Joe: Alright Lewis, I'm going to say the name of a book, and you have to give me your gut reaction, like a one-line roast. Ready? Restart: The Last Chance for the Indian Economy. Lewis: Okay... sounds like the title of a movie where Bruce Willis has to defuse a fiscal bomb before it bankrupts a billion people. Joe: You are not far off. It’s got that level of drama. Today we’re diving into Restart: The Last Chance for the Indian Economy by Mihir S. Sharma. And what makes this book so compelling is that Sharma isn't just a dry academic. He's a trained economist, yes, but he's also a career journalist. Lewis: Ah, so he can actually write a sentence you don't need a PhD to understand. Joe: Exactly. The book was widely acclaimed, won awards, but it also stirred up a lot of controversy. It's been called a "blunt, acerbic, and well-researched critique" of modern India. He doesn't pull any punches, which is why it's such a fascinating read. Lewis: I'm in. An economics book with a bit of a backbone. So where does he even start with a topic that massive? Joe: He starts by taking a sledgehammer to one of modern India's most sacred stories: the celebrated 1991 economic reforms. We think of it as this moment of triumph, but Sharma argues it was actually India's 'original sin'.

Lewis: Hold on. The 1991 reforms? That's the story of India opening up to the world, right? Manmohan Singh's famous speech, the end of the 'Licence Raj'... How can that be a sin? Joe: Well, Sharma’s point is that the reforms were half-baked. They were born out of a crisis, not conviction. And he pinpoints the exact moment this became clear with a fantastic story about something that sounds incredibly dull: fertilizer subsidies. Lewis: Fertilizer. Okay, you're really selling the drama here, Joe. Joe: Stick with me. In 1991, India was broke. It had to fly its gold reserves to Europe as collateral for loans. The new Finance Minister, Manmohan Singh, knew he had to make deep, painful cuts. One of the biggest drains on the treasury was the fertilizer subsidy, which had ballooned tenfold in a decade. So, in his budget, he announced a 40% price hike. Lewis: That sounds like sensible, if painful, economics. What happened? Joe: All hell broke loose. Politicians from his own party, the Congress party, were furious. They saw it as political suicide. The Prime Minister at the time, Narasimha Rao, got cold feet. He convened a meeting, and under immense pressure, he caved. He sent a bureaucrat to tell Manmohan Singh to roll back the price hike. Lewis: Wow. So his own boss threw him under the bus. Joe: Completely. Singh was humiliated and offered to resign. But they reached a compromise. They’d only raise the price by 30%, and—here's the crucial part—they would exempt 'small and marginal farmers' from the increase. Lewis: That sounds reasonable on the surface. Help the little guy, right? Joe: That's the 'pro-poor' loophole that Sharma says became India's 'original, stinking sin'. In practice, it was a disaster. A farmer in Uttar Pradesh is quoted in the book immediately seeing the problem: now big farmers would just bribe officials to get themselves classified as 'small farmers' or buy subsidized fertilizer through fake names. The system was designed to be gamed from the start. Lewis: So the compromise created a new avenue for corruption. Joe: Precisely. And it set a terrible precedent. It taught a whole generation of politicians that real, painful reform was too politically costly. It's better to do a half-measure, create a loophole you can call 'pro-poor,' and kick the can down the road. Sharma argues this single event created the template for the next 25 years of Indian economic policy: an 'agenda unfinished'. They liberalized product markets—so you could buy foreign candy bars—but they never touched the really difficult stuff: land, labor, and capital. Lewis: Okay, so the government was too timid to finish the job. But what about the private sector? Weren't they the big winners here? Weren't they supposed to build the new India? Joe: That is the perfect question, because it leads directly to the second great myth Sharma wants to bust. He argues that the Indian private sector, far from being the hero, has been one of the biggest parts of the problem.

