On India’s Wu Liu

Wu liu, in Chinese, is “the flow of things”, and is apparently the Chinese word for logistics:

Logistics covers transportation, warehousing and the management of goods. Its Chinese translation, wu liu, literally means “the flow of things”. But that flow within the country is costly and cumbersome. Much of the investment in infrastructure has gone to lubricate exports. Now, as China’s government shifts its focus to consumption at home it is finding that the domestic logistics industry is woefully inefficient.
Logistics spending is roughly equivalent to 18% of GDP, higher than in other developing countries (India and South Africa spend 13-14% of GDP) and double the level seen in the developed world. Li Keqiang, the prime minister, recently echoed industry’s complaints that sending goods from Shanghai to Beijing can cost more than sending them to America.

https://www.economist.com/china/2014/07/12/the-flow-of-things

This is an old report from The Economist – it came out in 2014. I’m not quite sure how much better China’s logistics sector has gotten since then, but back in 2014, India was also able to come up with similar statistics:

Indeed, the Financial Times reported in November 2014 that one French company finds that the cheapest and easiest way to send parts from Bangalore to Hyderabad, a few hundred kilometres apart, is to send them first from Bangalore to Europe, and then back from Europe to Hyderabad. It isn’t as if there isn’t a decent highway between the two cities; but the moment that a truck hit a state border, it has to stop and wait. According to the World Bank, Indian truck drivers spend a fourth of their time on the road waiting at the tax checkpoints that mark state borders. Factor in the time they spend in queues to pay highway tolls, and they spend less than 40 per cent of their time on the road actually driving. And that’s when the roads are good. Moving stuff around India costs this country’s manufacturers more than they spend paying their workers, the FT reports. Even India’s lower-than-low wages can’t make up for the dent logistics costs make in our competitiveness.

Sharma, Mihir. Restart . Random House Publishers India Pvt. Ltd.. Kindle Edition.

As I mentioned, I don’t know how the Chinese logistics sector has evolved since 2014, but India’s logistics sector needs to improve out of sight for us to become internationally competitive. And not just internationally competitive – even when it comes to domestic shipping of goods, there is a lot of scope for improvement:

“At the all-India level, the proportions of the produce that farmers are unable to sell in the market are 34 per cent, 44.6 per cent, and about 40 per cent for fruits, vegetables, and fruits and vegetables combined,” finds the committee on Doubling of Farmers’ Income. This means, every year, farmers lose around Rs 63,000 crore for not being able to sell their produces for which they have already made investments.
But, except for cold storage, the country is lagging in all other agri-logistics required to bring the produce from farm to markets. If plugged, the sector can create over 3 million jobs, a majority of which will be at the village level, says the State of India’s Environment in Figures 2018.
Although this seems to be a good show on the state of cold storage in the country, but it should be underlined that the existing cold storage capacity is confined mostly to certain crop types and not integrated with other requirements. In fact, close to only 16 per cent of the target set for creating integrated pack-houses, reefer trucks, cold storage and ripening units has been met. This means, there is an overall gap of about 84-99 per cent in achieving the target on improving the state of storage and transportation of the farm produce. Out of these, the country is far-far behind in meeting the requirement of integrated pack-houses, reefer trucks and ripening units.

https://www.downtoearth.org.in/news/agriculture/poor-post-harvest-storage-transportation-facilities-to-cost-farmers-dearly-61047

And that’s just agriculture. Taken as a whole, the logistics sector in India is rife with inefficiencies, and for many reasons:

A decade ago, the state of India transport and logistics was abysmal. The movement of goods within the country was an arduous and expensive affair. Serpentine queues at Interstate borders, random documentation checks, multiple regulatory checkpoints, tax compliance issues and poor infrastructure meant that India’s trucks had one of the slowest average speeds [20 to 40 kilometres per hour] and lowest distance covered in a day [250 to 400 kilometres] compared to developed countries [60 to 80 kilometres per hour and 702 800 kilometres per day respectively]. It also meant that Indian trucks spent about 60% of their time on the roads. Moreover the logistics sector was a complex beast with more than 20 government agencies, 40 partner government agencies, 37 export promotion councils and 500 certifications. All these factors combined made the cost of logistics in India much higher than most of her big trading partners.

