Such a passionate discussion about something as mundane as infrastructure is mind goggling really ...if I were the Prime Minister I would make Ajay Shah my finance minister right now....
This episode is fountain that keeps giving! Thank you for the great discussion and even better recommendations! Sowmya's episode is truly one of the best Seen and Unseen episodes. Vivian's memoir is especially evocative for someone who likes walking in a city. Keep crushing it, Amit, Ajay and team.
I was listening to the podcast very attentively until 29 minutes when Ajay said he does not have any solutions to offer for the questions he is going to raise. Any one can raise questions which a wisest of wise may not be able to answer. The reason manufacturing for World is not taking off is because not only India may not be able to match cost but also quality of many goods produced could be inferior. The infrastructure may not have yielded results in terms of greater exports and FDI, however collateral benefits it has given to hinterland Indian in terms of fast connectivity would be immense and his ease and quality of travel would have certainly improved substantially.
Is se bahut kum kharche me PMGSY me baney hai.. Papa on a infra spending aisa hai hai 50 k mahina kamane wala benz, bmw kharid liya.. Like bullet train.. Aur karodo log bhed bakri ki tarah normal trains me travel kar rhe.
Eye opener!😅❤ I always wondered what went wrong with the PPP model for infrastructure and thought it was profitability and the resultant lack of funding? Then we heard stories of ILFS & IDBI & NaDB
I do agree that the growth of the manufacturing is choked somewhere else. Just building infrastructure is not going to do it. Draconian Laboir laws, land acquisition laws, enforcement of contracts, properly trained technicians, a good eco system of tools room with skilled manpower etc. are some of the things. So a growth of software services with goods manufacturing cannot be compared based just on road transport infrastructure and data transport infrastructure.
About exports, can we get past first mover advantage of China in exports ? Do you think our services can help manufacturing and exports propel? Do you think china style dictatorship is necessary to take hard decisions/maybe our electoral process wont allow us to, thats why maybe Kissinger and Munger thought India has not much chance of success?? Would love to hear from you.
At the fag end of the talk Mr. Ajay has made an important observation with regard to "choke point". Roads and other infrastructure are only one part of the Exports story. We may have good roads but without a condisive eco system for investment and growth, roads alone can not improve our exports. so, the choke point is elsewhere- policies related import duties, internal savings, regulatory restrictions, capital controls etc. As things can not happen in series, we need to act parallely on all fronts lest the neglected aspect becomes a weak link. Further the aim of roads and other infrastructure is not only facilitate goods movement for export but also to improve other movements,like men and material, within the country. Improved infrastructure is of great help in that sense.
You constantly advocate about the opening up the market..privatisation of the economy. What do you think about the duopoly which is currently happening in the telecommunication sectors? And what about it's adverse impacts on consumers. I want your views on this.
Hi Amit and Ajay, big fan of EiE I feel like this is one of those episodes where the quality of argumentation is not convincing at all, and there are many inherent flaws in the arguments - 1) To say that export growth has not picked up as infra grew is a very poor argument. Export growth is a function of multiple variables, on both supply and demand side. The cumulative effect of all these determines a nation's exports. Those other factors(TBT, SPS, Exchange rates, exporter's ability to tap markets, GVC integration, global demand etc etc) are required for exports to grow ON TOP OF good infrastructure. Please refer to C. Veermani, Dhir, Sajjid Chinnoy and Rupa Chanda for further details 2) To say that export growth has been low is a fallacious argument. We must give context. Arvind Subramaniam and Shoumitro Chatterjee proved in a paper that India's export growth rate from 1991-2018 was more than 13%, which they highlight is among the best in the world for that period. You must also look at the COMPOSITION of exports in India: it has undergone radical shift post 1991, with capital intensive, high-technology goods, petroleum products being pre-dominant. Their remarkable rise was impossible without good infrastructure. 3) Where India failed was Labour-Intensive exports. One of the major reasons for their decline was POOR INFRASTRUCTURE: Please refer JJ Thomas's paper "Economic Growth without employment" for further details. Even today, India does not fare very well on metrics like Port-Turnaround time etc: India needs much more and much better infrastructure. In fact, Thomas highlighted that it is the Small Scale Units which reap the most benefit out of good infra, and we know how important MSMEs are in the Indian labor-intensive manufacturing story. 