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We welcome all of you across America and around the world, and particularly all of you listening in India. Now to that question, our Bloomberg Conversation of the Day on the historic moment for the Indian people. Raga Rogen is at Boo School. He's a Miller professor at Boo School. His financial book on the Crisis of seven eight won every award fault Lines. He is one of our great financial professors and of course a former head of a Central
Bank of India. Far more importantly is always Rogin out front. He has a book he is delivering, breaking the mold on his India.
It will be a.
Definitive two hundred and seventy pages. Look for that from Princeton University Press. Shortly, Ragu, thank you so much for sending me the PDA for the book. I'm going to cut to the Chase professor, the final sentence of your book. They cannot have any more excuses. What are the excuses Modi has now and what does he need to move India to a new prosperity.
Well, we have an election.
The results have been coming out and I think it's a splendid result because it tells the government it needs to change course. The old course was unviable and we can talk about that. Of course, markets seem to be disappointed. We can talk about that also why markets are reacting negatively.
But I think what is happening today is really, in the long run, really good for India because it forces India to choose a different course from the one it has been on, a course which has led to much wider unemployment and distress than needed in the country.
Is this an election result that you see will bring the technocratic in a lead South together with a more emotional and historic north. Does it bring the polarity of India together? Or do we have a more separate India in twenty twenty six.
No, it's actually a win for democracy and that's good for India because what democracy does is it allows the different paths to essentially express themselves and to negotiate. The problem earlier was India was trending towards a more autocratic country, a country with one leader who was who are a larger than like image, and that unfortunately meant that the BJP leadership wasn't listening, wasn't listening to the economic news
on the ground that people were actually suffering hardship. Wasn't listening to the broader sense that the weaponization of various instruments of the government to put you know, opposition party leaders in jail were simply not jelling and it would have taken India down a course which was ruinous in the longer run, maybe in the short run benefiti of the big, big business groups, and that's why the market is reacting adversely.
But I think this is good.
Rag and Rajen with us with MUSCO Chicago. We welcome all of you on YouTube worldwide and particularly in South Asia. My colleague Damien Sassar to Professor Rajin.
Professor Rajen, you have mentioned the concept of an authoritarian democracy and how India is moving into that sort of bucket. Talk to us a little bit about what this election means for India and what it means for Narendra Modi and some of his policies on labor and whatnot.
So I think the key number to look at in this election is the BJP's own seats in Parliament. They almost surely will fall short of a majority, which means that they have to actually take the support of other parties convinced them to stay on board, which means means they have to be much more sensitive to a broad based set of policies. Now, the BGP has done some
very good things during its stint in power. For example, it has improved the investment in infrastructure and you can see roads, airports, you know, highways becoming much better in India.
That's good. However, what it.
Has not articulated is a sensible policy for broad based employment, and that almost surely requires policies on human capital, how to skal up the workforce, how to bring you industry together with universities and so on to get people jobs. So the frustration with a BJP has been mass unemployment, which is, you know, in an authority regime, they simply don't even acknowledge the fact that unemployment has been growing
and is especially amongst the youth. So what this election has done is essentially given them a cold shower of reality that people are not happy with your policy and that will force, you know, if the VJP does come back to par with after negotiating with allies, it will force policies which are broader, more inclusive and more sensitive to the needs of the people.
That's a good thing.
This morning, an extended interview with rog and Roger the Bous School, Chicago for those joining it in America. A shock a result or beginning of results, I should say, in a Delhi election assumed to be dominant for mister Mody and it was decidedly less so my colleague Damian.
Sassar, Professor Roger, I want to take you back to your former role as director of research at the IMF. You're familiar with workers' remittances, the role they play in India. I mean the role they play globally. Eight hundred and sixty million of remittances in twenty twenty three, India is fifteen percent of that. Talk to us about what this election means for the diaspora outside of India, about the flows of capital into India. Is that's going to change things at all?
