Siddhartha Ahluwalia

Hi, this is Siddhartha Ahluwalia, welcome to The Neon Show. I’m your host and also co-founder of Neon Fund, a B2B SaaS-focused fund that invests in the most enterprising software companies coming out of India, building for the globe. And our aim is to make India a $10 trillion economy.

Today I have with me Ashok K. Lahiri, Sir. Sir, welcome to the podcast. How are you feeling?

Ashok Lahiri

Slightly nervous, as I always do when I’m facing the camera.

Siddhartha Ahluwalia

I’m also nervous, I’m intimidated by your stature, the work that you have done. So hopefully…

Ashok Lahiri

we neutralize each other.

Siddhartha Ahluwalia

We’ll neutralize each other. So you have been an Indian economist, you have been a member of, and you are a member of Bengal Legislative Assembly.

You have been a member of 15th Finance Commission, you have been a chief economic advisor to the government of India, you were the 12th one, right? Such an illustrious career. And today we are going to discuss your book, like India in Search of Glory, what we did right as an independent country, where we faltered, right?

And exactly, how does the next 10 years of India look like? Because we can’t say what are the next 10 years of India without looking at the first 75 years of independence today. So first, I would like to start with, sir, if you can share your own journey in life, where do you come from, about your parents, where you grew up, and what led you to choosing the current career path?

Ashok Lahiri

See, it’s a modest background, but I’m proud of my background. My grandfather was principal of a college in what is now Bangladesh. And so we are refugees.

So I grew up in a middle class background. And the studied in Kolkata, and Hindu School and Presidency College. Then it was very troubled politics, this was ultra-leftism was going on.

And education was disrupted in West Bengal, as you know. So my parents with a lot of effort, and hardship sent me to the Delhi School of Economics, to study economics. And from there, one thing led to another.

Many things in life is just to be at the right place at the right time, and not to do too many wrong things. And here I am. See, I’m a proud product of post-independence India.

I was born only four years after independence. And though I don’t remember everything, but I remember enough to look back on the journey, India’s journey and my journey, with a lot of satisfaction. And the advantage that I think I have, that I come from one background, and by God’s grace, and I am where I am.

So the normal distinction between India and Bharat, I know, having worked in various places, including abroad, I know India. And now I also know Bharat, not only for my childhood, but I’ve gone back to a semi-urban rural constituency, in a very remote place in West Bengal. So I have the advantage of knowing Bharat as well.

I shouldn’t overstate, knowing Bharat is not easy. People spend a lifetime in search of Bharat. But I know a little bit.

And I know a lot more than what I did, say even 12 years ago. And how did a career in government happen? Career in government, I’ll tell you, as I told you, as a middle class boy, I taught in the Delhi School of Economics for 13 years.

And then money was always a problem. And I wanted to, I thought that the best thing about abroad is those dollars. Dollars are good.

So I happened to get a job in the World Bank, then IMF. So I was there. And if you ask anyone who is going abroad, you’ll find they will say, I’m going there, will make some money, and then I’ll come back.

Going abroad is difficult, but coming back is even more difficult. My children were in sort of advanced classes in their school. But I was greatly afraid that I will die there and I’ll be cremated there, which I didn’t want. So I got a job, a former student of mine showed me an advertisement. You don’t apply cold. And I did, UPSC interview, I got a job.

Once I got a job, then it was difficult. So I took leave, came, and then one thing led to another. I’m happy and consider myself fortunate that I got great opportunities to work first as an economic advisor, then Director, National Institute of Public Finance and Policy, then Chief Economic Advisor, then Executive Director, Asian Development Bank, then Chairman, Bandhan Bank.

I was involved in this IPO, then Member Finance Commission. One thing led to another, and coming back, it was a difficult decision. But I think the right decision and I’m very happy that I did take the decision.

Siddhartha Ahluwalia

And you went abroad when you were what, I believe 35, 36 years of age?

Ashok Lahiri

35.

Siddhartha Ahluwalia

Yeah, and you came back when you were 50, I assume?

Ashok Lahiri

I came back when I was, I’ll tell you exactly. I was 53.

Siddhartha Ahluwalia

Oh, I believe it must be a very tough decision.

Ashok Lahiri

Not 53, what am I saying? It’s, I was, look how it is, 43.