https://twitter.com/anupammanur/status/1577483121183707136

Currently, we transport about 4.6 billion tonnes of goods worth 9.5 lakh crore rupees every year, and we do that through three different ways: coastal freight, road freight and rail freight. I got these statistics from a recent report on the Capitalmind website:

https://www.capitalmind.in/2022/11/how-india-transports-goods-is-changing/

And as the report goes on to say, this break-up is problematic because its much cheaper to transport stuff by rail or by water than road:

https://www.capitalmind.in/2022/11/how-india-transports-goods-is-changing/

Check the third graph in the Capital Mind article to see how the development of the Indian logistics sector defied economics – that is to say, over time, we’ve ended up transporting more by road than by rail! Except, of course, this isn’t in defiance of economics, it is because of it. Last mile connectivity is still poor in India, as most metro riders in this country will tell you. Plus, the fact that we’re transporting people and goods using the same infrastructure is a problem.

All of which is to say that we don’t transport stuff quickly, cheaply and seamlessly in our country. And that’s a amajor reason behind why we are not internationally competitive, and needlessly expensive in terms of domestic consumption. All of us, myself included, would do well to go over the broad countours of our National Logistics Policy. In addition, take a look at the associated e-book, and also read this interview of Vinayak Chetterjee on this issue. If India is to grow as rapidly as possible in the long run (and it must), getting our logistics right is an integral part of the puzzle.

This stuff matters, and if you are a student of economics in India, you absolutely must be familiar with our logistical challenges. They are many, they are inter-related, and solving them isn’t easy.

An Appropriate Continuation to Monday and Tuesday’s Posts

Lebenskunst

I was part of a small but fascinating discussion at The Fat Labrador Cafe yesterday (about which more in tomorrow’s post). The idea was to speak about under-rated/counter-intuitive ideas in economics, and a session that was supposed to last for an hour ended up starting at a little after nine pm, and going on well past eleven pm!

One of the ideas that I thought would be under-rated and counter-intuitive was that cities are magical places. Not only, it turns out, was this not under-rated and counter-intuitive where the audience was concerned, but it was almost quotidian. Huh, but also yay!

I’ve said it before, and I’ll say it again: cities are awesome, fantastic and brilliant, and we need many more of ’em on our planet.


Lebenskunst, The Economist magazine tells us, is the art of living well. Wiktionary has an even better translation, calling it the art of life. But whatever the definition, The Economist’s ranking of the world’s most liveable cities places Vienna at the top.

https://www.economist.com/graphic-detail/2022/06/22/the-worlds-most-liveable-cities

It is, after all, an index, and that means that you can choose to argue endlessly about which metrics are included and which aren’t, what weights have been given and what should have been the weighting instead, about how liveability isn’t all that measurable and especially comparable, and on and on and on.

The index rates cities along thirty different factors, bucketed into five different categories: stability, health care, culture and environment, education and infrastructure. Note that the article we’re talking about is from June, but that doesn’t really matter for us today. The good news, for the most part, is that “global activity is only around one-sixth lower than before the virus emerged. This is reflected in the global average liveability score, which has bounced back to something approaching normality.”

Of course, parts of the world have done worse compared to the pre-pandemic era. Almost all Chinese cities are worse off, although that is not at all surprising. Re: India, the bad news is that not a single Indian city comes in the top ten, and the good news is that not a single Indian city comes in the bottom ten! A summary of the report is available to read here, once you share your email address with the EIU. No Indian city makes the list of the cities that moved up the most in the rankings, nor does any Indian city make the list of cities that dropped down the most.