Well, I think it's It can actually be good news both from the perspective. Remittances will continue regardless of who's in power. This is more you know a lot of money coming from the Middle East, some from the United States and Europe for people to their families, and that will continue that there's no reason why that would be disrupted. What is interesting, however, is foreign direct investment has been
slowing into India over the last couple of years. Some people argue that one of the reasons it has been slowing is that, you know, people are worried about arbitrary government policy, to the extent that a more democratic dispensation at the center creates more stability about government policies, especially it limits the weaponization of the tax authorities, of the
investigative authorities. Business actually will feel more comfortable, I hope, and I think it is quite possible that private investment, which has also been on the down as well as foreign direct investment, could pick up slowly as it sees policies emerge which are more comforting.
Professor, within your new book, Breaking the Mold, and I guess the answer is for every central bank, the raging vogue now is to pull climate change into some form of monetary policy mandate from whatever the nation is. Climate change is reality in India New Deli today, I believe the high of one hundred and eleven, one hundred and fourteen, fair night, who's counting, Professor? What does India do and what does MODI do to immediately break the mold? On a climate change out of control.
Well, this is precisely what the book is about. Can India afford to become another China? Does the world have room for another China becoming a manufacturing giant? And that was the direction the Modi government was trying to go in offering massive subsidies to capital intensive manufacturing and it you know, the reality is that China is already there. There is very little place for another manufacturing giant, especially given the protectionism that's right in the world.
But India has a card up its leave.
It actually is doing far better in services exports, which is much greener, much more sustainable, and you're seeing a huge growth in skilled services exported to the rest of them, whether it's telemedicine, consulting, chip design, lots of new areas opening up. India accounts for five percent of global trade there.
That's good.
How do you unify a nation with over twenty languages? We in the United States are in a panic. I mean, there's two languages in Chicago, the Cubs in a white Sox. That's a different story. But ragu how do you unify towards a new India around twenty disparate languages.
Tom it's more than that.
It's twenty official languages, which means they have enough people speaking it, but there are six hundred additional dialects and languages. It's a vast complicated country and the only way it's unified is through democracy, because democracy allows each community a voice. You talked about twenty twenty six in India, that's when the parliamentary seats get reapportioned, when you know there will be a move to have new seats in parliament for
the more populous areas. That has to be done by consensus. And what I'm so glad about is that it will be done by consensus because democracy has re established itself in India and they will have to negotiate how that reapportionment helps. So India is more politically stable as a result of this election, is also going to be a greater friend for the democracies of the world.
Yeah, Damian, I know one of your focuses is on Russia, and of course it goes back to Nehror's visit in nineteen fifty five to Russia and all the responses through the sixties of James John, Kenneth Gilberys and Kennedy trying to reaffirm an American presence from a distance.
That's absolutely right. And Professor Rajan, I'd really like to hear your opinion on the relationship between India and Russia. Obviously, they've been a big consumer of Russian barrels of Russian oil and if you look at the tenure and the correlation between the Indian tenure and BRENTKRW, it is pretty strong and has been since two thousand. So talk to us a little bit about that relationship India and Russia.
Well, India sort of tilted towards Russia and the US tilted away from India. India and the United States were quite friendly in the sixties, but then you know, as the Bangladesh situation developed, the US tilted away from India and that's when Russia.
Moved towards India.
There was a strong friendship through the sixties, seventies, eighties. India buys a lot of military hardware from Russia, so it has been attended that has changed. India increasingly is buying from the West, you know, from France, from the United States, and that relationship is strengthening. So this is a work in process. India understands increasingly, Russia is going
to be dependent on China, which is unfortunately. At this point, the relationship between India and China is one antagonistm So.
Mago, I've got time for one more question. I have to interrupt and be rude. If you are called upon by mister Modi, will you serve the Indian people within his new government?
Well, I think that's an unlikely prospect. You know, my sort of inclination is whenever there's a government I can agree with, I'm happy to work with them.
I've always been open with advice. Let's see what happens.
Thank you so much. We're really anticipating breaking the mold. Two hundred and seventy pages from Princeton University Press, looking for that from Professor Rogin to bou School at Chicago