4) A good argument should be made on comparatives. In a world where India had not developed its infra at the pace it did, Exports would have been much much worse compared to what we have witnessed. Unless Ajay sir has a paper which conclusively proves that Infra has no impact on exports(or has minimal impact-I am sure such a result cannot exist, it doesn't make sense) 5) I have learned from you guys the importance of "The Unseen"- I feel you guys missed the unseen effects of infrastructure growth. It creates employment in the process, it has a huge multiplier effect(please refer NIPFP papers which calculate Capital Expenditure multiplier to be b/w 3-4 in India), uniformly reduces cost of production for firms and thus facilitates animal spirits. The state has to engage in infra for the high gestation , huge positive externalities involved and ofc it being a public good: and hence Ajay's check-1 of state intervention is satisfiied(ofc some of it like roads will be more of Public goods with congestion, but it is still a public good) 6) Freedom: using your framework itself, infra is massively important for freedom. It is good roads which will allow me to build my capabilities and have the freedom of pursuing education, travel, consumption(I can consume whatever I want if good roads exist: either markets will easily come, or I have the freedom to commute to buy stuff), profession etc etc. Infra is not just about GDP growth, Infra is the harbinger of Inclusive Growth by expanding opportunities uniformly for everyone( If an area gets robust electricity supply, it wont just stimulate business but give everyone, including the poorest of the poor the opportunity to study at night, pursue learning). A PMGSY gives someone in a far off village in North-East an opportunity to connect with the hinterland, explore opportunities in business, education etc and allows tourism to flourish which gives economic freedom to locals. The remarkable expansion of infra in North East is a known case study. 7) The ICOR analysis is incomplete imo. Please refer Rangarajan's paper on this. The most important reason for rise in ICOR was the Policy Paralysis in India from 2010 onwards, the roots of which were in structural impediments in India. Add to that the Twin Balance Sheet crisis, the roots of which are in the 2003-2008 high growth period itself(I feel like you guys give the 2003-2008 growth a lot more credit than it deserves, that period has a lot to do with the TBS which hit the economy later) I feel there was an element of political opinions clouding analysis in this episode: I feel the current dispensation should be appreciated for good work, they have done good work here, lets appreciate them for that, and lets criticise where they deserved to be. The points regarding the need to relook PPP are really important, Kelkar sir also headed a committee on this, please explore such aspects further instead of questioning infra(just a suggestion), infra is a sine qua non of material growth and inclusion.
You should visit John Deere tractor factory at Sanaswadi, Pune. (45 min drive from city) That factory is more advance and efficient than one I am working in now at USA.
The critical part is the genuineness of the debate. No summary judgments or indictments. Great. However, the infrastructure question has to be assessed within a bigger time-space framework (a) what if these investments in infra had not been made then where wud be today or tomorrow ? Especially in terms of readiness to scale up the economic effort . (b) When there were no private sector investments forthcoming should / can the govt also keep away ? (c) Is ICOPR the only metric to look at economic good for the nation ? . For ex. infra in the eastern part of India is so pathetic that it has to be pushed no matter what the cost. It is only fair that we take a decadal approach and assess the impact of our infra push over a 25 year horizon. Infra benefits in myriad ways not just instantly measuable numbers. It is too early to damn it. We need to wait for a rounder appraisal.
Sometimes you need to also think of the ease of living of the people of the nation. Someone living in a remote area is no less than somene living in the metros. So, infrastructure is not always an investment to give a direct economic profit. It has secondary tertiary benifits which takes time to show the fruits. It may sometimes may never be possible to calculate the benefits quantitatively. So, it's not right to call a port in JNPT and a metro is Delhi or Golden Quadrilateral the prime projects and a road to a remote area a lesser project just looking at the pure economic output.
UP and Bihar were a disappointment mostly because of law and order problems. The textile manufacturers of TN set up factories in Ethiopia rather than UP Bihar where labour was supposed to be cheaper.
Ajay might like to see and compare factories of same industry ( say automotive ) in india with ones in European countries like Germany or UK. I think india is still way behind when it comes to automation and use of robots. Also, it is interesting to see how women work in these factories.
Regarding the first insight from 3:21 onwards from Ajay, it's interesting to note that there is pushback to this idea of first-principle-ism in the startup world. Sidu Ponappa, of Gojek fame, recalls that the way he ran a super lean engineering team that did miles better others was not by thinking about the problem from first principles, but by picking up the top textbooks on it (something that he says doesn't happen a lot in the startup world).