Siddhartha Ahluwalia

Okay, almost eight years after. 10 years. I was there for 10 years. And by the time your kids grew up? Kids grew up, yeah. So it’s been an amazing journey in the last 33 years since liberalization, but are you satisfied with the GDP growth and the GDP per capita where we are at right now?

Ashok Lahiri

See, aspiration and dissatisfaction is at the root of development and achievement. Once you’re satisfied, you won’t be able to do much in life. So dissatisfaction is a must.

And as a sort of reformer or wannabe reformer, no matter what we do, I’ll never be satisfied. No, we have done reasonably well. You remember that fantastic coin, a coinage of the term Hindu rate of growth by Babu Raj Krishna.

I mean, many people say, what is Hindu about it? But it was a very catchy phrase. And the fact of the matter is that we used to grow at three and a half, 4%.

Given the fact that our great grandfathers before independence, they couldn’t even grow at that. Half a percent or quarter percent would have been fantastic for them. And so it was not bad.

But as soon as you look at East Asia and China, then you realize, and Japan, in the post-second World War period, they grew at double-digit rates for 25 years in a row. And so we are not happy. Post-liberalization period, we have done better, no doubt about that. But is it good enough? It can never be good enough.

Siddhartha Ahluwalia

But according to you, what will it take India to be at least, you know, from a GDP per capita, a developed nation? What rate of growth is required today? So that, you know, your grandkids could say, I live in a developed nation.

Ashok Lahiri

See, very simple calculation. My back of the envelope calculation is you divide 67 by the rate of growth. And the number that you get is the number of years that will take for your income to double.

So if you’re growing at 6.7 percent, roughly in 10 years you will double your income. So now depends what do you define as developed country?

Siddhartha Ahluwalia

I think let’s say GDP per capita between $10,000 to $14,000.

Ashok Lahiri

Right now it is how much? $2,000. Around $2,000.So you have to grow five times. So you have to double twice. That will take you to four.

So let’s stop at four. So if you’re growing at 7 percent, it will roughly take you 20 years. So 20 years will take you to 2044. Give another three years. So 7 percent growth day in and day out every year will take you to over $10,000 by 2047. That’s what the government keeps talking about.

Now when you talk of 7 percent, mind you, we haven’t had a decade where there is no unanticipated crisis like COVID. There could be a war somewhere. So you have to give some concession.

So at least 7 percent growth every year or on average is essential. And again, it’s no rocket science for what you have to do is education. I mean if we can educate those little boys and girls who are just roaming around in shorts now and playing football or something, if you can educate them properly, if we can make sure that they’re healthy, they don’t suffer from morbidity or stunting, and we provide them with infrastructure, they’ll do the rest.

I love one comment by Galbraith. Schulz also used to say that there is no country in the world where the people are literate and poor. And there is no country in the world where the people are rich and uneducated.

So I’m a great believer and I have a lot of faith in the young boys and girls. All I have to do is to give them the education and the health. They will do the rest.

Siddhartha Ahluwalia

And what are we doing today as a policy to make sure that at least we reach 80 to 90 percent, making sure these young boys and girls, the 80 to 90 percent youth of India gets educated to basically primary and secondary.

Ashok Lahiri

No, Siddhartha, the problem has changed. Initially, the problem was enrollment. How to get those little ones into school, that problem has been resolved.

That problem has been resolved because now you talk to any poor person and ask them, how much have you studied? They’ll say, studied till sixth and then quit. What about your children?

My eldest daughter is going to class 10. Will you make her study further? Yes, we will make her study. So, enrollment is happening. But now we have come to the second stage of the problem, that is quality of education.

That’s much harder. That’s the problem. How do you ensure that the teacher is good? How do you can build a school and get those boys and girls into the classroom? How do you ensure that they’re being taught properly? That I think is more the detailed work needs to be done.

And I don’t think you want to get derailed into that discussion now. But now we have to focus on quality of education. That’s very important.

Siddhartha Ahluwalia

And I think it’s very important to know that what next 10 years are going to look like to study our recent history. So for it, I would like you to for our audience to delve upon what were the 10 years of the UPA government from 2004 to 2014? And then the recent 10 years of India government, 2014 to 2024. How would you compare them both?

Ashok Lahiri

See, 2004 to 2014, the UPA government’s emphasis was on three rights. I think right to information, right to food, these are important. Because when the country is developing, you can’t afford to have a situation, particularly in a vibrant democracy, I think right to information is extremely important.