The full report costs an insane amount of money, and there’s no way I am paying for it, but you might want to just take a look at a Wikipedia article, as I did, for more information. I wasn’t aware of Numbeo, and obvious concerns about quality of data aside, it is a very interesting project.

Take a look at India’s data, it is fascinating. Pune comes in at number 2, which fills me with pride, and also with worry about what is up with the rest of India’s cities. If we’re at number 2…

Two Sides of the Same Model

Yesterday’s post and today’s post are really talking about the same thing (or the same model, to be a little bit pedantic), but it’s a little bit like that story about the blind men and the elephant.

Which model? This one:

The Solow–Swan model or exogenous growth model is an economic model of long-run economic growth. It attempts to explain long-run economic growth by looking at capital accumulation, labor or population growth, and increases in productivity largely driven by technological progress.

https://en.wikipedia.org/wiki/Solow%E2%80%93Swan_model

Ask yourself a simple question: which countries in the world today are likely to see reasonably rapid growth over the course of the next three decades or so?

As a person whose job it is to teach people introductory economics, I’m not as interested in your answer as much as I am in your framework for coming up with your answer. No matter whether you say India, or China or Nigeria or Indonesia or any other nation of your choice – why do you choose the set of answers that you do? What is your model for doing so?

And whatever model you come up with, and whatever specification of the model you deem most appropriate, it should have the following ingredients:

  1. People. No country can grow if its labor-force isn’t growing. Duh.
  2. Capital. More machines, more output. Also duh.
  3. Technological progress. It’s not just people and machines, but it is how efficiently you use them, and the quality of your ideas about how to use them. Not so duh, and often underrated.
  4. Quality of education. A close cousin of the third point, if you think about it. Definitely not duh, and a pet passion (and peeve!) of mine.
  5. Quality of institutions. See this video for an explanation. The very opposite of duh, and massively underrated almost always.

So: my pick for a country that is to grow rapidly over the course of the next three decades would have to tick most, if not all of these boxes. And yesterday’s post was about understanding the point that where India is concerned, her rate of growth is somewhat likely to be constrained by her inability to dispense quality education efficiently and at scale, and by the quality of her institutions. We also need to ramp up our capital stock (our infrastructure). Or put another way, if we try to maximize growth without getting these things right, it’s going to create more problems for us down the road.


A warm welcome to Shruti Rajagopalan, who launched her Substack yesterday. Her first post, and indeed her general focus on her entire blog, is about paying more attention to India. Bad puns that are actually good is an underappreciated art form, so a high five is in order for the name of the blog too! (Update: Mihir Mahajan very kindly pointed out that this is actually a song. I obviously hadn’t heard it before, and in case you haven’t either, here you go. Thanks, Mihir!)

Her post is about a lot of things about why (and how) one should pay more attention to India. But the first two sections of her essay are what I want to focus upon here:

  1. “India’s population will peak in 2065. Compare this with China, where the population will peak next year.”
  2. “Smartphone penetration in India since 2010”

If Gulzar Natarajan yesterday spoke about capital, the quality of education and the quality of institutions (2,4 and 5 from my list above), think of Shruti’s post as a discussion about people and technological progress (1 and 3 from my list above). And a great way to learn about the Solow Model is to first learn about it, and then think about India in the context of the Solow model. Which, of course, is what these two posts are trying to do.

Take, in other words, the model out of the diagrams and the math, and apply it to the world around you. And a great place to begin is here, in India!


Shruti’s post is worth reading (and worth using as a teching tool) because it also speaks about labor mobility (or the lack of it), and capital mobility also. And soft power too, if you want even more! So do give it a read, and bookmark her blog, or add it to your RSS reader.