Here is a tiny insight: roads are hindrance to local regional development as it only brings cheap labours from high population states into smaller states with tiny population
Fantastic episode (as always!). The lucidity in the way Ajay explains some of fundamental concepts combined with Amit’s intriguing way of questioning- 👏👏
It is the Chinese government that has built it's formidable economy and infrastructure. It's the government run banks that fuel the infrastructure development across the globe. While the UK is a typical case where water and rail was privatized and is now in shambles. The economy based on lowest wages has created massive poverty and homelessness in the western developed economy. Indian roads and many infrastructure projects were always built by private contractors under the stewardship of government engineers specific for various projects. Now even L&T has reduced its standards where it cannot even follow standard procedures to make a road. Indian economy is now completely taken over by a fraud system where only a handful of families are being made into monopolies at the cost of every other business and people. While the talk sounds good in terms of English, it shows a very narrow view and completely ignores the climate and pollution impacts in the way the current global economy is running.
opening joke made me reconsider my life options that led me to this podcast
Now you've heard everything (is everything).
Uncle and Anty😭😭😭😂
Laughed way more than I should have. Also seeing Ajay laugh back at joke just melted my heart 😭♥️
Such a passionate discussion about something as mundane as infrastructure is mind goggling really ...if I were the Prime Minister I would make Ajay Shah my finance minister right now....
war winner nehru napoleon logic
Or better, resign as PM and recommend Ajay Shah as PM 😂
Please have AA&A sessions (Ask Ajay & Amit) to foster follow-up discussion on these topics.
This episode is fountain that keeps giving! Thank you for the great discussion and even better recommendations! Sowmya's episode is truly one of the best Seen and Unseen episodes. Vivian's memoir is especially evocative for someone who likes walking in a city. Keep crushing it, Amit, Ajay and team.
Automobiles, specifically two-wheelers, is one industry that looks like they had a good run.
I am awestruck by the lucidity of Ajays articulation. Please plan an episode on building articulation skill.
Yes much needed and not found anywhere else
+1
Both gents. His, their lucidity comes from both authenticity and love for their craft
I was listening to the podcast very attentively until 29 minutes when Ajay said he does not have any solutions to offer for the questions he is going to raise. Any one can raise questions which a wisest of wise may not be able to answer.
The reason manufacturing for World is not taking off is because not only India may not be able to match cost but also quality of many goods produced could be inferior.
The infrastructure may not have yielded results in terms of greater exports and FDI, however collateral benefits it has given to hinterland Indian in terms of fast connectivity would be immense and his ease and quality of travel would have certainly improved substantially.
Most of the road network fund spent on NH, expressways in last 10 years.. They account for 2 ℅ of total road network..
Most fund Stations , airports beautification, few vande bharat .. Cannot be afforded by many
Is se bahut kum kharche me PMGSY me baney hai.. Papa on a infra spending aisa hai hai 50 k mahina kamane wala benz, bmw kharid liya.. Like bullet train.. Aur karodo log bhed bakri ki tarah normal trains me travel kar rhe.
Brilliant .Ajay Shah is criticising Modi without naming him and he is absolutely right.
Laughed so hard at ulhasnagar and lonavala chikki location. Even Pfizer made their covid vaccine in Ulhasnagar :p
At 17:54, I guess Ajay meant "photons fly all around the world?" But, really a nice phrasing of sentences coming together to put the point across.
What an incredible episode! Ajay’s your frameworks are always eye opening
The foundation of anything is ethics, honesty and good intentions. If that is missing no model or construct can deliver well
Brillaint! Eye opening episode!
Eye opener!😅❤
I always wondered what went wrong with the PPP model for infrastructure and thought it was profitability and the resultant lack of funding?
Then we heard stories of ILFS & IDBI & NaDB
I do agree that the growth of the manufacturing is choked somewhere else. Just building infrastructure is not going to do it. Draconian Laboir laws, land acquisition laws, enforcement of contracts, properly trained technicians, a good eco system of tools room with skilled manpower etc. are some of the things. So a growth of software services with goods manufacturing cannot be compared based just on road transport infrastructure and data transport infrastructure.
About exports, can we get past first mover advantage of China in exports ?
Do you think our services can help manufacturing and exports propel?
Do you think china style dictatorship is necessary to take hard decisions/maybe our electoral process wont allow us to, thats why maybe Kissinger and Munger thought India has not much chance of success??
