Why economist Ashoka Mody feels India needs to rethink its priorities

The Princeton professor, Mody tells Kanika Datta, "Nehru, though an honourable man, had an Achilles heel: he knew what he wanted but did not know how to get from there to his goal"

Just four days before news that some 600 families had been ordered to evacuate Joshimath, the economist Ashoka Mody breaks off from explaining his analysis of the erosion of social norms in India to declare “Joshimath is sinking”. I blink at this seemingly non-sequitur statement. It isn’t, of course, being linked to the theme of Mody’s apocalyptically titled latest book, India Is Broken and Why it’s Hard to Fix (Juggernaut). In case the reader doesn’t get the message, the cover declares: “A People Betrayed, 1947 to today”.

The tonality seems uncharacteristic for the Princeton economist, whom I remember as mild and soft spoken. That hasn’t changed, I discover as we meet at the Spice Route, the Imperial Hotel’s opulent Asian cuisine restaurant, but he’s clearly deeply concerned about the future of the country of his birth.  

The book chronicles the mis-steps by successive governments from Jawaharlal Nehru to Narendra Modi in the low priority they gave to investment in health, education and public goods and how subsequent solutions have worsened the problems of unemployment, underemployment, environmental degradation and the woeful state of the judiciary. Combining narrative and deep analysis, it contradicts with unsettling bluntness, the “rah rah phenomenon” (his words) around the India story. “There is this notion that with China in difficulty, India is the most favoured nation. The only thing I can say is that this is bulls**t. Complete bulls**t,” he tells me later in the conversation. 

Mody opts for lassi over my offer of Chardonnay and swiftly agrees to crispy chicken stir fried with bell peppers for starters and Spice Route’s reliably excellent Irachi stew, a delicately flavoured Kerala mutton curry, with appams for the main course.

Why this book and why now, I ask. He says it was the product of a dissatisfaction with the narrative of Indian politics set by a small urban elite, which was “very much a reflection of the First World lifestyle that this elite – and that includes me, I have no pretensions to be otherwise – lives”. He wanted to tell “the story of the real, lived reality of India rather than the glitzy, glamorous story that we tell”.

As Mody helps himself to a tiny portion of the starters, I ask whether Nehru wilfully ignored these issues when he had seen India’s poverty at close quarters. “Nehru, though an honourable man, had an Achilles heel: he knew what he wanted but did not know how to get from there to his goal. Gandhiji referred to him as a thinker not a doer.”

“Around 1954,” he explains, “Nehru’s primary economic goal was that in ten years India would generate enough employment for everybody. Then came this big push for industrialisation – the influence of economists such as [Walt] Rostow and [Paul Rosenstein] Rodan. Nehru understood that the process is capital-intensive but that in the short run we’ll sacrifice some employment because in the long run industrialisation would create so much activity as to generate lots of jobs. He made a conscious decision in light of the prevailing ideology. That’s excusable.” But, he adds, the Second Plan (1956-1961), which revolved around the idea of developing the public sector, went wrong “the moment it started”, yet “the self-correction did not happen”.

I posit that the Asian Tigers benefited from linking early into global supply chains during the Vietnam war, but he counters that it’s a question of priorities. He thinks it’s madness to talk of things like subsidising semiconductors when, in 2023, 30 per cent of Indian kids don’t finish school.

“My understanding of economic history going back to the Industrial Revolution is that there are two ingredients of economic development and no country in the last 300 years has done without them: education and increased participation of women in the workforce. I can only reassert a million times that the notion that India can somehow achieve this super-economic power status without these two but with the magic of IT and payments systems – which seems to be the solution for everything – is misplaced.”

The systemic problem in education illustrates the breakdown of social norms, he says. “In the mid-eighties teachers’ salaries in government schools went up a lot, so it became attractive to become a teacher. But teachers needed certification from authorised institutes. This led to local politicians cornering licences to create these institutes. So it becomes a bad equilibrium. Teachers want jobs and pay a fat fee to get certified. Goons want to make quick money; they pay off regulators to get certification for institutes that do not actually teach teachers. And a nexus develops in which you are churning out teachers who have no accountability. Everybody is milking the system.”

So it’s irreversible, I ask glumly. “Whose incentive is it to change it, you tell me,” he replies. “Pratham is talking about fancy things – teach to grade level, according to his or her capability. All that means the teacher is capable of standing in the class and taking special interest in each child. But here, the tuition industry grows, you can see the pathologies multiplying very quickly.”

He cites Allahabad University as a very good example of a Nehruvian disaster. “It was known as the Oxford of east. Then the IITs were set up. Kids like me went to them – Rs 50 a semester was our tuition! Then Meghnad Saha [the renowned astrophysicist] said you do this, you will siphon off resources from existing universities. That’s exactly what happened. Soon Allahabad University not only lost research, it lost scholarship. Today, it is a place where kids enrol so that they can go to classes outside and prepare for the civil service exams. There is virtually no teaching in AU. The system has got geared to an easy certification process.”

As the main course is served, I ask whether we can reverse these serial policy mistakes. There’s a long pause during which I greedily accept three appams. Then he adds, “We have become a society of do unto others before they do unto you. I don’t want to be the only sucker left in town. So in a modality like that, where the dominant economic games are from deep contestation for land, environment and water…”

That’s when he talks about Joshimath and how it reflects a bipartisan political consensus on degrading the environment, ticking off serial ecological crises: sand mining in the Aravallis, the death of the Musi river in Hyderabad from pharma effluents, the three-decade vintage of the Ghazipur landfill, and he opens up his laptop to show me gruesome photographs of garbage dumped in rivers including the Asi in Varanasi.

Our attentive server comes up and Mody apologetically says he’s going to “be a bit naughty” and asks for a fish curry, finding the well-stewed mutton hard to chew. I discover that that’s the result of a near fatal attack by a gunman in 2009. One of the bullets went through his jaw and he was saved by some intricate micro-surgery by a brilliant emergency room doctor. His assailant was never found but was suspected to be someone who had worked for him in the IMF and had been refused a promotion.

Back on the subject, he explains why he departs from the convention of using GDP growth as a metric of welfare. “In the Gujarat model of development, if you set up a petrochemical plant, GDP will go up, right? But how many people are you employing? What is the environmental damage?”

Seven-eight per cent growth in macro-assessments may look good “but do they mention employment?” There’s this one example, he continues, of Apple coming to India that’s being circulated a million times but how many jobs will it create? “We’ve arrived too late to this party. There's a chart in my book that shows how we have lost the race to Japan, then Korea, then China and now to Vietnam and Bangladesh. Why? Because we have chosen to believe that we can work a miracle in manufacturing without educating our children. But Vietnamese children are better educated than French children!”

The lunch winds down to coffee as we chat about rampant unemployment – he is passionate on the subject – and the harm Nehru’s daughter did to India. He appears less enamoured of Indian capitalists, recalling how Ratan Tata appeared on Fareed Zakaria’s CNN show in 2013 talking up Narendra Modi after he had relocated the Nano car project from West Bengal to Gujarat. 

But then, as he confesses, “I am an odd combination of a technical economist who has worked at the Bank and the Fund, yet I am a Marxist at heart.” To my raised eyebrows, he clarifies, “I am not an activist, but I do believe outcomes are determined by power relations. We are seeing those power relations in Joshimath, for example, where the erosion of social norms are two sides of the same coin. If I were writing the news, I would put Joshimath on the front pages.” His wish came true sooner than either of us expected.