As the first rays of 2024 paint the Indian horizon with hues of anticipation, the economic canvas reveals a blend of promise and complexity. Recent growth figures, showcasing a robust 7.6 per cent surge in the third quarter of 2023, cast a radiant glow akin to the dawn of a new year. Yet, within the celebratory dance of numbers, a nuanced narrative unfolds ~ a tale that resonates with the insights of economists Raghuram Rajan and Rohit Lamba outlined in a book they’ve co-authored. In the symphony of economic metrics, a distinctive melody emerges ~ a call to reconsider the well-trodden path of manufacturing. Rajan and Lamba, crafting their economic composition, advocate for a departure from the traditional allure of factories and assembly lines.

Once seen as the beacon of prosperity in East Asia, manufacturing now faces challenges of diminishing returns and heightened automation, prompting a re-evaluation of India’s economic strengths. Manufacturing, once the linchpin of economic growth, has become an intensely competitive arena, with other countries seizing the mantle. East Asia’s growth miracle in the 1960s propelled nations like China and South Korea to economic heights, but as the authors argue, the landscape has shifted. The profitability of manufacturing has dwindled, and the prevalence of automation has led to a reduction in available jobs. The success stories of global giants like Apple underscore this shift. While the design and distribution of products yield substantial value, actual manufacturing contributes comparatively less.

This paradigm shift makes the case for India to reconsider the manufacturing-centric approach that served its East Asian counterparts. The subsequent movement in this economic sonata directs our attention to the realm of services ~ a domain reshaped by modern technology and the omnipresence of the internet. India’s IT sector stands as a resounding success, yet the authors illuminate the need for profound reforms. Education, the cornerstone for navigating the complexities of the global value chain, beckons for increased investment beyond the current 3-4 per cent of GDP.

Rajan and Lamba unveil a palette of challenges, including high dropout rates and a significant gap in job readiness among graduates, underscoring the necessity for transformative changes. The final crescendo of this economic symphony echoes with the call for liberalism ~ both economic and political. A plea to shed protectionist tendencies, embrace open markets, and devolve power for effective governance permeates the narrative. However, the authors inject a note of realism, questioning the political feasibility of such reforms in the current landscape.

The delicate dance between economic liberalism and political control emerges as a nuanced waltz that India must master in navigating the trajectory of its growth story. In the unfolding narrative, there lies not merely a reflection on the economic currents of the past year but a compass guiding the path of the one ahead. The dawn of 2024 signifies more than the turning of a calendar page ~ it marks an opportune moment for India to recalibrate its economic compass.