Episode post here. Transcription by Prexie Miranda Abainza Magallanes.
Matt Teichman:
Hello and welcome to Elucidations, an
unexpected philosophy podcast. I’m Matt Teichman, and with me today
is Shruti
Rajagopalan,
Senior Research Fellow at the Mercatus
Center, Fellow at the Classical Liberal
Institute at New York
University School of Law, host of the Ideas of
India podcast, which I
recommend you check out, and author of the Get Down and
Shruti substack, which I also
highly recommend you check out.
She is here to discuss talent in India. Shruti Rajagopalan, welcome.
Shruti Rajagopalan:
Thank you so much, Matt. It’s such a
pleasure to be here. I always love chatting with you, and this time
we’re recording it.
Matt Teichman:
You know, before we actually talk about India,
I have to ask—your substack is called Get Down and Shruti. Is that
to suggest that you’re a form of dance which people can get down and
do?
Shruti Rajagopalan:
No, it’s actually a song by a band called
Shakti. This is a jazz
fusion band.
Matt Teichman:
Yeah, McLaughlin’s band.
Shruti Rajagopalan:
Exactly, John McLaughlin’s band. The
original crew was L. Shankar on the violin, Zakir Hussain, who is a
tabla player, and one of India’s foremost classical percussionists,
and Vikku Vinayakram, who played the ghatam, which is this clay pot
percussion instrument. Since then, some members have come and gone,
and this year they’re celebrating their 50th year anniversary. And one
of their tracks that I love is called Get Down and Sruti.
Matt Teichman:
Oh, that is amazing.
Shruti Rajagopalan:
And so, I thought that’s a nice name for
the substack. And also, I think kind of captures me a little bit
because I live in two worlds, right? I live in the United States. I
lead the Indian economy program at the Mercatus Center. I do EV
India. I also grew up in India, but I’ve spent the last 15 years
here. So, you know, when it comes to fusion, I guess it somehow just
clicked with me, and Shakti felt right.
Matt Teichman:
Amazing. Okay, so: talent in India. Your
inaugural Substack post was about recent developments in India, in the
economy, in culture and technology, and the main argument that I got
from that piece was: we should really be keeping our eye on India. So
I thought I’d open by asking, what does it mean to ‘keep an eye on’ a
country?
Shruti Rajagopalan:
So, you know, that obviously depends on
who we’re talking about, right?
Matt Teichman:
Right. Like me versus an actual policymaker,
or something.
Shruti Rnajagopalan:
Exactly. So if we were talking about the
Biden administration, I would talk a little bit more about all the
points where India and US can potentially ally, both in terms of being
very large, liberal constitutional democracies, very syncretic in
their culture, and secular in terms of religion—lots of different
religions, sort of a melting pot feel that both India and the US
have—and how they can confront the challenges that are now coming
up, with Cold War 2.0, and what’s happening with China and Taiwan, or
Russia and Ukraine. How we need to think about Africa in the future,
because India is pretty much the front runner when it comes to the
global south. A lot of the African countries are where India was
maybe 30 years ago, 50 years ago. So that’s the way I would pitch it
to someone who is in those sorts of policy or geopolitics
circles. Now, if you have nothing to do with India, but you just
happen to live in the United States, or you’re a young person
expecting to live another 30, 40 years, or you have children who you
expect will live another 100 years—
Matt Teichman:
—you love dosas; you’d love to learn more.
Shruti Rajagopalan:
Exactly. So one is: I think Indians are
going to be a very large proportion of the global demographic. That’s
an important point to highlight. But the other part is: they’re also a
very large group of the incoming talent to the United States,
especially universities, you know, STEM areas, AI research, Silicon
Valley. So there’s a very good chance that when your kids go to
college—you said your daughter’s two years old—there’s a good
chance she meets an Indian and falls in love with them. And the
in-laws that you’re with at her reception dinner are going to be
Indian in-laws.
Matt Teichman:
And already, in our generation, that was the
case for me, growing up.
Shruti Rajagopalan:
Exactly. So that’s only going to be more
so because India is incredibly young. About 46-47% of the Indian
population is below 25. So it’s one of the younger countries in the
world, especially at that scale.
Matt Teichman:
Can we contrast that with other countries?
Like, what would be the ratio for China?
Shruti Rajagopalan:
Yeah. So the median age in China is about
10 years more than the median age in India. India’s median age is, I
think, 27.5, and China’s is about 38. I think the United States is
thereabouts. Some of the Northern and Western European countries are a
little bit older, Japan is much older, and so on. Now, Africa: there
are many countries that are actually incredibly young, the median age
is like 15, 17, 21, and so on.
Matt Teichman:
Because there are a lot of them with high
birth rates, aren’t there?
