So Indian policy makers should read Lesotho's Mystery of Capital.
#
Understand the importance of informal economy and how important the property rights are
#
Which is a great book which is which is where I got the phrase debt capital from and since
#
then I just you know it's like in that Manoj Naik Shyamalan film Bruce Willis says I see
#
dead people everywhere.
#
I look around and I see dead capital everywhere.
#
Desotho would be very happy with me.
#
All the unused and misused lying assets.
#
Yeah, now you're pushing your agenda.
#
The next question, Vivek you go first for this one.
#
What is the one bad idea that all our policy makers share?
#
I mean you know I guess you would probably say that one bad idea at the central government
#
level is to keep launching new schemes because you know the Indian bureaucracy is like a
#
funnel where it's very wide at the top and when it comes to designing, planning, talking
#
about a new scheme they're pretty good about it.
#
Like I mean look at PM Kishan sounds very good.
#
But the moment you need to execute it the lower bureaucracy is already very very burdened.
#
So like you know in the 2016-17 economic survey Arvind Subramaniam had said that there are
#
950 centrally sponsored schemes.
#
So how is anyone supposed to keep track of that?
#
So launching one more scheme on top of that is remarkably stupid.
#
So take the you know the pension scheme that's been launched for the informal sector.
#
Now it's not like India doesn't have pension schemes.
#
You know there are enough public provident fund has been around since the late 60s and
#
it is available to anyone and everyone.
#
So you know you could have easily played around you know had an option in within that scheme
#
where the same scheme could have been implemented without you know going you know starting one
#
But then you know it wouldn't have you couldn't you know build a narrative.
#
You know in order to build a narrative you always need something new.
#
My answer is a bit similar to Vivek's.
#
Again when I was reading the budget speech felt if the common narrative there is the
#
government in this case the central government is thinking only they can do things.
#
So the number of new schemes which have the title Pradhan Mantri you know and the way
#
it starts you know Pradhan Mantri this Yojana Pradhan Mantri that Yojana.
#
So the Maibab Sarkar the notion the centralization so for me that one bad idea which all policymakers
#
want is centralization no matter what government there is they all pursue amassing greater
#
and greater power at the center.
#
The reason I say this is there's a lot of merit in decentralization of course you devolve
#
power to the local government but somehow that agenda or the narrative is not there
#
at all from politicians if there are local politicians no one is saying that why not
#
devolve power to the local governments we did those 73rd and 74th amendment way back
#
in 1992 it has been more than 25 years but they have not been implemented at least in
#
So I would say it is the continued centralization of power in the hands of central government.
#
I agree with you and to add to that I'll answer the question by saying that it's not just
#
a centralization instead the basic mindset that the state is a solution to the state
#
is or holds a solution to all problems that status mindset I think everything that India
#
has achieved has been achieved by Indian society and the Indians and despite the Indian state
#
and every time the state gets a little bit out of the way we do better like it did in
#
91 and I think this is fundamentally something that we don't understand because we don't
#
understand spontaneous order and how societies organize themselves and to fulfill their own
#
needs through markets for example and this is in fact the biggest cause of our agricultural
#
crisis I mean something that you know we've both written on many times that you know the
#
liberalization of 91 did not touch agriculture and agriculture is paternalized and it's
#
kept in the cycle of dependency and that's why we have this sort of massive.
#
So any distance making should happen closest to the people rather than further away.
#
Right now my next question is a related question which should be not so easy for both of you
#
guys what is the one good idea that all our policy makers share let's go with Kumar.
#
I think as far as the rhetoric is concerned so that may not be the case in actual policies
#
or implementation but almost every politician in the country while presenting the budget
#
or in you know appearing on television or speeches etc. do not ask for more taxes.