P.S. The very last section of her blogpost speaks about how to get started on learning more about India. I’d add at least two points to her list, the first because it is a passion of mine. If you want to learn more about any country, learn more about its food. Which ingredients are used at what time of the year, and why? What are the popular dishes in different parts of that country, and why? What do food taboos and food habits have to do with the culture, the sociology and the religions of that country? It’s a great way to learn more about different countries, and especially true for India. If you haven’t seen the light yet, and are therefore not as besotted with food as I am, consider music instead.

Or dance, if you like. Or textiles. But pick an entry point that you like, and read/see/travel optimizing for that entry point. But most of all, haffun – that’s the whole point, after all.

And for anybody who’s struggling with the Solow Model, trust you me, you can have fun while slogging through it all. This post is the proof!

Steady As She Goes

Gulzar Natarajan has a typically excellent post (part of a two-part series) on India’s economic growth trajectory. And they key point in the post is a counter-intuitive one.

India cannot, and should not, grow too rapidly.

In Can India Grow, we had argued that India does not possess the capital foundations to sustain high rates of growth for long periods. It does not have the physical infrastructure, human resources, financial capital, and institutional capabilities to grow in the 7-9% ranges without engendering serious distortions and overheating. The last such episode of high growth in the 2003-11 period required nearly a decade for companies to deleverage and for banks to overcome their bad assets. While some commentators have since come forth with similar views citing aggregate demand etc, I think we were the earliest to put forth a clear case for lowering expectations and targeting a 5-6% economic growth rate.

https://gulzar05.blogspot.com/2022/11/indian-economy-thoughts-on-growth.html

Our household owns two cars, a Tata Zest and Tata Nano, and the best analogy I can come up with for 2003-2011 is that it was like racing the Nano along the expressway to Bombay at a 110 kilometers per hour. It might (perhaps) have made it to Bombay at those speeds, but the little blue car would then have needed a long time at the mechanic before being road-worthy again. India, similarly, did grow rapidly in that period, but as Gulzar Natarajan puts it, it did not have the “physical infrastructure, human resources, financial capital, and institutional capabilities to grow in the 7-9% ranges without engendering serious distortions and overheating.”

Or put another way, if we want India to grow rapidy in the next two decades or so (and who wouldn’t?), it is very much a question of whether we’re driving a Nano or a Zest over the course of the next two decades. Or, god willing, an even better car. But a Nano will simply not cut it, and in terms of our infrastructure, human resources, financial capital and institutional capablities, we’re more like Tata’s cheapest car than we are like the Tata’s most expensive car.

But our country needs those upgradations if we want to achieve (and sustain) those aspirational growth rates. And here’s another counter-intuitive bit: even a 6% growth rate would be a challenge when we are talking about sustaining it over the course of twenty long years. That’s not the pessimist in me talking, that’s empirics:

A 6% baseline growth for the next three decades would be extraordinary. Underlining this point, as Ruchir Sharma has written, there are only six countries which have grown at 5% for four decades – Taiwan, Japan, South Korea, Singapore, Malaysia, and China. As the data shows, India has become the seventh. But just two have done it for five decades in a row – South Korea and Taiwan. Given that China looks certain to fall short, India could become just the third. It could go one better and strive to become the only country to grow at 5% for seven decades in a row. This would be exceptional at a time when developed countries will struggle to grow at even 2%.

https://gulzar05.blogspot.com/2022/11/indian-economy-thoughts-on-growth.html

But for that to happen – for us to embark on this journey, we would do well to first take the Nano to the garage, and bring out the Zest instead. We could do with a bigger engine, better suspension, better safety features – why, better everything:

We should simultaneously use the growth to build the capital foundations – increase domestic savings, deepen financial inclusion, develop robust financial intermediation systems, expand physical infrastructure, prioritise human capacity development, and develop and strengthen state capabilities.

https://gulzar05.blogspot.com/2022/11/indian-economy-thoughts-on-growth.html

All of which is easier said than done, as many a “growth star” state of the 20th century will tell you. This stuff is hard, unglamorous, politically risky, and with payoffs that manifest themselves only in the long run. But also, this stuff is unavoidable. Here’s one way to think about it as a student of economics: studying macroeconomics without a deep study of development economics is dangerous.