Shruti Rajagopalan:
One, because of high birth rates, but
also low life expectancy. Whereas Indian life expectancy is on par
with a lot of the developed world. So that’s one of the reasons the
fact that India skews young matters so much: because these people are
going to be around for a long time—
Matt Teichman:
—all those Ayurvedic herbs keeping people
old—
Shruti Rajagopalan:
—and high fertility rates. India has
just reached replacement rates. And, you know, in terms of a direct
comparison with China, China and India’s population were the same last
year for the first time. This year, India has just surpassed China’s
population. But I think the more interesting trend is that China’s
population has peaked this year. And China’s population is going to
decline. It’s going to actually de-populate, like a lot of the
developed world. Like Korea, like Japan.
Matt Teichman:
And is that because the birth frenzy pretty
much has already happened, and now we’re in the after-wave of that?
Shruti Rajagopalan:
Yes. And there’s also something
interesting happening. You know, initially, I thought it’s the
one-child policy in China that pushed fertility rates to drop so much.
Matt Teichman:
—yeah, that’s of course what I thought
too—
Shruti Rajagopalan:
—but oddly enough, you see the same
trend in South Korea, and they never had a policy like that. So
there’s something going on in the East Asian economies, where when
they grow very rapidly, the fertility rate drops quite steeply in a
way that we didn’t see in the previous centuries, when the Western
world developed rather rapidly. So there’s something going on
there. I’m not a good demographer; I have no idea how to decode
that. I also don’t know that much about the East Asian cultures, you
know, what’s driving this culturally.
The trend, though, is that China is going to depopulate, and India’s population will only peak in 2065. So over the next 40 years, India will add a quarter of a billion people, and China will lose a quarter of a billion people. And so, that’s a pretty big trend. If we’re thinking in terms of the next century, we’re going to add a couple of billion people in Africa, right? So if your horizons are 30-50 years, you should really focus on India. If your horizon is 100-120 years, you should really focus on Africa. I think we should focus on both. I’m a strong believer in long-termism and economic growth, for human well-being, and flourishing, and innovation. So that’s why I was paying attention to these trends. And over the next three, four decades, it’s really the decades for Indian talent.
Matt Teichman:
Although I guess if you go to a longer
timescale, does that mean that’s more opportunity for the trends to
change?
Shruti Rajagopalan:
Absolutely. So trends can change both for
cultural reasons: there can be productivity shocks, there can be
fertility shocks. You know, various things can happen. But these are
projections based on what we know today, which is the trends based in
the past and what we expect in the future. But all of this could
change, and the world could also rapidly depopulate if there are other
unforeseen events—like pandemics, an asteroid hit in some part of
the world. I mean, there are crazy things that can happen. A nuclear
war, for instance, wiping out entire nations. So of course one can’t
predict with any kind of certainty, but this is what the trend line
looks like.
Matt Teichman:
What are some other changes that have been
taking place in India in very recent years?
Shruti Rajagopalan:
So one thing about the current Indian
demographic, which is different from, say, my parents’ generation or
my grandparents’ generation, is how connected they are to the rest of
the world. And this is a consequence of a few different things. Of
course, there are major technological shifts. The whole world is more
connected, thanks to the internet and telecom, and basically, the cost
of those kinds of innovations just dropping at such a scale. In India,
in particular, since 2015-2016, a telecom company called Jio—this is
led by Reliance, Mukesh Ambani, who’s one of India’s biggest
businessmen—he decided to come into the telecommunications market
and just drop the price of data.
And until then, data was relatively cheap, given other countries, but it was not relatively cheap given Indian GDP per capita, right? And Indian GDP per capita is about 2,000 to 2,200 dollars, depending on which measure you use. With his innovation and entry in the market, he decided to drop the cost of 1 GB to 6 paise. I don’t even know what that registers as in cents, right? It was just so cheap. So for the first—
Matt Teichman:
And probably most areas of the country don’t
have broadband internet yet, right?
Shruti Rajagopalan:
Exactly.
Matt Teichman:
So this is the way to get data out into new places.
Shruti Rajagopalan:
Exactly. So what Indians have done—it’s
interesting you mentioned broadband. Most Indian households have
completely bypassed the broadband stage. You know, the standard thing
is: people get a landline, and then maybe they get access to a cell
phone in each household, then they get broadband for the whole
household, and then the really productive members of the family end up
getting a smartphone.
And India just leapfrogged into the smartphone world because the cost of data and the cost of calling was so cheap. Both Indian and Chinese manufacturers managed to replicate smartphones. I mean, it doesn’t do what my iPhone does, but it can do about 90% of what my iPhone does, which is what really matters, at a fraction of the cost.
For instance, my parents’ housekeeper, or the guy who comes to pick up the garbage, or like a rickshaw puller. You can pay a rickshaw puller in Delhi using online payment systems, peer-to-peer payment, or the unified payment system, UPI as they call it in India. So this would be like Google Pay or Venmo that, you know, you and I might split lunch over. They can do that in India, using a smartphone that wasn’t too expensive, using data that is really cheap. And this group is really connected to the rest of the world. They’re all on Meta, on Facebook, WhatsApp, Instagram. India was a huge user of TikTok before the Indian government banned it, when India and China got into a serious border conflict.