#
So they do not ask for increasing of duties and they talk about ease of doing business
#
with at least some kind of reverence you know though they may not be the best solution but
#
the thing that how that low taxes is good lesser regulations is good what happens in
#
reality is a completely different matter but at least you know no one is publicly opposing
#
a low taxes lower duties or ease of doing business I would say I have two observations
#
here I mean I mean one observation obviously is that some of the rhetoric has changed but
#
they don't follow out on the rhetoric and from this what follows is that this kind of
#
rhetoric the minimum government maximum governance kind of rhetoric is rhetoric that is appealing
#
to a small section of the elites who also happen to be in media and so on and is for
#
them only but they don't actually need to deliver on this because their constituency
#
which counts are the actual voting masses and they don't really care about it that's
#
that's sort of one cynical reaction to what you're saying the reality is different yeah
#
the other non cynical reaction would be that yes over time what we have seen is a shifting
#
of what is called what economists call the overton window the overton window essentially
#
is a definition of essentially indicates the window of acceptable discourse on a linear
#
scale which is normally organized around freedom and what happens is that over time that window
#
shifts and things that were not acceptable 20 years ago may suddenly become acceptable
#
today for example at a social level I've seen the overton window shift in my own lifetime
#
where if 377 had been abolished in the 1980s it would not have got the kind of response
#
it has today where today the response largely is that yes it needed to be abolished and
#
of course there are widespread celebrations and all that though maybe that selection bias
#
in play because I follow those circles but regardless of that I think in the 1980s it
#
would not have been like that at all and a lot of people just wouldn't have gotten it
#
and a lot of conservatives would have been more outspoken in the opposition of outlawing
#
377 and similarly in an economic sense I think there was a time where you know high taxes
#
were considered good and nobody would be talking about low taxation and blah blah blah and
#
I think I agree with you that it's a positive sign that they're talking about it but my
#
sense is they're talking about it for you know optical reasons for one small part of
#
the intelligentsia and they don't really care about it at all but I hope I'm wrong
#
and I hope the overton window keeps shifting because rhetoric does matter Vivek.
#
I think you know one good thing that one could possibly say you know is the fact that you
#
know once you know income taxes have sort of come down to a low level they haven't
#
really gone up again I mean even though you know there is too much fiddling around and
#
you know we could do much better on our taxes front but largely our tax rates have stayed
#
more or less the same so yeah we should say that we could possibly thank our politicians
#
Right now my next question two sort of broad general questions and Kumar you know when
#
I shared these on WhatsApp you said that these are sort of related and you'd like to take
#
them together so I'll just ask them together which is that one we are facing this massive
#
jobs crisis which is evident and which is why I also say that our jobs and agricultural
#
crisis are so big that it doesn't really matter who wins the next elections we are screwed
#
anyway there's not much we can do about them partly because none of the party shows the
#
mindset that you need to solve these particular problems but to stop rambling in this economics
#
ramble episode my quick question to you guys is one what would you do to create jobs and
#
two what would you do to fight poverty on a war footing?
#
Vivek is amused by my questions why are you asking this nothing will happen we know what
#
This is you know this is like a prime time debate on TV especially on the Hindi channels
#
aap batahiye aap hote to kya karte to kya karte yeah you know it's like as my father likes
#
to say agar main is desh ka pradhan manthri ek din ke liye hota toh I watch news television
#
so you know what do people say basically on what digression so when they are asked this
#
on TV because I don't watch TV it's I mean what will they say but what do they like is
#
it like zero-sum solutions and is it like you know the standard t-shirt jokes I mean
#
there is there are no answers to these questions so no so basically you know I think to answer
#
your question seriously the first thing so if you look at the interim budget you know
#
the word jobs was used five times okay and and very vague and in very vague context okay
#
so the first thing to solve the jobs crisis is to acknowledge that it exists which the
#
current government refuses to do what I find very very funny is that you know when you
#
tell them there is a crisis they'll point out to you know data points like uber and
#
ola have been recruiting you know drivers but when you tell them that CMI survey shows
#
that 1.1 crore Indians lost their jobs in 2018 then they'll come around and tell you
#
but that's private and uber ola is also private the you know the recent NSSO data which the
#
business standard published I mean that the way they went around trying to deny that data
#
was very very disturbing because you know a huge NSSO is by far the largest survey that
#
the government carries out I mean obviously you know the census would be much bigger but
#
census is not a survey and a lot of things that the NSSO collects ultimately are you
#
know go in as inputs into the GDP calculation so if the NSSO data is also not kosher then
#
what is kosher so I mean the broad point is that the first thing that the government needs
#
to do in order to solve the jobs crisis is to acknowledge that it exists okay that's
#
the first thing the second thing that so Vivek will acknowledge that it exists and then we'll
#
come to the second thing no the first thing is yeah that's the first thing no if you
#
don't acknowledge how will you how will you solve it the second thing that has happened
