The importance of economics in arranging limited resources for prosperity and the Indian government’s role in creating a stable climate and infrastructure for entrepreneurs to innovate and succeed.
00:00 💰 Sanjeev Sanyal discusses the importance of economics in arranging limited resources for prosperity and his journey from financial markets to government.
Sanjeev Sanyal, an economic advisor to the PM of India, discusses the future of the country’s economy and the importance of well-researched opinions in forming political views.
Sanjeev Sanyal is a guest on the Ranveer Show and they discuss economics in this episode.
Economics is about arranging the limited resources on the planet in a way that makes as many people as possible prosperous, and it can be done by government or markets.
The speaker’s job involves a lot of traveling and unexpected crises, making it difficult to maintain a consistent schedule for writing a book.
The speaker studied economics and worked as a financial markets expert for 22 years, managing investments and risks for clients and himself.
The speaker gained respect for markets after experiencing the consequences of being wrong and was approached to work in the government due to the limited pool of eligible macro economists.
10:37 💼 The speaker shifted from being the principal economic advisor for the finance ministry to the prime minister’s economic advisory council, where the job involves strategic thinking beyond just economics.
The speaker joined the government in February 2017, but not everyone wants to work in the government due to various reasons.
The speaker worked as the principal economic advisor for the finance ministry and was one of the main authors of the widely read economic survey before shifting to the prime minister’s economic advisory council.
As the prime minister’s economic advisor, the job is more cross-cutting and involves strategic thinking beyond just economics, such as re-evaluating the list of nationally protected monuments.
Working in the PM’s office is extremely busy and intense, with a core team dealing with day-to-day issues while also allowing for some room for longer-term thinking.
The speaker has the luxury of doing strategic thinking and writing working papers on various issues, but acknowledges that implementation and disagreement may prevent ideas from coming to fruition.
Online trolling is a common occurrence on social media, and those who open themselves up to it should be prepared for criticism.
18:31 👂 PM Modi is a receptive leader who is willing to change his mind, while navigating the complexities of leading a major economy involves empowering and leading a team to achieve big goals despite challenges.
PM Modi is a good listener and willing to change his mind when presented with evidence, which is an amazing trait for a leader.
Navigating the complexities of leading a major economy involves managing constant shocks and disruptions, but success lies in empowering and leading a team to achieve big goals despite inevitable imperfections and challenges.
Being a politician is a tough 24/7 job that requires mental toughness and the ability to handle political flack and blame.
Being a politician is a difficult job with no boundaries and constant expectations from constituents.
The government is aware of YouTube channels that criticize them and filters out ideologically or politically driven feedback, but takes genuine feedback from various sources including mainstream media.
Media has not become irrelevant, but it has evolved and is adapting to new platforms and markets.
27:18 💡 The Indian government’s role in the economy is to create a stable climate and infrastructure for entrepreneurs to innovate and succeed.
There is no one way to get information as people receive it from various sources such as WhatsApp, alumni groups, and newspapers, but individuals have become better at filtering out false information.
The general consensus among Indians is that the current government is suitable for the current geopolitical turmoil, although there are some who disagree, primarily the urban elite.
Becoming economically rich leads to geopolitical power, but relying solely on natural resources is a dangerous game, and a strong economy should be based on a more widely based system.
The government’s job is to create a stable climate and provide infrastructure to make it easier for entrepreneurs to start businesses and innovate.
The goal is to make things easier, but there may be challenges and conflicts along the way.
The government’s role in the economy is to create infrastructure, organize regulators, and set rules, while the actual work of entrepreneurship and workforce should come from the bottom up.
34:32 💰 A successful country requires a balance of education, health, infrastructure, and economics, with the government providing supporting infrastructure and allowing for creative destruction.
Investing in only one aspect such as education, health, or infrastructure is meaningless as they all feed on each other and a successful country requires a balance of all.
Economics is about balancing the trade-offs between different important things, such as education, health, civil aviation, and money.
The government should allow the economy to generate ideas and entrepreneurship, and let the market decide how things will evolve, while still having a role in providing supporting infrastructure and auctioning airwaves.