For as a nation to our north and east is hell bent on showing us in recent times, attemptig rapid growth without getting the basics right isn’t a good idea:

A too rapid growth will invariably drive up signatures of overheating – high inflation, property bubbles and land valuations, spike in wages, environmental damage, clogged infrastructure like traffic congestions and water scarcity etc.

https://gulzar05.blogspot.com/2022/11/indian-economy-thoughts-on-growth.html

Institutions matter. Education matters. Physical infrastructure matters. State capacity matters.

And attempting to engineer rapid growth without getting all (not some, all) of these right is a bad idea.

P.S. If you are a student of the Indian economy, the first chart in this blogpost is worth deep contemplation and reflection. What is your best guess for what comes next, and why is your guess whatever it is? That’s be an excellent essay to assign at the end of a macro semester that focuses on the Indian economy.

A Walk Down Abhimanashri Lane

Or Abhimanashree, whichever version you prefer.

But however you choose to spell it, join me, won’t you, as I saunter down this leafy little lane on a wintry Sunday morning?

Abhimanashri Lane is today a bit of a misnomer. But as a true-blue Puneri, I remember a time when it really and truly was a lane, and a very quiet one. Today, it forms the base of a very useful triangle, connecting Baner Road and Pashan Road, with the apex of the triangle being Pune University signal. Why this is a very useful triangle is a long story that will bring much angst to every Punekar reading this, so we will move on for the moment.

Accompanying us on this jaunt is my nine-year old daughter, whose ability to ask endless questions is matched only by her ability to ask questions about what we’re going to eat next. As a gourmand who pretends to teach economics for a living, I thoroughly approve of both of these qualities.

And so down Abhimanashri Lane we go, appreciating the quietness of the Sunday morning, pausing every now and then to meet a new canine friend, and breathing in the soft yet crisp wintry air that Pune still affords us in the absence of traffic.

Until we reach a nice little bakery on the left hand side, with a cute sitting-out area, and what looks from without to be a promising array of baked treats lying in wait inside. The daughter deploys the most beseeching look she can muster, but she needn’t have. I am chomping at the bit myself, so in we go to take a look. There’s croissants, there’s breads, there’s pastries and there’s coffee. Heaven, to be precise. Having suitably nourished ourselves, we resume our walk.


But then the economist in me starts to wonder.

We had gone there at around nine in the morning, and we were the only cutomers in the cafe. There was one delivery order that was picked up, but that apart, there was no one else who walked in. The food was very good without being truly outstanding, but that is not (at all) a knock against the place. In fact, if anything, I would have expected more customers.

So why, the economist in me wondered, was it empty?

  1. Abhimanashri is a truly lovely place to walk around in, but it is a low density neighborhood. Most people might wonder if I could have phrased that sentence better – wouldn’t it be the case that it is a lovely place to walk around in precisely because it is a low density neighborhood? Well, yes, but also no. Read on.
  2. It is not just a low density neighborhood, but it is also almost entirely residential. There’s a misal join towards the end of the lane, and a couple of shops and offices, and one upmarket salon. But it is safe to say that it is overwhemingly residential in terms of character.
  3. It is also a no-parking zone, for reasons that we refused to go into earlier, but now we must. Read this article to get a sense of why it is a no parking zone.
  4. So, low density neighborhood, not enough offices, plus a no parking zone along its entire length. Not enough folks in the vicinity, whether residents or otherwise, and the inability to park along its entire length. Nor, if memory serves me right, is there a bus-stop along the entire length of the lane.
  5. So walk-in customers are unlikely. Plus, the inconvenience of having to park a ways away and then walking down might disincentivize other customers.
  6. I’d much rather sit at home and order from there using Zomato or Swiggy or some such, rather than actually try and reach the place.
  7. And so while I thoroughly enjoyed my visit there and wouldn’t mind going there again, the inconvenience of it all makes it rather unlikely that I will.
  8. Which is why you should read up about mixed-use neighborhoods, and urban planning more generally. I have a couple of videos on the subject, or you might want to read more about it by searching on Google, or you might want to read this lovely thread on Twitter.
  9. But the next time you take a walk down one of your favorites streets in your favorite city, you might want to ask what makes that street your favorite, and what were the opportunity costs of that street being the way it is. Ask yourself in what ways that street could become better, and how your city might go about planning for it to be so. Get into the habit of doing this all the time, because why wouldn’t you want to think about how your city could be better.
  10. And then, suitably incentivized, learn more about urban planning, because it is a fascinating subject that every budding economist should know more about.
  11. Past EFE posts on urbanization, if you’re interested, are here.