Would love to hear from you.
What a fantastic episode. Very insightful 🙏🏻🙏🏻
Thanks so much
Great discussion on what and where we are failing
Very Insightful!
Best options at this moment is to have all states go their separate ways to pursue their own destinies. 😊
At the fag end of the talk Mr. Ajay has made an important observation with regard to "choke point". Roads and other infrastructure are only one part of the Exports story. We may have good roads but without a condisive eco system for investment and growth, roads alone can not improve our exports. so, the choke point is elsewhere- policies related import duties, internal savings, regulatory restrictions, capital controls etc. As things can not happen in series, we need to act parallely on all fronts lest the neglected aspect becomes a weak link. Further the aim of roads and other infrastructure is not only facilitate goods movement for export but also to improve other movements,like men and material, within the country. Improved infrastructure is of great help in that sense.
You constantly advocate about the opening up the market..privatisation of the economy. What do you think about the duopoly which is currently happening in the telecommunication sectors? And what about it's adverse impacts on consumers. I want your views on this.
Hi Amit and Ajay, big fan of EiE
I feel like this is one of those episodes where the quality of argumentation is not convincing at all, and there are many inherent flaws in the arguments -
1) To say that export growth has not picked up as infra grew is a very poor argument. Export growth is a function of multiple variables, on both supply and demand side. The cumulative effect of all these determines a nation's exports. Those other factors(TBT, SPS, Exchange rates, exporter's ability to tap markets, GVC integration, global demand etc etc) are required for exports to grow ON TOP OF good infrastructure. Please refer to C. Veermani, Dhir, Sajjid Chinnoy and Rupa Chanda for further details
2) To say that export growth has been low is a fallacious argument. We must give context. Arvind Subramaniam and Shoumitro Chatterjee proved in a paper that India's export growth rate from 1991-2018 was more than 13%, which they highlight is among the best in the world for that period. You must also look at the COMPOSITION of exports in India: it has undergone radical shift post 1991, with capital intensive, high-technology goods, petroleum products being pre-dominant. Their remarkable rise was impossible without good infrastructure.
3) Where India failed was Labour-Intensive exports. One of the major reasons for their decline was POOR INFRASTRUCTURE: Please refer JJ Thomas's paper "Economic Growth without employment" for further details. Even today, India does not fare very well on metrics like Port-Turnaround time etc: India needs much more and much better infrastructure. In fact, Thomas highlighted that it is the Small Scale Units which reap the most benefit out of good infra, and we know how important MSMEs are in the Indian labor-intensive manufacturing story.
4) A good argument should be made on comparatives. In a world where India had not developed its infra at the pace it did, Exports would have been much much worse compared to what we have witnessed. Unless Ajay sir has a paper which conclusively proves that Infra has no impact on exports(or has minimal impact-I am sure such a result cannot exist, it doesn't make sense)
5) I have learned from you guys the importance of "The Unseen"- I feel you guys missed the unseen effects of infrastructure growth. It creates employment in the process, it has a huge multiplier effect(please refer NIPFP papers which calculate Capital Expenditure multiplier to be b/w 3-4 in India), uniformly reduces cost of production for firms and thus facilitates animal spirits. The state has to engage in infra for the high gestation , huge positive externalities involved and ofc it being a public good: and hence Ajay's check-1 of state intervention is satisfiied(ofc some of it like roads will be more of Public goods with congestion, but it is still a public good)
6) Freedom: using your framework itself, infra is massively important for freedom. It is good roads which will allow me to build my capabilities and have the freedom of pursuing education, travel, consumption(I can consume whatever I want if good roads exist: either markets will easily come, or I have the freedom to commute to buy stuff), profession etc etc. Infra is not just about GDP growth, Infra is the harbinger of Inclusive Growth by expanding opportunities uniformly for everyone( If an area gets robust electricity supply, it wont just stimulate business but give everyone, including the poorest of the poor the opportunity to study at night, pursue learning). A PMGSY gives someone in a far off village in North-East an opportunity to connect with the hinterland, explore opportunities in business, education etc and allows tourism to flourish which gives economic freedom to locals. The remarkable expansion of infra in North East is a known case study.