Failure is not a bad thing and insolvency and bankruptcy code is an important part of the economy’s churn process, allowing individuals to take risks and try again.
Allowing for creative destruction in the civil aviation sector leads to a healthier system overall, as seen in India, while the US domestic airlines industry suffers due to a lack of this process.
The speaker expresses gratitude for the opportunity to learn from the audience and asks silly questions to represent the podcast’s audience.
43:27 🌍 Indian startups are incorporating in Singapore and Dubai to avoid high taxes, but the government is working to improve regulations to keep startups in India.
Indian startups are incorporating in Singapore and Dubai to avoid high taxes when selling off their companies, but the government is aware of the issue and working to improve regulations to keep startups in India.
Relying solely on natural resources for an economy can lead to unidimensionality and hinder development, as seen in countries like Kuwait.
Dubai’s success in creating an urban hub for business and trade without relying on oil makes it well-positioned for a future beyond oil.
Lithium is important for storage, but a healthy India requires a mix of services, industry, mining, construction, and farming.
India’s greatest resource is not just its youth, but also the widespread internet, which is critical in mobilizing the youth and providing and receiving information, as all of these things feed into each other in an evolving ecological system.
Cricket requires both fastball and spin bowling and emphasizes team play, while still allowing for outstanding individual performance.
50:41 🌐 The development of AI algorithms by China and the US can have global implications, highlighting the need for Indian algorithms to be developed.
The government takes feedback from a large number of people, including geopolitical observers like Rajiv Malhotra and the Polyvaths, and may engage with them directly or indirectly through projects or reading their work.
AI is changing multiple industries and governing human emotions and opinions, but the dominance of American algorithms highlights the need for Indian algorithms to be developed.
Algorithms can be influenced by subjective factors and manipulated, leading to a managed algorithm that drives our reality.
Politics can affect human relationships and opinions on various topics, including technology and vaccines, and the development of AI algorithms by China and the US can have global implications.
It is unlikely for an Indian company to take over a globally accepted space like Wikipedia, and while we may be able to create closed systems in certain segments, our political system is not set up for a first world closed world system, and we should be aware of the risks and push back in multiple ways.
ESG norms are being pushed globally, but they are subjective and can be influenced by think tanks, leading to the creation of alternate realities and the need for active debate and pushback.
01:04:36 👀 International organizations may have biased data and India is suspicious of George Soros, but the country is focused on building infrastructure and fixing its legal system for development.
International organizations often manipulate data and have kindergarten-level mistakes in their methodology, leading to a tilt in a particular direction and an exaggeration of problems, which can lead to a suspicion of their motives.
The Indian government is suspicious of George Soros and his actions due to his history of using his wealth to affect certain narratives and governments, and his past as an informer during the Holocaust.
India is focused on building world-class infrastructure in the next 5–10 years, with a massive Metro system, coastal road, new airport, and largest concentration of cranes in Mumbai.
Fixing the legal system and bureaucracy are the top priorities for India’s development in the next decade.
The administrative and judicial systems in India need to shift from a control mindset to a service mindset, requiring a redesign of the system itself rather than blaming individual bureaucrats or judges.
The speaker expresses gratitude for the conversation with Sanjeev and emphasizes the importance of gathering information to shape opinions, while also teasing future conversations and asking for feedback on how to improve discussions with intellectuals.
Economic Growth and Development
💰 Sanjeev Sanyal, PM’s economic advisor, believes that India is on the path to becoming a $10 trillion economy in the next 10–15 years, which is a controversial statement considering India’s current economic state.
💰 “How do you make sure that [limited resources] gets used in a way that makes as many people as possible prosperous and that we can all have a good life and incorporate new technologies and make progress so how do you arrange. All of that is what economics is about.”
💰 Sanjeev Sanyal believes that India’s economic future lies in the growth of its middle class, stating “The real story of India is the rise of the middle class, which is going to be the engine of growth for the next 20–30 years.”
🧐 The Planning Commission was shut down because there were no such thing as wise men who knew everything about everything, and allowing for creativity happening at multiple levels in unpredictable ways has historically proved to be vastly superior.
💸 Failure is not a bad thing in the economy, and bankruptcy is an important part of the churning process.