#
is and you know a lot of people have talked about see basically how you know if you look
#
at the formula if you look at the economic history the one formula which stands out for
#
countries which have gone from being developing countries to becoming developed countries
#
is through exports of you know low-end goods I mean it's happened to the US UK large parts
#
of Europe China you name a country and that is how it is played out that is something
#
that is not happening in India and very very funnily are engineering goods exports which
#
are highly skilled exports seem to be doing much better than you know exports which are
#
labor-intensive so you know given that there is a formula in place so you know any government
#
I mean the next government has to work towards ensuring that you know people who want to
#
export or even you know generally people who want to do business transact exchange things
#
are allowed to do so I mean if this might sound like again you know one of those utopian
#
answers but I cannot object to the way using the word utopian because the utopia would
#
refer to an end goal while this is my while I would see this as referring to a direction
#
yeah I mean what I mean by utopia here is that you know because this is never going
#
to happen is what what I mean it's not going to happen that we reach an ideal end
#
state but it can happen that we become better so so if you look at many Indian states and
#
I mean this is pretty well documented we have you know there's an economist called Danny
#
Roderick and he uses a term called premature non-industrialization and this was the term
#
used in in the economic survey a few years back by Arvind Subramaniam as well so many
#
Indian states have reached you know premature non-industrialization where the industry in
#
this state has simply stopped growing so the only Indian state which has ever crossed where
#
industry has crossed 20% of the states GDP is Gujarat whereas a lot of other you know
#
states which you think are extremely industrialized states like Maharashtra and Tamil Nadu achieved
#
their high point in industry in the late 1980s okay a state like Uttar Pradesh has you know
#
basically the level of industry in that state is 10 to 12 percent of the GDP and it has
#
stopped industrializing so you know unless these states industrialize I mean there is
#
no way they can go forward so if you look at you know if you leave states small states
#
like Goa which you know what would you do to like this goes back to the classic thing
#
that look okay economies grow they start off in agriculture then manufacturing then services
#
and of course in our case you know cheap labor was you know could have been a great strength
#
we could have been vaginized today but our manufacturing revolution simply never happened
#
because of the state because of labor laws and this license Raj and all of that it simply
#
never happened and instead we had a bit of a services boom through the 90s and all of
#
that thanks to because the state did not understand what is happening which is why it was kind
#
of so what do you do do you think that given the rise of automation across the world there
#
is still scope for a manufacturing revolution or we've missed the bus I think we've missed
#
the bus which is why you know I've sort of become a sort of I mean I have a soft corner
#
for an income support scheme I mean I would have not had it five years back but I think
#
we've missed the bus clearly because I mean people these days talk about the fact that
#
China is sort of getting out of labor intensive manufacturing and you know there is our big
#
opportunity but you know countries like Vietnam and Bangladesh have caught on to it we haven't
#
and I mean it's surprising you know Bangladesh exports more textiles than India does I mean
#
so yes I think we've missed more or less missed the manufacturing and even the low end export
#
which brings me back to your point to your point one is you'll acknowledge there's a
#
jobs crisis point two is what will you do so see the thing is no no I mean so see we're
#
talking here you know this is like this is a very good diagnosis I mean this is not binary
#
you know what I'm trying to say is that you know once you acknowledge you will do a few
#
things it may not work out to solve the problems through the length of breadth of you know
#
India but it will definitely benefit a few people somewhere right so these things are
#
never binary right I mean so I guess first thing is you acknowledge and then you do
#
all the things that have been done in the past to ensure that you know a lot of which
#
the Modi government did promise in 2014 and absolutely did not deliver on like reforming
#
labor laws you know the thing that I find funny is that so Martin Wolf has a piece in
#
the Financial Times on how India will grow despite its politics and he's referred to
#
some World Bank report that's come out I haven't read the report but I've read the Martin Wolf
#
piece and you know that the kind of things that he points out that these are the things
#
that the Modi government has done you know stuff like GST and how it will help but you
#
know the way the GST has been implemented instead of helping businesses it's actually
#
killed them or he's talked about the fact that how the government is borrowing less
#
which is extremely stupid because all the government has done is it you know the capital
#
expenditure that the government used to carry out has now been simply moved off the books
#
so you have Indian Railways borrowing through the Indian Railways Finance Corporation you
#
have Food Corporation of India not being paid the amount that has to be paid or you have
#
companies like ONGC being forced to buy HPCL and in the process sort of billing out you
#
know borrowing to bail out the government and debt which should have ended up on the
#
books of the government has ended up on the books of ONGC so I mean you know if you look
#
at the things that are being done I don't think you know I mean one is the government
#
does not do anything that's fine I mean if the government does not do that's better but
#
they're doing things and in the process screwing up a lot of things so.
