Ashoka's Mody's book ‘India is Broken’ says India is not doing well economically. But then, how does one square this with the lived experience of many Indians, who see six-lane expressways, Vande Bharat trains, malls, shiny airports and UPI? 

Ashoka Mody’s book, India is Broken, is a great antidote to blinkered growth-focused thinking. The superbly crafted book highlights that any fair evaluation of the economy has to answer the question of how growth has benefitted India’s people at large. It is simultaneously a political history and a sustained critique of India’s economic trajectory.

Its scathing judgements are telegraphed in its table of contents: we have “Part 1: Fake Socialism, 1947-1964”, “Chapter 10, India Has an Empress”, “Chapter 16, Rajiv Unleashes the Gale Force of Hindu Nationalism”, and “Chapter 21, Modi Pushes the Economy off the Edge”, among others

The popular narrative of India’s post-independence economic history has congealed around a combination of stylised facts and mindless repetition of uninformed myths: Nehru was a socialist and was responsible for the low rates of growth; the licence-permit raj under Indira and Rajiv Gandhi strangulated the economy until the reforms of Narasimha Rao and Manmohan Singh liberated it; there is something called the Gujarat model; “nothing was done” in 70 years, etc.

Mody does an excellent job of demolishing these nuggets of received wisdom.

He is particularly clear-eyed about Nehru, offering a bracing contrast to the hagiography of many writers. As he points out, Nehru’s socialism was mostly rhetorical, bearing little resemblance either to Soviet socialism or to European social democratic practice.

The primary economic thrust of the Nehru years was heavy industry, aligned with the idea of big push industrialisation, which was popular at the time. Mody thinks this was a serious mistake and that the focus should have been on labour-intensive light industry, which would have generated far more employment and let India take advantage of the post-World War trade boom.

The unifying theme in the book’s critique of India’s economic policies is the lack of focus on job creation. This is a powerful and intuitive organising principle. It runs as a consistent thread through independent India’s economic history.

Generally, output growth and employment are positively correlated, but the magnitude of this correlation is unusually low for India. Low unemployment and good jobs clearly benefit individuals, but also have enormous social impact – it is a commonplace observation in many societies that unemployed youth provide fertile recruiting grounds for all manner of political violence, and India is no exception.

Making job creation a priority – through budgetary allocations and policies favouring labour-intensive manufacturing with an export orientation – does not mean giving up on GDP growth, as shown by Japan, Korea, Taiwan and China.

by Vijay Poduri