It leads to transparency. But it’s debatable whether the land-related reforms or legislation was the best thing that you could have done. Because no matter what you want to do, you will need land.

Whether you want to open up a jalebi shop, or whether you want to set up a huge factory for microprocessor, you need land, you need land to set up a railway line, you need land to everything. To make land acquisition so difficult, and so expensive. So many people think that there was a need to ensure that the poor people are not dispossessed of their land without compensation.

But the question is, how to strike a balance. And particularly, the best way of acquiring land is by paying a price at which you’re willing to happily selling it to me. But at times it may happen that 1000 people have sold their land, but 27 people are resisting because they want to blackmail you.

Now, the sovereign authority, as long as it’s a fair administration, because you have to avoid the other problem, and in the name of acquisition, some political leaders or bureaucrats are making money by acquiring land. So the devil is in the details. But I think land remains an open question.

But see, UPA government’s time also, there was growth. But then the coalition became such that there was policy paralysis. Especially the second period was a period when the UPA found it very difficult to move forward.

And the other problem that came is that this great recession came. And great recession came now with the advantage of hindsight. We know that the UPA government went overboard in terms of stimulus.

So what happened during the last few years, high inflation and some incipient problems in the balance of payments. So that is how the UPA government ended. And then there was this corruption charges.

So it became, it was a messy end. Now 2014 onwards, this government has definitely put more emphasis on infrastructure. And the policy paralysis is gone. However, a few laws which have been enacted, have not been notified as yet, have not been enforced. That’s the agriculture related laws and the other is labor. So it’s a noisy democracy.

But having said that, democracy I think is very bad for India. But any other system is even worse. And I’m a great believer that what we are doing is right.

Siddhartha Ahluwalia

And you are feeling that we are on the right track right now?

Ashok Lahiri

Right track because Buddhi, Subuddhi will dawn. I mean Indians, we may take time, but ultimately we decide to do the right thing.

Siddhartha Ahluwalia

So you mentioned democracy is a noisy process. And we wouldn’t have any other way. But what is happening today is Kolkata, the Bengal is your homeland. And it’s become, it’s almost on the verge of president’s rule. Why do you think it has happened? Because the entire country is growing.

And Bengal has been, at certain point in time, not so long ago, maybe 100, 150 years ago, the most prosperous state in the country, the highest amount of literacy rate, the highest amount of businessmen, all the Marwaris came from that place. And now we are seeing it’s in a turmoil.

Ashok Lahiri

See, this is the process of growing up. Even you, who looks like a fine young gentleman, new young days, you know, teenage days, you must have done things which are not right. So Indian democracy is also growing.

See, what you’re mentioning about Kolkata and the current problem, let’s not go into the details of it, the discussion will get diverted. But the fact of the matter in West Bengal, what we sometimes forget to recognize, that’s a very turbulent history. Since independence, the country got divided.

It was a very messy affair. Jinnah, the father of Pakistan, let’s not go into what he wanted actually, and what actually happened. But the two nation theory was actually unworkable.

Because with mixed up population, how do you do a country for religion A and how do you do a country for religion B? So West Bengal was sort of flooded, inundated by refugees. The density went up all of a sudden.

Second, we had the ports becoming dysfunctional because of silting problem. There was also the problem of food in the 50s and 60s in particular. And then there was the freight equalization, whereby the whole eastern region, the mines, the minerals and metals were available all over the country at the same price.

So the eastern region lost its advantage. So West Bengal became a hotbed of dissatisfaction and leftist ideology, food movement, trams and buses were burned. And when I told you that I left Bengal and went to Delhi, it was at that time, the peak of that movement.

Now, why is West Bengal going through this? It’s not only West Bengal, other areas, but I don’t want to take away from the fact that it’s a very unfortunate incident. It shows a failure of our administration.

It’s a failure of our education process. Whatever happened to that young lady is most unfortunate. It’s unbelievable what whoever the unknown people did to her. I mean, it’s beastly almost. But let’s not get into that. I mean, let’s not get into a West Bengal. That’s another book project, hopefully.

Siddhartha Ahluwalia

But my goal is what we can learn from it so that no other Indian state suffers the same fate tomorrow.

Ashok Lahiri

Now, you can be talking about two different things. One is law and order and the other is the way we treat our women. Now, the way we treat our women, improvement will come with education.