#
I think I broadly agree with you and what you're basically saying is lies as Guracharan
#
Das said India grows by night and as I said of little by little whatever India does is
#
because of Indian society in spite of the Indian state and what you would do is number
#
one acknowledge that there's a jobs problem and number two put in whatever different small
#
fixes you can most of which will involve the government getting out of the way Kumar what's
#
your take on this besides acknowledging the problem.
#
So yeah I think my answer to the questions would be the same I think once you do the
#
first do the second the problem of jobs gets taken care of in some ways and I if you know
#
as a government government should not be worrying about creating jobs you know that's not the
#
job of the government in any case so what you do is you focus on public goods of course
#
don't worry too much about provision of private.
#
Can you try to enable an environment where the jobs come and what I mean there is that
#
you work focus more on economic freedom you know not so much on ease of doing business
#
so what has happened all the headlines in the last four five years from the time the
#
current government has come to power you see a secular decline or increase you know a betterment
#
of the ranking of India on ease of doing business and if you look into the disaggregation is
#
the indicators which goes into you know building up the ease of doing business ranking itself
#
you realize those are things which could have been quick fixed using some notification by
#
the government and it takes care of of course Delhi and Mumbai I mean lot has been written
#
Wherever there is a metric it can be gamed.
#
Yeah so sort of those are things which are easy for the government to do.
#
At least now it is being gamed but it's only being gamed there's no actual.
#
What Vivek said in the beginning you know it's about all goes into building the narrative
#
you know so most recent I think if I remember correctly I read a recent piece with a headline
#
which said Narendra Modi now wants to have India's ranking under 50 probably next time
#
around right now it's 77 while interestingly if you look at index of economic freedom out
#
of 186 about our country which gets ranked India's ranking is 130.
#
And that's pretty much the same as it's been for the last few years that has not changed.
#
So a closer look at both the sub indicators of ease of doing business and economic index
#
of economic freedom would tell you that all the sub indicators for economic freedom are
#
much harder to do because those would require institutional reforms while you know a notification
#
could help you get an improvement in the ranking for ease of doing business.
#
So all you need to do is just make sure the institutions are right and take enforcement
#
of contracts those kind of things property rights you know rule of law is working while
#
you know and step out of the way and that takes care of both you know the problem as
#
you said in poverty and jobs.
#
And given the fact that there is no demand for good economics given the fact that the
#
political economy is so convoluted and all the parties seem to think in the same kind
#
of status way are you guys then hopeful that we can actually move in a better direction
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or is it just you know sit back and let things unroll and hope that nothing disastrous like
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demon happens again but otherwise it's the same old same old is going to go on like this.
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I may have been a bit cynical few years ago I'm not as much anymore I think.
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Which is weird because he's a corporate economist now so.
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No I used to be a corporate economist I'm not anymore.
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The thing is it is very it has become very difficult to differentiate between the options
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in front of a voter today you know they look almost all the same.
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So people used to say the BJP is Congress plus cow but even the Congress is Congress
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Exactly so BJP is equal to Congress you know so as a voter if you know I'm in the marketplace
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you know and working up to a polling booth and I don't have see much of a difference
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I think there would be some entrepreneurial it's a great opportunity for someone to come
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with a you know a different set of ideas and say look they're all the same and it's so
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obvious that they're all the same so make your case you know I mean we don't have a
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liberal party in India today.
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Swatant's party was the last time and they wrapped up in 1971-72.
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So you're saying okay it's okay the political marketplace is not giving the people what
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they need but there is a gap in the marketplace and that's why you're hopeful.