What Should The Fundamental Unit of Analysis Be, And Why?

https://indianexpress.com/article/opinion/columns/ews-verdict-underscores-that-judiciary-has-been-a-reluctant-supporter-of-caste-based-reservation-8255165/ (Highlight added)

As you might imagine, I’ve been asked about the EWS judgment in class during random question time. And it is something that I’ve been thinking about myself, naturally.

But I have been thinking about a very basic question, and I haven’t yet landed upon an answer that satisfies me. This post is more a request for help, suggestions and reading material, and I do hope some of you end up helping me!


When we’re analyzing something – it could be reservations (affirmative action) or something else altogether – what should we choose as our unit of analysis? Should it be the individual or the group? Whatever one’s answer, why? What are you optimizing for when you choose your answer?

More: say you choose to change your unit of analysis, either while analyzing the same problem, or a related one. Say it is the hijab ban controversy. Or maybe the question of banning beef. Or the Sabarimala issue. Or pick any issue of your choice in any country of your choice – I’m not interested in what your (or my!) opinion is on any of these controversies. I’m interested in what our choice of unit of analysis is, and why. I’m also interested in whether we are tempted to change our unit of analysis depending upon the context, and if yes, on what basis.

I’ve spoken about this with some folks privately, and the best answer I’ve gotten so far is that of “agency”. I’m paraphrasing the argument here, but in effect, one should use an individual as the unit of analysis if that individual has agency – that is, the power to bring about meaningful change in their own circumstances. In the case of the hijab controversy, for example, this line of thinking would imply that we should be leaving the choice to wear (or not wear) the hijab to the individual in question.

Whereas in the case of reservations, it should be the group that is the unit of analysis, because you can’t change your caste, and societal structures impose costs on you for belonging to a particular caste. No agency, therefore the unit of analysis should be a group.

This argument seemed appealing to me when I first heard it, but the more I think about, the more I ask myself if the hijab example really is a good example of agency. You may agree or disagree with me when I say this, but I would argue that girls don’t necessarily have agency in this case. Whether it is rules or laws or norms, they take away this agency no? Again, this isn’t about what is “right” in the case of the hijab controversy – it is an important question, but not the one I’m trying to get at here.

This is, by the way, an important question to ask in economics, with many implications for how research is conducted and policy is designed and implemented. But the importance of this question is much more than that, with implications for fields as diverse as management, sociology, politics and more.

I’m hoping to learn more about how to think about this and why, so please do let me know what you think!

Externalities, R&D and Public Policy

Amol Agrawal, author of the blog Mostly Economics, linked to a very interesting article from CEPR recently:

How knowledge spillovers operate between academia and private firms remains an open question. This column exploits the Laboratoire d’Excellence, or LabEx, a large-scale funding programme of public research in France implemented in 2010–2011, to understand the spillover process. The authors find strong spillovers through the contracting channel, the mobility channel, and the informal channel, with the contracting channel playing the central role. As financing public research is an indirect way to spur private sector activity, comparing it with more direct instruments would be interesting.

https://cepr.org/voxeu/columns/knowledge-flows-public-labs-private-firms

That publicly funded research and development is a good thing is something I’ve spoken about on this blog before, and I’ve also written about how it could (potentially) be made better. I’ve also written about the fact that India needs to up its spending on publicly funded R&D. But all that, eventually, does beg a rather obvious and important question: how?

