Breaking the Mould: A Critical Look at India’s Economic Path
Breaking the Mould: A Critical Look at India’s Economic Path

Breaking the Mould: A Critical Look at India’s Economic Path

Understanding the economic structure of a country can often seem difficult; however, by going deeper into each section and component, individuals can feel more engaged and accountable. I experienced this same sense of engagement while reading Breaking the Mould, a book I recently finished. This book is authored by renowned economist and former RBI Governor Raghuram G. Rajan, alongside Rohit Lamba. It addresses issues that bridge traditional economic perspectives with modern approaches.

Manufacturing Debate and Solutions

Starting from the country’s demand and supply to criticising the plan and schemes with solutions, he has ensured the best strategies with pragmatic outcomes. Rajan begins by explaining why the Narendra Modi government subsidies to boost the manufacturing sector are ‘the wrong strategy’. However, the authors falter by proposing unrealistic alternatives, such as shifting the economy towards high-end services, including global capability centres for large investment banks and consulting firms, while neglecting low-end manufacturing due to its razor-thin margins. This is an overly defeatist approach regarding prospects for manufacturing in India, reminiscent of the export pessimism former Prime Minister Manmohan Singh argued against in his PhD thesis at Oxford in the 1960s.

Self-Reliance Under Question

Additionally, he emphasised the importance of adopting a regional and global perspective on manufacturing, highlighting the potential for development, governance, capabilities, and other related factors. He provided an overview of inequalities that exist between local enterprises and large firms in India, drawing comparisons with China and other developed economies. He criticised border policy trends and structural shifts in India. 

Speaking generously on India’s growth, he mentioned a concern over democratic health and governance, warning against over-reliance on manufacturing and the Indian path vs copying others. He explicitly stated that India is capable of becoming self-reliant in every sector, even in manufacturing, but our policy is still under shadows.