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Yeah I'm hopeful because it's become starkly that they are all equal so it has become very
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difficult to distinguish so then what's the point you know when if you're it's not a single
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party well it's still a multi-party system you know.
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So it would be I think if someone makes a strong enough case and presents the right
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evidence probably there is some hope there.
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I hope some young political entrepreneur or I have some young person listening to this
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recite to become a political entrepreneur because of your inspiring words and frankly
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I you said you were hopeful but you didn't sound very hopeful to me but Vivek what's
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I just wanted to go back to the budget so you know again I mean which is you know at
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the beginning I said Piyush Goyal did a fantastic job of marketing the government.
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So if you sort of you know heard him carefully he talked about how low the inflation was
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Now what he didn't talk about was that inflation was low because food inflation is in negative
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territory so basically food prices have been falling.
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The other thing he talked about was how bandwidth prices have fallen.
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Now bandwidth prices have what has the government got to do with it or he talked about the fact
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that how airline traffic has doubled and he attributed it to the fact that government
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has opened so many airports.
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These are the achievements of society for which the state takes credit.
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No I mean so the government may have opened airports but ultimately you know more and
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more people are actually again no flying between the bigger cities where the airports are already
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It's just that the private entrepreneurs you know the indigos and the spice jets of
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the world have many more flights now than used to be the case.
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So okay so the point here is that you know basically all Indian politicians now are trying
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to create a narrative okay.
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I think the one lesson that politicians have learned from Narendra Modi is I mean whether
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it's the right one or the wrong one we don't know is that you know irrespective of what
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you do at the ground level whether you deliver or you don't deliver what is more important
#
is to create and spread the right narrative okay.
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And I think this is you know this will play out it's already playing out and it will play
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out even more up until the next Lok Sabha elections.
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But that's an answer about the politics.
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Is there any hope for good?
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Which is what I am coming to.
#
So basically you know there's this again you know I'll go back to Hindi cinema there's
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this movie called Kamine and in that the title song had a lovely line Masoom sa kabootar
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nacha toh more nikla I mean Gulzar Rooted.
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So I think Indian politicians are going exactly the opposite way you know Masoom sa more nacha
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toh kabootar nikla and I think I guess that the way you know things are going currently
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I mean I am really not I mean Anand might be optimistic but I am really not very optimistic
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you know all these I mean see the thing is this I mean ultimately we may continue to
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grow at 6% and that over a period of time will that will also pull out a lot of people
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But the entire talk about you know India growing at 8% 9% and you know the demographic dividend
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coming good and you know the growth story remaining strong and all that is not going
#
to play out and you know if you understand the basic laws of compounding you know great
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if you grow at 8% 9% and if you grow at 6% it makes a huge amount of difference over
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a longish period of time.
#
In fact I think Nitin Pai of the Takshashila Institution once calculated that 1% of GDP
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growth in a year brings 2 million people out of poverty.
#
So that becomes the opportunity cost of having a lower growth rate than you otherwise and
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Yeah so if you grow at 9% a year your real income doubles in 8 years if you grow at 6%
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your real income doubles in 12 years.
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So I am not very I am not too optimistic.
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So it's kind of time to wind up because we've just got 5 minutes left in this interview
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and therefore we can't take any of the reader questions.
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Sorry for that we'll definitely take all of those and any more that you provide.
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Next time let's just end on a note of hope.
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All of us sitting and you know to use your brilliant Bollywood analogy from Kamine all
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of us are basically looking at a kabootar and saying to ourselves yeh dil maange moor.
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In case you enjoyed listening to this episode you can follow Vivek on Twitter at call underscore
#
You can follow Kumar at Kumar Anand one word.
#
You can follow me at Amit Verma A-M-I-T-V-A-R-M-A and you can browse past episodes of The Scene
#
and the Unseen on sceneunseen.in and thinkprakati.com.
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Thank you for listening.
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Filter coffee is a fascinating beverage.
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Which is exactly like great conversations as well.
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You need to track down the most interesting minds, get them into their zone and settle
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Yep, you heard me right.
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We're all in the content business now.
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Let's not call it news, TV, radio, etc, etc.
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It's all content and we're in the middle of this weirdly exciting phase where all the
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borders and lines that have been drawn over decades has been swept away by this lovely
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