Lewis: How so? The story we hear is all about Indian innovation, the rise of tech giants, this idea of 'jugaad' or frugal innovation. Joe: And Sharma calls 'jugaad' a curse. He says it's a euphemism for a 'make-do' approach that prioritizes cutting corners over quality. It's a mindset that has trapped India in a low-cost, low-quality, low-innovation equilibrium. And this is where the stories get really shocking. He points to the pharmaceutical industry as a prime example. Lewis: I thought that was a huge success story for India—making affordable generic drugs for the world. Joe: It was, on the surface. But Sharma tells the story of Ranbaxy Labs, which was once the jewel in the crown of Indian pharma. In 2008, it was sold to a Japanese company, Daiichi Sankyo, for over 4 billion dollars. But the Japanese had been sold a lie. An internal investigation, led by a brave whistleblower, found that Ranbaxy had been falsifying drug test data for years. Lewis: Wait, falsifying data? What does that even mean? Joe: It means they were selling drugs without proper evidence that they were safe or effective. The book details horrific findings: labs in unsanitary conditions, test results being faked to get approvals. There's a chilling quote from a senior executive who, when told their AIDS drugs for Africa might not be effective, allegedly said on a conference call, "Who cares? It’s just blacks dying." Lewis: That is absolutely horrifying. That's not just bad business, that's a complete moral collapse. Joe: Exactly. Ranbaxy eventually had to plead guilty to felony charges in the US and pay a half-billion-dollar fine. The Japanese company sold what was left of Ranbaxy for a massive loss. Sharma uses this story to show that the problem isn't just a few bad apples; it's a systemic issue of weak governance and a culture where owners, or 'promoters' as they're called in India, are rarely held accountable. Lewis: So it's a system of 'survival of the fattest,' not the fittest. Joe: That's the perfect way to put it. He uses another incredible example: Vijay Mallya, the 'King of Good Times'. His Kingfisher Airlines was a financial disaster from day one. It was a premium airline in a low-cost market, a terrible business decision. Yet, he used his flamboyant image and political connections to get thousands of crores in loans from state-owned banks—taxpayer money—long after it was clear the airline was failing. Lewis: The 'too connected to fail' problem. Joe: On a massive scale. And Mallya is just one example. The book points out that between 2007 and 2013, government banks wrote off five trillion rupees in bad debts, and 95% of that was for large loans to big companies. It's a system where politically connected oligarchs get cheap land, cheap capital, and bailouts, while genuine entrepreneurs struggle. This is the world of crony capitalism that the half-baked reforms of 1991 created. Lewis: This is a pretty bleak picture, Joe. It sounds like both the government and the private sector are broken. It's easy to see why people would blame India's messy, chaotic democracy for all of this. Joe: It is. And that's where Sharma delivers his most powerful and counter-intuitive argument. He says we're all looking at it wrong.

Lewis: How can democracy possibly be the solution? Authoritarian countries like China seem to be so much better at just getting things done—building infrastructure, making decisive policy changes. Joe: Sharma tackles that head-on. He says, yes, China is efficient, but its growth is built on a form of repression that would be politically impossible in India. For example, China practices what economists call 'financial repression'. The government keeps interest rates on savings accounts artificially low, effectively taking a cut from every citizen's savings to fund massive infrastructure projects. Lewis: You couldn't get away with that in a democracy. People would vote you out. Joe: Exactly! And that's his point. Democracy, with all its noise and chaos, acts as the nation's immune system. The economic slowdown, the public anger over corruption, the protests—these aren't signs of failure. They are signals. They are democracy's way of saying, "This growth model is unhealthy. It's unsustainable. It's not benefiting enough people. You need to change course." Lewis: So the problem isn't the noise, the problem was that leaders weren't listening to it. Joe: Precisely. They were nostalgic for the 8% growth of the 2000s, but that growth was built on a house of cards: artificially cheap capital, cheap resources given away to cronies, and a global boom. When those things went away, the system collapsed. Democracy is forcing India to find a more honest, more sustainable way to grow. Lewis: Okay, so what does that 'honest' path look like? What's the prescription? Joe: Sharma lays out five big strides forward, but two really stand out. First, trust prices. He argues the government must stop giving away natural resources like coal, land, and spectrum for cheap. It should auction them off at market prices. This does two things: it brings in massive revenue for the state, and it forces companies to be efficient and innovative, not just well-connected. Lewis: And the second one? Joe: Build 'India-class' cities, not 'world-class' cities. He says the obsession with creating sanitized, Singapore-style cities with wide boulevards and pristine gardens is a disaster for India. It's a model designed for the elite. What India needs are dense, chaotic, but functional cities that provide livelihoods and living space for the millions moving off the farms. He has this incredible example of Mumbai, where restrictive rules on building height, meant to control density, have had the opposite effect: the slum population has more than doubled because there's nowhere else for people to live. Lewis: Wow. So the solution is to build up, not out, and to make cities for working, not just for living. Joe: Exactly. And to get more women working. He calls that the 'silver bullet'. The entry of a massive, underemployed group into the workforce is the biggest possible boost to growth. It's about creating a level playing field, trusting people, and letting the market work. It's a radical vision, but one born from a deep analysis of what went wrong.

Lewis: So, when you boil it all down, what's the one big takeaway here? Is there really a 'last chance' for India, or is that just a dramatic title? Joe: I think the 'last chance' refers to a specific window of opportunity. The book argues that for the first time, the Indian people themselves are demanding radical change. They're tired of the old excuses. The book's ultimate message is one of tough optimism. It says that the 'noise of building'—the protests, the political fights, the anger—isn't a sign of failure. It's the sound of a billion people demanding a better, more honest path to growth. Lewis: So the restart isn't just about a new set of policies. It's about a fundamental shift in the relationship between the state and its citizens. Joe: That's it exactly. The real restart happens when the government stops acting like a paternalistic, all-knowing father—the 'mai-baap' state, as he calls it—and starts trusting its own people and the signals its democracy sends. It’s about moving from a system of favors and exceptions to one of clear rules and accountability. Lewis: That’s a powerful idea. It really makes you wonder, for any country, not just India, what are the uncomfortable truths that our own systems are trying to tell us, if we'd only stop and listen to the noise? Joe: A perfect question to end on. It's a challenge to look past the headlines and understand the deeper currents at play. Lewis: This is Aibrary, signing off.