And I think it will come also with more liberal attitude. If I’ve never met any woman apart from my mother and my sisters, then I have a different feeling about the women. But when I meet enough women of my age group and younger ones, then I realize that they’re also human beings. They feel pain. They feel happy. They’re just as human as I am.

So openness, I think, I will not for a moment claim that you young boys and young men are worse than us when it comes to women. No, you’re better because you have a better understanding of those women. So, a more liberal society and a better education is extremely important.

Siddhartha Ahluwalia

And one of the important things that you mentioned in your book is the neglect of taxation for a long period of time and resource constraint. Would love to dive deep into that.

Ashok Lahiri

See, there is a debate about what the government should do. Normally, we ask for three things from the government. Spend more.

You want more government to spend more on everything. Education, health, roads, railways, name it, you want it. You want the government to tax less. Why are you taxing me so much? It’s too much. And the other thing that you want, don’t borrow so much.

Don’t have so much deficit. I mean, it will not take you even one minute to realize that these three are inconsistent with each other. You can’t say spend more on everything, tax less and borrow less. So which one is legitimate? In India, do we spend too much? I don’t think so.

Because if you think of education, you want them to spend six percent. On health, you want the government to spend more. The government meaning the general government, the union and the states combined.

But at the same time, you’ll find that taxation, you talk to your mama, you will say he’s been taxed too much. You talk to me, I’ll say I’m being taxed too much. If everyone is being taxed too much, then how do you spend without borrowing?

And you ask anyone, is our deficit too much? They’ll say, yes, deficit is too much, debt is too much. So I think it’s my judgment and many people would agree with me, we spend too little, we tax too little. And we must spend on the right things. But again, education, health, infrastructure, law and order. Law and order has to improve.

Now taxation, let me give you an example. You look at direct taxes, income tax. Income tax, the most important thing is the exemption level. Exemption is what, below which income level you don’t have to pay any income tax. Normally, who are exempted? Exempted are poor people. Who is poor? If all of us start claiming, you start claiming I’m also poor, I am poor, then there is no one left to tax. So, normally, the exemption level has to have a bearing with per capita income.

And the other is poverty level. Now forget poverty level. But even in terms of per capita income, you compare our exemption level with our per capita income.

And compare the exemption level of other countries with their per capita level. Ours is much higher. Because you must have seen in the newspapers and television, the discussion middle class is not, has been forgotten in tax.

Who is going to pay the taxes? Only the rich. In fact, I give the, it was, it is discussed in the book, that we have tried it in the past.

You can say don’t tax the middle class, catch hold of the big guys. During Mrs. Gandhi’s time, Indira Gandhi’s time in the 70s, yeah, she was finance minister for a short while, then Y. B. Chauhan came. At that time, the highest rate of income tax was 97.75%. You earn 100 rupees, the rich will can keep only 2 rupees 25 paise, the rest is taken. And then, this was the height of socialism.

Tax revenue was not much. Then Wanchoo Committee came. Wanchoo Committee said that black money, the reason is this, confiscated income tax. Income tax didn’t go up. So, this particular thing that people talk about, that spare the middle class, tax the rich, it’s not possible. We have tried it in the past and failed.

And later it was brought down during Mrs. Gandhi’s time. So, I think taxation has to be broad-based and moderate. Kautilya used to talk about that. You have to collect, like the bees collect honey, without harming the flowers. If you collect it from many flowers, then no flower will be affected.

Siddhartha Ahluwalia

I think the one reason is if you start taxing rich, and it has happened, it’s happening currently, it’s happened in the past, they leave the country. For example, now Indians are migrating to Middle East countries like Dubai, Saudi, Qatar, or even Southeast Asian countries like Singapore and they’ve always gone to the US side because some states like Texas, there’s no state taxes, only the federal tax, right? So it’s a balance I think is very difficult here to achieve. I can’t blame the government here because there’s no easy middle way.

Ashok Lahiri

Yeah but what you can do, don’t change the exemption level. If you keep it fixed for a long time, since per capita income is increasing, the denominator is increasing, numerator remains the same, as a proportion it keeps coming down.

Siddhartha Ahluwalia

One thing that I always think about is, let’s say today we have only 1. 15 million people paying the largest amount of tax. Even the government has said that the tax money that we get at direct taxes are from 15 million people only, which is like if we have a population of 1.4 billion, only 1% of the population is bearing the load of the entire country.

