Raghuram Rajan's blueprint for India's prosperity

How can India become a wealthy nation? According to Dr. Raghuram Rajan, the answer lies in just one thing.

Transcript

00:00We didn't, even as a democracy, focus on building out human capital.

00:05That we lagged behind on education. We, you know, still don't have our Tesla.

00:11We still don't have our, you know, drug manufacturers. We didn't, where is our Pfizer or our Merck?

00:20In your book, you say that in 1961, and this is a really interesting statistic, which says

00:27India's income per person was $1.86. It was ahead of China's, which was at $76,

00:33but behind South Korea's, which was at $94. Today, India is lagging behind at $2,300

00:41versus China's $12,500 and South Korea's $35,000. My simple question is why?

00:49You know, a variety of things. I would argue that the wrong answer is to say

00:56they went into manufacturing and we didn't, right? I think the right answer is to say that we didn't,

01:02even as a democracy, focus on building out human capital. That we lagged behind on education.

01:10And if you compare India and China at the time of their liberalization, they started in 1980.

01:17We, you know, probably started somewhere in early 1990s. We were 10 years behind.

01:22But they started with fantastic sort of capabilities in their worker population.

01:30They were much better educated than our workers were. We are making strides in different states

01:36on trying to improve the business environment. What still is a place where we need to do more

01:44is on human capital. Let me give you an example to show the power of human capital,

01:50which is what we start with in the book. There's this guy Mustafa, really heartwarming story,

01:57who's a laborer's son. His father picks up ginger root, throws it on a truck.

02:03And Mustafa goes to school, which is a wonder. You know, all kids are going to school,

02:08but fails in sixth grade. Comes back and starts working with his father on the farm,

02:16basically doing that, picking up ginger root. His teacher comes to the farm and says,

02:22Mustafa, why aren't you at school? Says, sir, I failed. Says, no, no, you can't drop out. You

02:28must continue. That's a much better life than this. And the only way to do it is through education.

02:34So he goes back to school. His friends make fun of him because he's now one grade below the,

02:40you know, with all the junior kids. And he's dejected. His teacher says, no, no,

02:46you must stick it out. But try doing one thing well. And he focuses on math, tops the class,

02:53gets the approval of all the students, tops the school, becomes an engineer, goes to NIT.

02:58You know, one of the big advantages we have in India is a lot of public universities,

03:04which are really cheap, but also very good. He goes out, earns a job as an engineer,

03:10then comes back and wants to become an entrepreneur. And goes through IIM Bangalore,

03:16but starts a enterprise making idli batter. Seems simple, but it takes a lot of design.

03:25How do you create a packaging which keeps it fresh, which keeps it clean, hygienic?

03:32He now has cameras in his factory showing how it's produced. And you can go onto the internet

03:37and see that. Wonderful story. Employs 2,500 people today under the brand name ID Fresh,

03:43makes idli batter, even coffee, very good coffee. I tasted it. The point is the power of education.

03:51Why has India till date not created an Uber, a Snapchat, a Meta, an Amazon?

03:58We have a lot of, you know, fascinating enterprises, some of which we document in the

04:04book. Lens Guard, the Agni Cool, which is making 3D printed rockets. These are all fascinating.

04:19And including, you know, taking traditional handicrafts and selling it to the world,

04:24which Tilfi focusing on Banarasi saris and getting traditional craftsmen to make it.

04:31There are lots of these around India. But you're right that we, you know, still don't have our

04:37Tesla. We still don't have our, you know, drug manufacturers. We didn't. Where is our Pfizer or

04:46Merck?