7) The ICOR analysis is incomplete imo. Please refer Rangarajan's paper on this. The most important reason for rise in ICOR was the Policy Paralysis in India from 2010 onwards, the roots of which were in structural impediments in India. Add to that the Twin Balance Sheet crisis, the roots of which are in the 2003-2008 high growth period itself(I feel like you guys give the 2003-2008 growth a lot more credit than it deserves, that period has a lot to do with the TBS which hit the economy later)
I feel there was an element of political opinions clouding analysis in this episode: I feel the current dispensation should be appreciated for good work, they have done good work here, lets appreciate them for that, and lets criticise where they deserved to be. The points regarding the need to relook PPP are really important, Kelkar sir also headed a committee on this, please explore such aspects further instead of questioning infra(just a suggestion), infra is a sine qua non of material growth and inclusion.
You should visit John Deere tractor factory at Sanaswadi, Pune. (45 min drive from city)
That factory is more advance and efficient than one I am working in now at USA.
Awesome.
The critical part is the genuineness of the debate. No summary judgments or indictments. Great. However, the infrastructure question has to be assessed within a bigger time-space framework (a) what if these investments in infra had not been made then where wud be today or tomorrow ? Especially in terms of readiness to scale up the economic effort . (b) When there were no private sector investments forthcoming should / can the govt also keep away ? (c) Is ICOPR the only metric to look at economic good for the nation ? . For ex. infra in the eastern part of India is so pathetic that it has to be pushed no matter what the cost. It is only fair that we take a decadal approach and assess the impact of our infra push over a 25 year horizon. Infra benefits in myriad ways not just instantly measuable numbers. It is too early to damn it. We need to wait for a rounder appraisal.
Sometimes you need to also think of the ease of living of the people of the nation. Someone living in a remote area is no less than somene living in the metros. So, infrastructure is not always an investment to give a direct economic profit. It has secondary tertiary benifits which takes time to show the fruits. It may sometimes may never be possible to calculate the benefits quantitatively. So, it's not right to call a port in JNPT and a metro is Delhi or Golden Quadrilateral the prime projects and a road to a remote area a lesser project just looking at the pure economic output.
UP and Bihar were a disappointment mostly because of law and order problems.
The textile manufacturers of TN set up factories in Ethiopia rather than UP Bihar where labour was supposed to be cheaper.
A masterclass indeed!
Ajay might like to see and compare factories of same industry ( say automotive ) in india with ones in European countries like Germany or UK. I think india is still way behind when it comes to automation and use of robots. Also, it is interesting to see how women work in these factories.
Make one on everything on healthcare system
The hills have eyes👀❤🎉
Ajay looks like Bengal BJP leader Dilip Ghosh.
Considerably less stockier though
Regarding the first insight from 3:21 onwards from Ajay, it's interesting to note that there is pushback to this idea of first-principle-ism in the startup world. Sidu Ponappa, of Gojek fame, recalls that the way he ran a super lean engineering team that did miles better others was not by thinking about the problem from first principles, but by picking up the top textbooks on it (something that he says doesn't happen a lot in the startup world).
Here is a tiny insight: roads are hindrance to local regional development as it only brings cheap labours from high population states into smaller states with tiny population
Fantastic episode (as always!). The lucidity in the way Ajay explains some of fundamental concepts combined with Amit’s intriguing way of questioning- 👏👏
Amazing
war winner nehru agrees
27:25 did domestic consumption increase substantially? Or is that not expected to happen?
gestation period for infrastructure is long
Free thinker.. It's great we have this as a religion choice in Singapore.
Interesting
Good morning
It seems you upload on @spotify much later
Use the source, luke
When is murali neelakantan coming back to your show
I feel there is subconscious bias in both of them
Of course everyone has a bias.
Road infrastructure 😮😮
India reached heights in 10 years but modi is not good for India 😂
The joke was so unfunny that it was so funny 😂. Pune people trait I guess.
It is the Chinese government that has built it's formidable economy and infrastructure. It's the government run banks that fuel the infrastructure development across the globe. While the UK is a typical case where water and rail was privatized and is now in shambles. The economy based on lowest wages has created massive poverty and homelessness in the western developed economy. Indian roads and many infrastructure projects were always built by private contractors under the stewardship of government engineers specific for various projects. Now even L&T has reduced its standards where it cannot even follow standard procedures to make a road. Indian economy is now completely taken over by a fraud system where only a handful of families are being made into monopolies at the cost of every other business and people. While the talk sounds good in terms of English, it shows a very narrow view and completely ignores the climate and pollution impacts in the way the current global economy is running.