If we have to bring, for example, 30% of the population under taxation, then even for the people who are currently getting the concessions, if we start collecting tax from them and start giving them benefits, so at least we’ll bring a more percentage of population under taxation and give them out the same amount of benefit for which they are paying the tax.

But our coverage will increase and over a period of time what is happening, the lower middle class is jumping to the middle class and the middle class is moving upwards. So the coverage, I think that way, maybe I might not be fully right.

Ashok Lahiri

No, no, it’s right. Only one thing that you have to remember, if there is a family size of four or five, so one person paying tax is actually representing five people. So one and a half crore people paying taxes or two crore people paying taxes, it’s actually 10 crore people of two crore families who are paying taxes, that’s the only thing. You’re right, I agree with you.

Siddhartha Ahluwalia

If we start providing, the government starts providing equal benefit to the people who are not under the current tax regime.

Ashok Lahiri

See, here the issue is an enlightened discussion in a democracy. See, democracy to me is not only an end in itself, I believe is the safe instrument for achieving what the people want to achieve. Now, how do you articulate what the people want?

See, the people are not going to spend 20 days reading and thinking about issues, what should be done. It’s the job of the politicians and the media to inform the people. Now, will the people’s response be the same in Belgium and in Burkina Faso? No. But the points have to be put properly and people will respond. I think people will respond and so far as politicians are trying to maximize votes, it will depend on the people what kind of feedback they’re giving.

And I think Indian people, once they’re informed about the issues, they always take the right decisions. And the very interesting and that was the beginning of the book. I mean, in democracy, is it good?

Is it bad? If you can get God as our dictator, nothing like it, then you don’t have to worry about all these elections and so on. But the problem is, how do you get God to become our dictator? It may not be God, it may be Saturn, it may be devil. Now, what I believe is that once the people are informed, people choose the right leader. And when the leader goes astray, they punish him or her.

And here is the symbiotic relationship. I’m improving, so I’m choosing a better leader. I’m choosing a better leader, so a better leader is giving me better policies, I become even better. So it’s a win-win situation, it’s a virtuous circle. So here, I think it’s very important to have the right kind of debates. And I think we’re on the right track.

There may be ups and downs, but ultimately, we are moving in the right path. So that’s the search of glory. And the search of glory, democracy not an end in itself, democracy is an instrument. I think democracy is an instrument is also a safer instrument than anything else.

Siddhartha Ahluwalia

Yes, the search of glory in your book that you mentioned, you seem like the search of happiness, like the pursuit of happiness, there is no end to it.

Ashok Lahiri

No, I am no historian. But whatever little I read, see India was a rich country in a relative sense. Now, is it ancient history?

Is it medieval history? Even medieval period, and we have reasons to believe that it’s a very long history, going back to Mohenjo-Daro Harappa. So glory you have had, we are trying to regain that glory.

Forget whether we had the glory in the past or not. But Indians, we are very proud people. We may not have the money, we may not have produced as many Nobel laureates as we want to. But we are very confident about our basic abilities. So that’s the search of glory. And that search of glory, whether we are following the right instrument, right path.

The issue is, you can’t discuss all policies, what it should be. As long as you have chosen the right government through the democratic process, is it doing it or not? And here comes the, you know, chicken and egg. People vote properly. Once they are informed, they’re enlightened. They vote properly, they get the better leaders.

The better leaders give better policies. So people vote even better. So that’s the virtuous cycle. That’s what I’m trying to sort of grapple with in this book. And I believe so far so good. There have been lapses here and there. But there’s nothing to suggest that we are off track.

Siddhartha Ahluwalia

And what gives you the most amount of confidence that we are on track today?

Ashok Lahiri

I told you, I saw a number somewhere, they say that 40% literacy rate is what is essential. Now we’ve gone far beyond that. Now we’re talking of quality of education.

But illiterate poor people, and in this country with so much variety in terms of fertile soil, agroclimatic region, and ability. I think now, would I claim that we are on an automated system, where glory is inevitable? No.

But there’s reasonable grounds to believe that we are in the, we have reached the take-off stage. It’s like China. So China, Deng Xiaoping came in 1979. Till 1991, 90s, mid 90s, Tiananmen Square, there were doubts. But it was a silent revolution that was happening. And China hit the scene in the early 2000.

And we are going to hit the scene, if we haven’t hit it already. And now, you look at the international newspapers, or international media, there’s fair amount of confidence there about India. And I’m happy that we don’t have that much confidence here.