That is, imagine that you are the newly appointed czar in charge of deciding how and where a lot of money is to be spent on R&D in India. What you say goes, and you would (naturally) like to make sure you get the maximal bang for your buck. Which states will get more money, and which states will get less? Which geographical clusters within these states will you prioritize and why? Which industries will you focus upon, and why?

These are not easy questions to answer, far from it. There will be economics, politics, geopolitics, sociology, finance, history and geography-based aspects to consider, and there may well be other nuances to this question. Today’s post is about a very simple, specific question, which the authors of the piece that Amol linked to focus upon:

Once there has been some knowledge that has been gleaned, or developed, as a consequence of spending on R&D, how to ensure maximal spillovers into private firms? And even more specifically, through which specific channels will these spillovers be conducted?

Let’s put that into simple English: a university has developed knowledge that is of use to industry. How will this knowledge reach industry? The authors of this piece highlight three different ways (there are others):

  1. The contracting channel: there is direct, explicit cooperation between the academic institution and the private parties. This could involve “subcontracting research by private firms, contracts signed for PhD supervision or for joint research projects”.
  2. The mobility channel: Researchers who worked on the knowledge project in academia could move to the private firm.
  3. The informal channel: events, dinners, conferences etc.

The research mentions that the contracting channel was the most dominant:

We find evidence that firms more exposed to the shock start more PhD co-supervisions with public labs (panel a) and increase their outsourcing to the public research sector (panel b). Both these effects are consistent with the contracting channel being at play. We also find that researchers are more likely to move to the more exposed firms (panel c) and that these firms are more likely to hire fresh PhDs (panel d), evidence of the mobility channels. All channels thus seem at play, but the reports written by the funded units suggest a central role played by the contracting channel.

https://cepr.org/voxeu/columns/knowledge-flows-public-labs-private-firms

But that, of course, was for France. What might the story be like in India? A simple search on Google Scholar and Elicit.org didn’t throw up much that was useful and of recent vintage, but if any of you have any academic references that might be of help, please do send them my way.

In my personal experience, though, as someone who has worked in academia and industry when it comes to analytics, I would say that the mobility channel is by far and away the most dominant. While the contracting channel grows a little bit every year, it is nowhere near enough. And don’t get me started about the under-utilization of the mobility channel – while there is some movement of some faculty members, it can (and should) be a lot more, and in a variety of ways, not just a full time switching of careers.

The development of knowledge clusters, and the free (two-way!) flow of both people and knowledge between academia and industry needs to dramatically increase, and this increase needs to happen with every passing year. Funding R&D is one thing, but this – the exchange of people and ideas – is a relatively low-cost intervention with only upsides.

We should be making this happen!

Just one Object

When I teach courses in introductory statistics, my focus isn’t so much on helping students memorize definitions and formulas as it is on helping them understand the point of the core statistical concepts.

I often ask a student in class to tell us about their favorite movie, for example. Let’s assume that the student in question says “Dulhe Raja”.* Ok, I might say, rate the movie for us. And let’s assume that the student says 9.

I then ask the student if every single aspect of the movie is 9/10. All the songs, all of the fight sequences, all of the dialogues, every single directorial decision – is everything a 9/10? And the usual answer, of course, is no. Parts of the movie do much worse, and there might be some that are a perfect 10. But all in all, if the entire movie had to be summarized in just one number, that number would be nine (in that student’s opinion). Which, of course, is one way to think about averages. It’s a great way to summarize, distill or boil down a dataset into just one data point.