So this is the most connected Indian generation ever in history. It is also the most educated Indian generation ever in history. India majorly democratized education. Now, there are lots of problems with that—not the fact that they democratized education—but the quality is very low. In the poorer demographics, and especially the rural schools, even today, there are students in the fifth grade or the seventh grade who can’t write their names, who don’t have basic numeracy and basic literacy, especially in a non-native language like English.
Matt Teichman:
Are we mainly talking about primary education?
University education?
Shruti Rajagopalan:
Primary education. So I’m talking about
e.g. an eighth grade student who doesn’t have third grade level
skills, because the schools are not that great. But this is still an
improvement if I take the hundred-year view, when most of these groups
were disenfranchised and never allowed within a mile of a school or
could never afford to go to school.
Matt Teichman:
Yeah, showing up is the first step.
Shruti Rajagopalan:
Right? So in that sense, India has really
democratized connectivity and education. So this is really the first
group of people who are disconnected to what’s happening in the rest
of the world. And I think that matters. So that’s one of the more
recent trends that’s taking place.
And India has, I believe, 860 million people with smartphones out of 1.4 billion. So smartphone penetration is pretty high. If we count it as a percentage of households, that’s an even higher proportion because typically the male member or the patriarch of the family who’s going to work will have the smartphone, but the household has access to one.
Matt Teichman:
And presumably, what you said about people’s
first experience using the internet being through a phone—maybe that
also applies to the phone in a lot of cases, right? Their first
experience talking on the phone would be with a portable phone or a
smartphone.
Shruti Rajagopalan:
Exactly. I had a really interesting
experience. I was flying to Mumbai. This was a few years ago. I was
waiting in line and the person who was sitting next to me was, I
believe, an executive from HBO, or one of the syndication channels
that HBO syndicates to. And we were just exchanging the basic, “Oh,
hello, how are you? Where are you flying to? What brings you to
India?” kind of small talk. He said he’s going to look into whether
they launch the Game of Thrones in India the same day that it
premieres in the rest of the world, because India actually has the
largest number of Game of Thrones watchers.
Matt Teichman:
Yeah.
Shruti Rajagopalan:
But they’re doing it illegally, or on
torrents or on streaming, and they’re all watching it on their phones!
It’s a wildly popular and successful show in India. But HBO was not
making money on that model very much because they didn’t realize how
popular the show is. So they thought—I think this was like maybe
six, seven years ago, so the last couple of seasons was what they were
trying to time simultaneously. I hope I’ve got the dates right.
But that was very telling to me. Indians have the eyeballs. We may not be high in GDP per capita, but what internet connectivity, and smartphone connectivity to the rest of the world, and cheap data gives is: they can be the eyeballs for virtually anything that’s happening in the rest of the world. And people who want to capitalize on that are going to start tailoring their content.
Avengers is hugely popular in India. In my parents’ gated community, the school buses will come and drop everyone outside. This is just a suburb of Delhi. When school ends, there be a long line of buses and kids getting off. The number of backpacks that have Iron Man, and Thanos and, you know, all the Avengers characters, in a suburb of Delhi, right? It’s a relatively well-off suburb, so I’m not surprised that they have access to Western content. But it’s hugely popular. India is going to be a big market, and that’s also going to influence how the West—especially, those in LA—are going to make the content. You’re going to see more and more South Asian characters. You’re going to see more and more South Asian themes, avatars, things like that, woven into stories. Indian mysticism, or Hindu mythology. I expect—
Matt Teichman:
—yeah, that was my next question. Like are
school kids getting off the bus in a suburb of LA going to start
having Bollywood iconography on their backpacks?
Shruti Rajagopalan:
Exactly. And this year, one of the
Indian songs, Naatu Naatu, won the best song at the Oscars. That was
a really big deal in India. But also, it felt like the number of
people in Mercatus who asked me that a question about that movie or
about that song, that was quite incredible. Like, most of them don’t
work on the India program and so it’s sort of a cultural lens. You
think running the Indian political economy program, people would ask
me a lot of like econ questions. The question I’m asked most often is:
do Indians really marry the way they show on Indian matchmaking, the
Netflix show? So this stuff is already penetrating. Bridgerton has
Indian characters, though in a very clumsy fashion. But it does have
Indian, South Asian characters.
So I think there will be this kind of cultural mingling, hopefully more niche, more sophisticated. We saw that happen in Britain. With multiple generations of Indians in Britain, British born Indians, or British born Pakistanis had a huge impact on their comedy, on their culture, on their food—on their prime ministers, now. You have some serious Punjabi influence, both with what’s happening in Scotland, you have a Pakistan Punjabi who is now going to be at the helm, and you have Rishi Sunak, of course, in England. I anticipate all this is coming. It’s just going to take a few more years in the US.
Matt Teichman:
Another observation you made that struck me is
that there’s been a real uptick in venture capital investment in
Indian startups. How exactly has that gone?