Overconfidence leads to disaster. So I do not mind this thing that, is it really happening? Let people have their doubts, because that will strengthen the process.

Siddhartha Ahluwalia

I think the other data point is, FDI today is at its lowest. How do then we say that the foreign markets have confidence in India, when they are not ready to put their money where their mouth is?

Ashok Lahiri

Now this particular thing about FDI, see money naturally is a shy commodity. It doesn’t like uncertainty. And we have seen in all periods of uncertainty, money has a tendency to go to rich countries, especially the United States.

Now uncertainty, the geopolitical uncertainty, Ukraine, Russia, then in the Middle East, Palestine, Israel, Iran, Turkey. And then the US itself, election, Mr. Donald Trump, what will happen to the rates? What will happen to the dollar?

There’s a lot of uncertainty. So I think FDI will naturally be shy at this point of time. But in the medium term, after this uncertainty gets over, I think FDI will resume its journey.

But maybe we need some more opening up, because if you want to be integrated in the supply chain, you need to give more concessional treatment or low taxes on inputs that will be brought in, because that is what is going to go out.

Siddhartha Ahluwalia

One other interesting thing is, till a few months ago, Bangladesh was said to be on a path of development. And its GDP per capita was said to be higher than that of India. And suddenly it collapsed.

Do you feel this is because of internal turmoil? GDP per capita is a good measure to measure how the country is doing? Or is it because of external influences? And why I’m asking this question is because it’s one of the closest neighbors.

Ashok Lahiri

Bangladesh is definitely our neighbor. And we have had a very cordial relationship with Bangladesh ever since 1971. But again, I don’t want to comment too much on a foreign country.

But there are doubts about how healthy the democracy was in Bangladesh in the last 5-10 years. The allegations that the elections were not fair. And that is again another factor that bolsters my faith in democracy.

Don’t play around with it. Let it be. The steam will come out and you’ll be okay. So Bangladesh, what has happened is that democracy was slightly compromised. And it’s a reaction to it. Second is corruption.

Again, I’m no expert on Bangladesh. There are allegations of corruption. Corruption is a dangerous thing. And beyond a point, it can destabilize the polity. So Bangladesh, I hope, will get its act together fairly soon. And resume its growth.

Siddhartha Ahluwalia

Because India, as you said earlier in our discussion today, is surrounded by unstable neighbors. And as a region, it’s not a good situation to be in. Even if you are developing fast, you don’t want your neighbors to be poor, if you are rich.

Ashok Lahiri

I want my neighbors to be healthy, wealthy, and wise.

Siddhartha Ahluwalia

Yes. And you mentioned in a conversation just before this podcast that you know, today in this room, you know, we have one Bengali. We have two people from UP and two people very diverse background from UP. I’m a Punjabi.

My wife, she’s from, you know, part of Shahjapur, Eastern UP. And we have a person from Kerala. And we are very comfortable sitting here together with each other.

There is, I think, zero friction. That’s how I would describe it. You also mentioned one thing that our fathers, great grandfathers or grandfather wouldn’t have had the same. Can you elaborate more on that?

Ashok Lahiri

You see, you must be as a young Indian, you must be aware of the fact that it’s a very troubled region in South Asia. Pakistan, I have many Pakistani friends, and Pakistan is a troubled polity. Some people say it’s a failed state.

Bangladesh had its tremors. Sri Lanka has had its problems, and continues to have problems. Nepal is not in a happy state.

In that, this massive land, which is India, we have managed to be together. And if you read the skepticism, which is in this book of Englishmen, who thought India, Winston Churchill, I think, said that India is no more a concept than the equator. But I think our founding forefathers were right.

No matter where you are from, Western UP, Eastern UP, he may be from Kerala, there’s an underlying unity. Pakistan has broken up. Bangladesh is in trouble. We have seen many countries, the former Soviet Union broke up. Yugoslavia broke up. Czechoslovakia broke up.

There are plenty of countries that have broken up. But in spite of the best wishes of our British colonial masters, we haven’t managed to break up as yet. And the understanding grows.

Now, it hardly matters. I mean, Punjabis can’t claim that Chole Bhature is Punjabi. Bengalis can’t claim Roshogolla is Bengali. Even dosa and idli, fairly soon, I would be surprised if your children believe that dosa is actually from the South. They’ll say, what nonsense? I get better dosa in Lajpat Nagar.