Of course, you would want to worry about whether each dimension of the movie has been given equal importance or otherwise. Dilli-6, for example, gets a score of 6/10 from me, but that’s because the music is just so utterly fantastic. But I’m giving much more importance to the music, and not that much importance to anything else (which, for me, was almost uniformly meh). And then, of course, we start to talk about weighted averages. And this also is a great way to segue into what standard deviation is all about. Then come the formulas and the problem solving, but that’s a whole other story.


So why am I speaking about this right now? Because I read an article in The Print the other day, which asked an interesting question that reminded me of all of what I’ve written about above:

If there was a cultural artefact that truly represents everything that is India today, what would it be?

https://theprint.in/opinion/pov/rasgulla-taj-mahal-sanskrit-what-if-i-told-you-to-pick-one-object-that-represents-india/1175979/

What a question to think about, no? Read the rest of the article to find out the author’s own answer, but in what follows, I want to try and think through my own answer to this question.

First, the recognition that we’re talking about a truly multi-dimensional problem. India is diverse in terms of her geography, her languages, her dance forms, her religions, her architecture, her food, her music – I can go on and on. As, I’m sure, can you!

So should we try and come up with an artefact that covers all (or as many dimensions as possible) at once? Maybe a movie, maybe a song, maybe an epic? But can (and should) a movie or a song encompass all of what India is across space and time?

The Mahabharata, maybe? A saga told in multiple languages, in various forms, from the viewpoint of many different protagonists, interpreted in a variety of ways over the centuries, and contains innumerable references to music, dance, food, sport, architecture besides so much else.

The only other artefact that might qualify must have something to do with food. We might have different ingredients, different techniques and different methods of preparing our food, but we all love a good meal, no? So might there be a dish, or a drink, that truly represents everything that India is today?

Tea? Nimbu paani? Khichdi?

Or does this dataset have so much variance that the average isn’t really a good representation?

I haven’t yet found an answer that satisfies me – which is a good thing! – but I do think I have found a good question to teach statistics better. No?

*This is a fantastic movie, and I will not be taking any questions.

Is The Indian Economy Slowing Down?

That is a bit of a misleading title, because the focus of this blogpost isn’t about answering the question. It is, rather, about how to go about answering this question.

If you are a student new to economics, and someone were to ask you the question that is the title of this blogpost, how would you go about answering this question?

  1. Note that GDP data comes with a lag of about two months. You really should be looking at more recent data. But that being said, a good place to begin will be by tracking India’s quarterly GDP growth for the past (say) twelve quarters or so. This is actually bad advice for this specific time period, because of the pandemic, but under usual circumstances, not a bad place to start.
  2. Take a look at electricity generation numbers for the country. Check if there has been an increase, and if so, by how much.
  3. Check the trends in GST collections.
  4. Check trends in freight movement.
  5. Take a look at the Index of Industrial Production data.
  6. Take a look at India’s foreign trade data. Note that I have not used the word trend for these two points. That’s not because trends aren’t important (they are!) but because I want to lament the fact that India – the country that makes software for literally the entire world – isn’t able to come up with better ways to represent its own government’s data. Why does this not improve?!
  7. Take a look at the “Quarterly Financials of Listed Companies” on the CMIE website. Take a look at the trends for Net Profits and the PAT margins. This is usually on the right hand side of the website, you’ll have to scroll down a bit.
  8. Use the same website to take a look at the employment data.
  9. Take a look at the inflation data.
  10. Take a look at the bank credit data.
  11. Finally, note that this list is by no means complete. Other economists might well have more indicators they would like to recommend, and please don’t hesitate to show this list to them, and ask what they might like to include.
  12. Then, and only then, should you start to read opinion pieces about how well/badly the Indian economy is doing. See if your assessment matches with what is written or being said by others. If it doesn’t, ask yourself why. Check if you should look at other data sources, or other opinion pieces.
  13. But as an economist, remember: data comes first.