Shruti Rajagopalan:
There’s a bit of a history to this. So,
in the ‘90s, when the United States opened up the work permit H-1B
category for certain kinds of jobs, especially STEM categories, and
invited a lot of Indians, because Indians were English speaking, India
produced a lot of engineers. A lot of computer science, coding talent
in India.
Matt Teichman:
I teach computer science now, and there’s a
seemingly infinite supply of students coming from India.
Shruti Rajagopalan:
That wave really started in the ‘90s. So
sort of the first wave of immigrants from India came in the ‘70s,
because in the ‘60s, the United States started liberalizing
immigration restrictions, especially from many Asian countries. And
then, in the’ 90s, you really saw the tech wave coming in. There were
a lot of people who came in, and they were part of the early stages of
the internet revolution. What we used to call the dotcom revolution,
you know, in those years, if you’re of my vintage.
Matt Teichman:
Yeah, the dotcom boom. It’s such a quaint term.
Shruti Rajagopalan:
The dotcom boom and then the dotcom bust.
Matt Teichman:
Right.
Shruti Rajagopalan:
We witnessed both. Do you remember Y2K,
Matt? That was such a big deal.
Matt Teichman:
Oh, my god. Yeah, my entire youth, people were
so worried about it.
Shruti Rajagopalan:
Yeah. And that was nothing. It was like
not even a blip that registered. I doubt it’s making it into history
books even now. So this was the wave of Indians who came. And India
also liberalized its economy in 1991. One of the biggest exports that
took off after liberalization for India is technology exports. These
are companies like Infosys, and Wipro, and TCS, who started doing the
frontend and the backend of tech for all the banks. All the big
giants: everything from Walmart to J.C. Penney to J.P. Morgan. These
were the companies that were building out the tech infrastructure.
Matt Teichman:
Does liberalization in this context mean
‘government regulations that make it easier to have a multinational
corporation’? What does that mean, in this context?
Shruti Rajagopalan:
Liberalization in this context means that
India actually removed a very large number of its import and export
tariffs and actually devalued its currency and opened up to global
trade, which until then was completely controlled by the
government. Anyone who wanted to import anything, they needed a whole
bunch of licenses from the government. There were actual licenses for
the item they were importing. They had to show that it was
essential. Then they needed to get the foreign exchange to actually
pay for the imports. So they needed a special license to earn that
foreign exchange. Again, they had to show that it was essential.
I mentioned Infosys, right? So one of the founders of Infosys, Narayana Murthy, has written in this lovely book chapter on India’s transition from socialism to markets, where he said, to get a simple mainframe computer, he had to make 50 trips to Delhi from Bangalore, just to get all these licenses and permissions so that he could actually import a mainframe computer, which should not be such a big deal.
We couldn’t get CD players or Nike shoes, I mean, nothing, right? India was very much whatever was made in India is what was sold. And for me, I was about eight years old when India liberalized, seven years old. For me, the biggest change was suddenly there were more than two brands of chocolate.
So even as an eight-year-old, we really felt it like, now I could get Pepsi. And I wanted to drink Pepsi because Michael Jackson was drinking Pepsi. And that was like a really big deal. I think I’m dating myself on your show for all your listeners.
So that was what was going on in India and liberalization in terms of exports. Now there weren’t export caps. There weren’t, you know, all these permissions needed to actually create backend tech for a bank or for financial service, which means companies like Infosys could start exporting their tech services, right?
And that also meant a lot of immigration. So, you know, there was an entire generation that came over in the ‘90s and Silicon Valley was a great place to attract those. So the first generation are like Vinod Khosla, you know, that vintage of VCs that came out of that tech boom.
There were a bunch of Indian South Asians who made big money developing things, Hotmail was invented or founded by an Indian and then sold to Microsoft. So this was Sabeer Bhatia, Vinod Khosla. These are like very early stage guys.
So India’s had a foothold in Silicon Valley, both in terms of immigrant workers and talent and computer scientists and coders, but also in terms of people who made the first bit of money 30 years ago and could be part of the venture capital world. So India’s had both of those. And they had their eye on developments taking place in India.
So when startups started succeeding in the US, there was the first way was, hey, let’s make X for India. You know, how do we think about DoorDash for India? Or how do we think about Postmates for India? Uber, of course, went to India as Uber and so on.
Then the next generation of startups is really tech and SaaS based startups. Again, because India had this natural advantage for 30 years that had been Indian companies that had been working on SaaS programs. That talent pool already existed, so now India started developing these kinds of technologies for startups that were serving the whole world, not just India and not just Silicon Valley.
And now the third wave of this is edtech, for instance. India is one of the largest education markets. The state education system is kind of broken and technology can penetrate that market in a huge way. And—
Matt Teichman:
—this is maybe connected to the fact that
there’s so many people online, as you observed earlier, right?
Shruti Rajagopalan:
Exactly. There’s so many more people
online, they’re hungry for education, and now they’re all
connected. And there’s a unified payment system. So anyone with a
smartphone can now immediately pay for classes and use those
services. The edtech, fintech, e-commerce, Amazon, Flipkart: all these
became the next things that boomed.