So it’s a fantastic achievement, this India. I don’t think we have had an India as big as what we have now. For a long, long period, you can go back to the Maurya dynasty or Akbar.

Even then, I don’t think we had such a large area where you could go without being questioned as to who you are. So that’s a great achievement, great achievement. But mind you, we shouldn’t rest on our laurels.

And integration is still an ongoing process. But I feel very happy when I meet a young woman who says, this is my husband. She may be from Himachal, and the man may be from Tamil Nadu. No problems.

Siddhartha Ahluwalia

It’s very important for our listeners to know, especially the young ones, what is the cost that we have paid to bring this unity together?

Ashok Lahiri

See, I think zero. Zero because what is the counterfactual? The counterfactual is that we had British India. Yeah.

Even British India, if you look at the map, the map was divided into provinces according to when the Brits captured that area. And then you had some 500-odd princely states. Can you imagine some 600 countries in India?

Siddhartha Ahluwalia

No, today I can’t.

Ashok Lahiri

You can’t. I mean, it would have been foolish. Because the most important thing is to have the advantages of a small country as well as the advantages of a big country. So our quasi-federation, what I call quasi because India is a union of states, not the United States. So our founding fathers, what they tried to do is to have a quasi-federal structure.

Quasi-federal structure is you have the autonomy to do what you like in a particular state, but you give the center the powers where the center has an advantage. For example, you don’t want to break up an economic space. By borders, look at what the European Union did.

It would have been a tragedy if some Keralite producing something had to negotiate borders and checkposts and customs to sell something in Meerut. That would have been foolish. Now similarly, I want to employ the best IT engineer.

Why do I have to restrict myself to Gurgaon or West Bengal? I can recruit anyone I like, the best and the brightest. So I think the advantage that we have with the current arrangement is that we have the advantage of being a small country together with the advantage of being a big country.

So the counterfactual would have been disastrous and there would have been conflicts. Conflicts that you have seen that our forefathers or even we have actually gone through a lot of trouble. You remember, you don’t remember, you’re not even born.

The breakup of the Bombay state, Gujarat Maharashtra, it was a very turbulent period. The breakup of Madras presidency into Andhra, Sreeramulu, there was a fast unto death. And in recent times you have seen Jharkhand, Chhattisgarh, so be it.

I mean someone wants to break up, it’s okay. And I think the counterfactual would have been much worse, much worse. The cost is sometimes when you and I are trying to be friends, there will be conflicts and I’ll think that Siddhartha, I wish I was not.

But then the time passes and then we again become. So conflicts, occasional conflicts, some hiccups, nothing to worry about. We must be patient, we must be fair. The fairness is very important and then people come around.

Siddhartha Ahluwalia

So one thing which I want to dive into your book right now is, you mentioned that India has developed in the last 75 years but not so much as compared to our southeast Asian neighbors and China. Why do you think are the core reasons behind it? It’s a complex topic, I’m asking you to simplify it. It’s a challenge, I know that.

Ashok Lahiri

First, you compare India with the East Asian tigers, the newly industrialized countries like Korea, Singapore, Hong Kong and Taiwan. And I’m deliberately leaving Japan out because Japan is a different story altogether. By the mid-19th century, the Japanese in the Tokugawa period, after Meiji restoration, had taken their literacy to 40 percent, 50 percent.

Japan, mind you, was a strong enough country to take on Russia in 1905 and then in the Second World War, you know the history. So Japan post-war was a reconstruction like Germany was reconstruction. Ours was no re, ours was only construction.

You can say India was also reconstruction because if you look at the Mughal period when Thomas Roe, the ambassador from England, came to Jahangir’s court. Jahangir was dismissive because Thomas Roe, the presents he had bought were not good enough for Jahangir. But anyway, going back to Korea, Singapore, Taiwan and Hong Kong, the Vietnam War was there, then Korea’s history as you know, Japanese occupation, then the Americans, it got broken up.

But I’m not taking away from anything from what they have done. It’s a very incredible achievement. But the emphasis was, their emphasis was on education, health, infrastructure, and they did what they did.

Vietnam War was going on. Some people may say that they took advantage of their political position on the Vietnam War. But no matter what, you can actually see the common thing.

And I’m a great believer in that, the emphasis on education, health, infrastructure, and openness. Openness, not only to foreign trade, but also to investment. We had a different path.