🌍 Developing skills and diversifying the economy is crucial for a country’s growth and sustainability.
🌍 It’s important to not get stuck with one resource, as there will come a time when we move past oil and need to have built capacities in other areas to survive.
💰 Natural resources alone don’t make a country rich, it’s the mix of services, industry, mining, construction, and farming that creates a healthy economy.
💰 India is focusing on building world-class infrastructure in the next 5–10 years, with a massive amount of construction happening in Mumbai alone.
Role of Government and Leadership
💡 Sanjeev Sanyal praises PM Modi’s ability to listen and change his mind when presented with evidence, calling it the greatest trait of a leader.
💼 The government’s job is not to run businesses, but to create a stable climate and provide infrastructure for entrepreneurs to thrive.
What steps is the Indian government taking to improve regulations and keep startups within the country?
The Indian government is actively working to improve regulations and retain startups within the country. They are aware of the issue of Indian startups incorporating in Singapore and Dubai to avoid high taxes when selling off their companies [5a]. The government is making efforts to enhance regulations in order to create a more favorable environment for startups in India [5b]. Their aim is to provide supporting infrastructure and auction airwaves to enable entrepreneurship and innovation, while also ensuring that startups do not feel compelled to move elsewhere [4a][5c]. By creating a stable climate and offering necessary infrastructure, the government is striving to make it easier for entrepreneurs to establish businesses and thrive within India [4b][4c].
How can relying solely on natural resources hinder a country’s development?
Relying solely on natural resources can hinder a country’s development in several ways. The document highlights that natural resources alone do not make a country rich; rather, a healthy economy requires a diverse mix of services, industry, mining, construction, and farming .
Firstly, depending heavily on natural resources can lead to unidimensionality in the economy, meaning that the country’s economic growth and development will be heavily reliant on the fortunes of a specific resource. This can be risky because the value and demand for certain resources can fluctuate over time. Therefore, if the resource becomes less valuable or obsolete, the country’s economy may suffer, as seen in countries such as Kuwait .
Moreover, relying solely on natural resources can often result in the neglect of other sectors of the economy. This can hinder the development of a diversified and robust economy. A diverse mix of industries, services, and agriculture is necessary for sustained economic growth and stability. Focusing only on natural resources can lead to a lack of investment and innovation in other sectors, which are crucial for long-term sustainability .
Additionally, depending heavily on natural resources can hinder the development of human capital and skills. Countries that rely primarily on resource extraction may not invest adequately in education and skill development needed in other sectors. This can lead to a lack of qualified workers in industries beyond resource extraction and hinder the country’s ability to adapt to changing economic circumstances .
In summary, relying solely on natural resources can hinder a country’s development by making the economy vulnerable to fluctuations in resource value, neglecting other sectors of the economy, and hindering the development of human capital and skills needed for a diversified and sustainable economy. A balanced, diverse, and innovative approach is necessary for long-term economic prosperity .
What are the risks associated with creating closed systems in certain segments of the Indian economy?
Creating closed systems in certain segments of the Indian economy carries certain risks. One of the risks is highlighted in the document snippet , which states that it is unlikely for an Indian company to take over a globally accepted space like Wikipedia. While closed systems may be feasible in certain segments, the Indian political system is not conducive to a first-world closed world system. This implies that there might be limitations in terms of innovation, competition, and global acceptance.
Furthermore, closed systems can hinder the flow of information and ideas. The document snippet [5a] emphasizes the importance of the widespread internet in India as a critical resource for mobilizing the youth, providing and receiving information. Closed systems might limit access to information and impede the exchange of knowledge, which can hinder economic growth and development.
In addition, closed systems may result in a lack of diversity and resilience. The document snippet [5b] mentions that relying solely on natural resources for an economy can lead to unidimensionality and hinder development. Similarly, closed systems in certain segments can limit the diversity of perspectives, ideas, and approaches, which are crucial for sustainable economic growth.
Therefore, while closed systems may offer certain advantages in specific cases, it is important to be aware of the risks associated with such an approach. The Indian economy should aim for a balanced and diverse ecosystem that fosters innovation, competition, and the free flow of information.
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