In 2021—and of course, a lot of this is driven by US monetary policy. There was a lot of capital flooding the system. Interest rates were relatively low. There were 41 or 43 unicorns in India that year, I believe one every nine days. That was kind of a crazy hot year.
Matt Teichman:
And a unicorn means it’s a privately held
startup, which received a \$1 billion valuation inside of a year—
Shruti Rajagopalan:
—exactly, a valuation of over a billion
dollars. Exactly. That’s a unicorn. So there were 43 of them
in 2021. Of course, that’s tapered off.
Matt Teichman:
That seems like a lot.
Shruti Rajagopalan:
It was an odd year.
Matt Teichman:
43 times a billion?!
Shruti Rajagopalan:
It has kind of reduced, which is good,
but that was like a year with a lot of hot money. But now, because
there is this relationship between Silicon Valley and the tech
community in India…and there are also a lot of venture capitalists
who have Indians either working there or who are founders of those
funds, who are keeping their eye on India. There’s this healthy
exchange between Bangalore and San Francisco. We see that that
community is very plugged into what’s happening in India.
Also, people who are looking at owning NFL franchises, or those who are in broadcasting, or those like Netflix and Amazon, they all look at India, even though India is relatively poor, doesn’t have very high GDP per capita, lots of eyeballs, right? Which means that could be a great market to penetrate, if not for anything else, just for data mining. How can we make our algorithm better? How can we make our systems better? How can we make sure that the little boxes with content that we have on the Netflix screen, how does it appeal to people from virtually anywhere in the world with very little education?
So India can also be the testing ground or the laboratory for a lot of these things. That’s sort of what I see happening right now. Emergent Ventures is not a VC, but our approach is very much like a VC. We like to support moonshots.
Matt Teichman:
Should we say something about what Emergent
Ventures is? It’s a grant program?
Shruti Rajagopalan:
It’s a grants program. We like to support
moonshots. It was started by Tyler Cowen. And one of the things
Tyler—
Matt Teichman:
—it has occasionally (actually frequently)
been known to support the Elucidations podcast—
Shruti Rajagopalan:
—yes. Matt is an EV winner, and I’m an
EV winner myself. And one of the things that happened when I first
came to Mercatus—and EV was entirely Tyler’s baby—in the early
stages, what he learned was: there’s something really interesting
happening in India. Some of the best applications that he gets—the
highest application to success ratio—are either Indians living in
India or Indian immigrants in his favorite place to quote is Ontario,
Canada, but also various suburbs in the United States, Singapore.
So, he was like: something interesting is happening with Indian talent, and he was the first to spot it. Then he passed on a few applications to me and said: “You have a lot of context, you work on the India program, see if you can find some trends, have some interesting picks.” And I thought, I’ll just help him and, like, nudge the effort in a particular way, but now, EV India on its own is more than 100 winners. We have an EV India meetup—like the kind that’s happening this weekend, we have one in India. And we’re going to do it again this year.
That has grown into something phenomenal, and we support a lot of early stage startups. This is pre-pre-pre-pre-seed. This is kids building a robot or a drone, or an air pollution filter—you know, things like that—right out of college, in college, dropping out of high school. We try to help them with that development. And some of them hit big, some of them have been valued at pretty high numbers, some of them have won Y Combinator and other incubator programs, some of them are going on to raise series A money, and so on. That group has done really well.
The trends that I am picking up, or at least the EV applications that I see, are clustered in a few areas. One of them is climate change: a lot of deep tech working on climate change solutions, upcycling plastic, capturing carbon, trying to create, air pollution—filterless air purifiers to at least mitigate air pollution—though it can’t be solved by that. You know, people working on electric vehicles, particular kinds of technology. There are lots of people working on measurement issues, using drones and other devices that they’re developing. So just lots of interesting stuff there. And there’s a number of them working on edtech, either from a philanthropic point of view, or as commercial, for-profit ventures.
These are two interesting areas, and the other is just a lot of interesting deep tech hardware solutions. Again, the numbers matter: it’s a relatively poor country with large numbers of people. So you can experiment things at scale: can we make prosthetics at scale? I just set up a call—received an EV application—for someone who is looking at hearing aids. India is a great place for that; the numbers are just so large, so if you can do it at scale, then not only are you making for India today, you’re making for Africa tomorrow. So those sorts of things I find super exciting. I’m looking forward to more applications in this space, sort of deep tech, hardware solution, low cost solutions that can be scaled up—not just for India today, but you know, also Africa tomorrow.
Matt Teichman:
Do you think there’s anything, just speaking
in broad brushstrokes, about Indian culture that makes the general
approach to tech different, coming from there?
Shruti Rajagopalan:
I think it’s a very problem solving
approach . We need to fix a problem, right? Sometimes it can be
quite—
Matt Teichman:
—it’s like the abundance of problems gives
you lots of—
Shruti Rajagopalan:
—exactly—
Matt Teichman:
—your work is cut out for you.
Shruti Rajagopalan:
And then you’re clever about it. So
sometimes it could be as simple as: you know how to fix a leak with
lots of tape and, I don’t know, Play-Doh, and a bunch of things.