Mind you, I’m very fond of a statement that a friend, leftist friend of mine, senior to me, used to say when in our younger days, we used to mention the East Asian tigers, you’d say an elephant, a mouse cannot be modeled for an elephant. So you can dismiss this step states as mouse, a mice, unfair. But fair enough, you say that India is different in terms of size, its problems are more variegated than what they faced.

But what has changed at all is the Chinese reconstruction and Chinese progress. So it’s obvious, I mean, I don’t have to tell you why we have done far worse than China. But mind you, when you do that, the calculation of what or measurement of what you’ve achieved cannot be only in terms of rupees and paisa. China has got to its own tribulations. You remember the Cultural Revolution?

Siddhartha Ahluwalia

Yes.

Ashok Lahiri

Now we know enough of how under Mao Zedong, China millions perished, their leaders were persecuted. We have done none of that. So we have done it in a very civilized way, whatever we have achieved.

And I’m very proud of the fact that our ancestors, our seniors, we maintain democracy. And democracy is valuable. Democracy is an end in itself, even you can say.

Now we are more sort of ambitious. We say democracy not as an end in itself, it must deliver also. So we want to have the cake and eat it too. And we will.

Siddhartha Ahluwalia

But there are few, you know, that saying that, and you also mentioned in your book that our negligence on physical infrastructure, education and health, especially during the first five decades, has cost us dearly in terms of development.

Ashok Lahiri

You know, that is true. That is true. But cannot blame our ancestors that much. Because what was the expectation?

The expectation was in this country, where we know now that per capita income did not increase at all in three, four hundred years.

It increased by I think some 12 percent per capita income in three, four hundred years by 12 percent. And the idea was that we’ll grow at double-digit rates. And mind you, we did not grow fast enough. But still, I think in the first 10 years of independence, we grew more than what we grew in three, four hundred years of British, previous to that. So it didn’t do badly.

And the idea of these guys was that we’ll grow very fast. We’ll have the money. Then we’ll start spending on education, health and roads. And in retrospect, I think that was not quite correct. But let me tell you, Siddhartha, what kind of discussions we used to hear in the younger days. They’re very worried about educated unemployed.

And the problem was that they used to say is that if we educate these boys and girls, we’ll have more of educated unemployed. And that would be a problem. Now we know, don’t mind, don’t bother about the fact whether they’ll be able to educate, give them employment or not.

Educate them, they will employ other people. But that fear can be palpable because educated unemployed can be a political menace. So, yes, I wish we had spent more, we had spent, given more attention.

And in education also, mind you, we didn’t do badly in terms of higher education. Our ancestors did set up the IITs and the IIMs. And that is what you see reflected in the IT revolution in India. But did we give enough attention to primary education and secondary education? Perhaps not.

That was a mistake. Similarly, if you look at the first few decades after independence, we didn’t spend enough on roads and railways. And the railways, we had a much more developed railways than China at the time of independence. Look at Chinese railways now and our railways, we are far behind.

Siddhartha Ahluwalia

The Chinese have the fastest train globally now. And you can’t compete with them now.

Ashok Lahiri

Now, in terms of the extent of the railways, I mean, railway connection is very important, not only for people’s mobility, even for taking goods. I mean, rail freight, rail is the cheapest form of communication and sending goods, not roads. But road transport has a larger share of our freight traffic than railways.

Siddhartha Ahluwalia

And I believe now, at this point in time, we are realizing the importance of airports, even in smaller towns like US has, for example, 40,000 airports.

Ashok Lahiri

But the, see you,, airports, yes, I agree with you. But I won’t put that much emphasis on our failure to develop airports. Because mind you, you travel by air now almost every week. Do you know when I traveled by air for the first time in my life? After my master’s exams, my father got transferred from Delhi to Kolkata.

So as a dependent, I was entitled to first class train fare, which was equivalent to airfare. And how delighted I was that I’m going by plane. And I was at that time, 22.

Siddhartha Ahluwalia

I believe it was only Air India back then.

Ashok Lahiri

Yeah. Indian Airlines, not Air India. Air India was for foreign travel.

Siddhartha Ahluwalia

Thank you so much, sir. It’s been a really interesting discussion. I learned a lot from you.

My listeners, I hope, learned the same that I learned from you. And thanks to you for writing this book, you know, India in Search of Glory. I wish my listeners go out and read it, right. And we can have another discussion again, in a few months time on more going more in depth.

Ashok Lahiri

Thank you, Siddhartha. Thank you.