Matt Teichman:
Right. It’s like a MacGyver approach to
dealing with problems.
Shruti Rajagopalan:
Absolutely. I couldn’t have put it
better: it’s a MacGyver approach to dealing with problems. That is
such a cultural thing, that I have no doubt that it also seeps into
tech, and it also seeps into developing hardware solutions, and deep
tech solutions. Thinking a little bit laterally, thinking about: what
are the problems regular people are struggling with? I was actually
joking about this with someone the other day. There’s a lovely EV
project that we’ve supported called LooCafe: “loo” like the
restroom. These are smart toilets, because India is, you know, just
lacking state capacity. It also has problems of open urination, open
defecation.
Matt Teichman:
Does smart toilet mean it connects to the
internet? What does that mean?
Shruti Rajagopalan:
Exactly. It connects to the internet. It
has some self-cleaning mechanisms. It can alert the maintenance staff
when certain levels, you know, odor, cleanliness, bacteria are above
the level that they would like for it to get clean. They had already
developed the structure of it, and they also had some governments that
were willing to deploy the pilots. But they wanted to develop the
smart portion of it, which is: it talks to the internet, they’re all
connected to each other, it can actually give the company—you know,
it’s difficult to go to sort of remote areas to keep checking on these
things. A lot of information in real time about how the toilet is
being used, how it’s functioning. That that was a serious tech
development that needed to happen, and we were willing to help with
that development, so we sort of funded the development cost for
that.
But that is a uniquely Indian problem, and this is a uniquely Indian solution. The joke there was: I said, well, San Francisco could use this, because it takes them like a million years and a bajillion dollars to have one public restroom, and they now have a problem of public urination and open defecation.
Matt Teichman:
Yeah. Big problem in South Africa, too, right,
in a lot of urban areas?
Shruti Rajagopalan:
Exactly. In many—
Matt Teichman:
—maybe not even a smart toilet, we could
just use a toilet at all.
Shruti Rajagopalan:
Exactly. So these things can be deployed
in an interesting way. And now, this is an age old cultural problem:
the state capacity problem that India is also trying to solve using
tech, and the smart internet connectivity of things in some clever
way. Yeah, a lot of the Indian solutions are quite interesting.
Matt Teichman:
So the idea that India is going to be a major
player in the world economy immediately gets me thinking about, like,
what kind of impact is that going to have on the world? How is Indian
culture going to disseminate?
And I keep coming back to the remark you made at the beginning about how India has in common with the US the fact that there’s sort of a melting-pot culture. But one contrast that jumps to mind is that India is, for example, very linguistically diverse. There’s different ways of counting, but approximately like 125 or so languages are spoken there, whereas the US is a particularly monolingual culture. I wonder whether a certain number of years of people coming from this place where so many different cultures and religions and demographic groups and languages are all sort of jammed together, where many people inhabit simultaneously different identities, and switch between them, and code switch, what kind of impact that could have as more of that becomes mainstream worldwide?
Shruti Rajagopalan:
I’ll answer in two parts. The first part
is: I think India’s at an interesting point in its economic
trajectory, where it needs to really start manufacturing for the
world. China is slowing down when it comes to manufacturing; they’re
already too rich to be manufacturing what they were doing
before. Malaysia took that spot, now Bangladesh is taking that spot.
Matt Teichman:
China has to find its own “China” to
manufacture its steel.
Shruti Rajagopalan:
Exactly. And now that is parts in
Africa, Bangladesh—but India has always from its socialist times had
a really big problem with scale, like large-scale factories,
large-scale companies. Tech completely escaped that because tech
really emerged in the early ‘90s after liberalization. A lot of the
regulation that actually impacts other brick-and-mortar factories and
manufacturing never really impacted tech. That’s one of the reasons it
grew in the shadow without any government oversight.
Matt Teichman:
The liberalization was in the ‘90s?
Shruti Rajagopalan:
Yes. 1991. And so, what happened with
tech, we need to do with manufacturing. We need to stop punishing
scale. We need to think about how to make a labor-rich country
actually use its labor and manufacturing, as opposed to a tiny elite
group, which is in services, and exporting tech, and a very large
percent of the population, almost half, still stuck in rural areas in
an agrarian economy which is not that productive. The agrarian economy
employs about 45% of Indians, whereas it only produces about 15% of
the GDP. And services, which only employs about 15% of Indians
produces over 50% of the GDP. India has to really bridge that
gap. Most developing countries eventually became manufacturing hubs
before they got too rich, and then stopped doing that, and got into
like knowledge production, high-end design, sort of like the South
Korea trajectory.
First is: India needs to do that. And for that, it needs to reform it’s stifling regulation, which is really what’s prevented manufacturing from booming. It also needs to very seriously think about investing in its human capital.
Matt Teichman:
Yeah, because I don’t know if this is true,
but certainly you hear this through the grapevine. Someone wants to
know: what are some examples of countries with a labyrinthine
bureaucracy? France is always at the top of the list, and I feel like
India is often also at the top of the list.
Shruti Rajagopalan:
Yes. But France got there after it got
rich.
Matt Teichman:
Ah, yeah.
Shruti Rajagopalan:
India started out that way, which is why
it never got rich. And so now part of the 1991 reforms and
liberalization was reforming the Indian economy such that it could be
better suited for a market economy than a command and control
socialist system, which is what it had before. So this transformation
is not yet complete, and the transformation is always painful, which
means we need to develop human capital in a serious way—health and
education—so that people can actually switch. People can actually
move from rural areas to urban areas, from agricultural to
manufacturing jobs, from manufacturing to tech jobs, or from
agriculture to tech jobs. They can literally move location, they can
move to urban areas, which is what Indians want in overwhelming
numbers.
These are just some of the things that the Indian policymakers need to crack, so that India can be the production powerhouse for the world, at least over the next 20, 30 years before it gets too rich, and then passes the mantle on to the next.
The second part of your question is not so much about goods and services, but about people: people moving from one point to another. I think you’ve zeroed in on absolutely the right thing, which is: anyone growing up in India—I mean, of course, there’s so much linguistic diversity, there’s a lot of religious diversity—but it’s also a very segregated and hierarchical society, mainly because of the caste system. So it’s wholly possible that even though you live in a really large city, which is very multicultural, you never really see people who are that different, because you live in a particular neighborhood, and neighborhoods are segregated by caste, by religion, by social hierarchy, economic hierarchy. But we all have to code switch, because we have grandparents who literally came from another century, who don’t speak English, so we need to be fluent in how we talk to them. We can’t be drinking Pepsi and wearing torn jeans, or at least that wasn’t cool when it came to my grandparents. But we also need to be able to do that when we go out with our friends. And we also need to, when we emigrate out and we come to the United States, you should be able to discuss Seinfeld, if I’m talking to Matt.
Matt Teichman:
Yes, that’s very important.
Shruti Rajagopalan:
There you go. I knew you were a
Seinfeld guy; I just had this feeling. This is something that Indians
are able to do in more than one language, across more than one
religion. They understand social hierarchies well and the need to code
switch. This is actually why I think Indians have also been very
successful as CEOs in Silicon Valley. A lot of the big firms are led
by and have Indian CEOs like Google, like Microsoft. This is one
particular superpower.
The other that you mentioned is the assimilation factor. Devesh Kapur and Sanjoy Chakravorty had this wonderful book called The Other 1 Percent where they talk about how Indian immigrants to the United States have ended up becoming this modern minority. They’ve assimilated really well. They’ve taken a lot of the high end knowledge sector jobs—
Matt Teichman:
—a lot of that has to do with the history of
immigration policy here, right? And how we basically let in very rich,
highly educated people in the ‘60s, etc, right?
Shruti Rajagopalan:
Exactly. But that also meant that
culturally, because they were trained in English in India, they spoke
English at very high fluency, sometimes near native levels. And the
other thing is that they took on the jobs of, doctors, or engineers,
or university professors; basically, jobs that had a lot of status and
prestige in the community. So even if you’re in a small town in
Alabama or small town in South Dakota, and the Indian there is your
gastroenterologist. Or they are your, I don’t know, eye doctor, or
something like that. That ends up being a very visible job, and
they’re quite well integrated into the community, and they assimilate
pretty well, and they’re able to code switch. So the Indian minority
immigration happens slowly, starting in the ‘70s. Now it’s much
faster, but the assimilation has been fantastic. And I think the
European countries need to learn from the United States, and try to
adopt something similar for their countries.
For instance, Estonia is tiny. If they want Estonian to survive as a language, they need to slowly bring in high skilled Indians or even relatively low skilled Indians. Try and cultivate a way—a process—by which they can assimilate, that can actually have long-term permanent residency, eventual citizenship. And there has to be an Indian-Estonian hyphenate. Like, the United States is full of hyphenates. You have Korean-Americans, you have Vietnamese-Americans, you have Indian-Americans, you have Pakistani-Americans. You don’t have Indian-Danes.
Matt Teichman:
Right. Yeah.
Shruti Rajagopalan:
You don’t have Indo-French. This is
something that the European countries that are aging and
depopulating, they need to bring this in a slow and systematic
way. Otherwise, when the crisis point comes, you’re suddenly going to
have, like, 100,000 Indians doing all the low-skill, not so high
status jobs. And you’re going to think: “Oh, all these immigrants are
terrible. They don’t understand our culture. They don’t speak our
language. They jaywalk on the street.” You know, it’s going to be
socially very confusing to people. But if it’s done in a very phased
and sensible fashion, and they start looking at the future 30 years
from now and saying, “Oh, our language may not survive. Let’s start
bringing in Indians each year, you know, have them pass a language
test, create a path.” Nobody wants to learn Estonian unless it’s going
to lead to job security, permanent residency, college education for
their kids, and so on. This is something they’ve got to figure out,
and they’ve got to figure out the same with Africa.
Matt Teichman:
Estonia has a great computer hacker
culture. Maybe they can lure in some my Indian computer science
students.
Shruti Rajagopalan:
You know, the reason I picked Estonia
specifically was actually online, Estonians and Indians talk to each
other a lot.
Matt Teichman:
That makes sense.
Shruti Rajagopalan:
You know, through the computer hacking
culture, the hackathons, just a lot of people who inhabit the internet
irrespective of where they live physically. That’s actually one of the
reasons I picked that country, other than the fact that it is also
depopulating, aging, and has a language and a lot of pride associated
with their language and culture that they should keep alive. But these
things have to live in human beings.
Matt Teichman:
Absolutely.
Shruti Rajagopalan:
And guess where all the people are?
They’re today in India and next they’ll be in Africa.
Matt Teichman:
So if things go in the ideal way, according to
you, I wonder if you could paint us a picture of what the “Shruti
Utopia” of productive collaboration between India and the rest of the
world might look like 60 or 100 years from now.
Shruti Rajagopalan:
I think before I get to the productive
collaboration between countries, the most productive collaboration is
always between people. Now, the Chinese government and the United
States government may have lots of strategic issues on which they are
not allied or on the same page. But, for the last three decades, we
know that Americans overwhelmingly wanted to trade with Chinese. They
wanted to buy stuff that people in China made, and that’s really what
led to China’s growth story.
Matt Teichman:
Like the microphone I’m speaking into right
now, for example.
Shruti Rajagopalan:
Exactly. Like the microphone, like the
iPhone I’m carrying right now was pretty much entirely made and
assembled in China, I believe. I mean, the tech and design is from
many other parts of the world, but the actual assembly and
production. So India needs to figure out how it is going to produce
for large parts of the world. Now, India has certain advantages, like
when COVID happened, India was one of the front runners in making
low-cost vaccines at scale. And it’s the reason that the Global South
had COVID vaccines. Even though they were later, the mRNA vaccines
required a particular kind of storage, particular temperatures, they
were completely unsuited for the developing world, whereas India
solved that problem. So India needs to solve our problem for
everything from shoelaces to vaccines, to climate change, to renewable
energy. I just want the Indian economy to open up in a way that all
these experiments are possible. That Indians can actually start
designing, manufacturing, trading with the whole world, where most
Indians have been rather sheltered from that because of the history of
socialism, and the very recent opening up of the economy, and
embracing global trade, and so on. Most of that embracing has been in
the services sector.
That would be the first thing I’d say: I want people to trade. When people trade, and they get rich, India will automatically have a seat at the table in every important global conversation. India already punches above its weight; there are virtually no other countries that are at 2,200 GDP per capita that actually get talked about as a possibly important global player, or the next global superpower, and things like that. But you will see all these clichés being attached to India. You will see Narendra Modi on the cover of every major thing, and he’s very much considered the leader of the global south. India being a constitutional democracy, if it can keep it—as Jefferson said—if he can keep it, with getting richer, I don’t think India has to do something special to be very important geopolitically, I think it just will be.
On the other hand, if India does not grow rich, and if it grows old before it grows rich, then it’s going to be a damn nuisance for the rest of the world. Because then there’s going to be a lot of social turmoil; there’s going to be economic turmoil. Who is going to be making stuff at a low enough cost that can actually serve Indians, who are not a very high income country by the time they got old. That is something India has to resolve very quickly. It has only about a decade and a half, and that’s giving a lot of leeway.
Matt Teichman:
That’s interesting. So there’s kind of a race
to get rich before you get too old as a country.
Shruti Rajagopalan:
Exactly. I think that’s the main puzzle
India and Indians have to solve. Everything else will follow. And the
reason I’m focused on talent is: even if Indians are not in India, no
matter where they are in the world, we know that young people of
tomorrow have to solve the problems that the next generations confront
and have to solve. So it could be pandemics, it could be nuclear war,
it could be asteroids, it could be solar flares, it could be stuff we
have never even imagined; but we know that they have to solve it. My
focus is always on: let’s really bet on human capital and talent. And
the whole world, especially the developed world, should give that
talent a chance at their universities, at their workplaces, in all
kinds of cultural exchange. Make it easy to get a visa so that EV
India could be integrated this weekend with EV United States. It’s
like, I don’t know, 500 days to get a visa appointment in India right
now to the US? I don’t want a tourist visa—I’m not talking about
immigrants and work permits—I’m just talking about visiting for a
weekend.
These are just things that people everywhere in the world have to be a little bit more sensitive to, and have their eye on the ball, so that they can cultivate that talent—they can make sure that talent is in their corner, looking at the problems they want to solve and throwing light to cultural, social, economic, tech issues that they hope become important.
Matt Teichman:
Shruti Rajagopalan, we’ll have to have you
back once we’re in that future utopia to talk about how well it
went. Thank you so much.
Shruti Rajagopalan:
Thank you so much, Matt. This was a
pleasure. Always a pleasure to talk to you.