Inside India's Wealth Gap: AI Jobs, Middle Class, Freebies & GDP | Abhijit | FO521 Raj Shamani

38:21the burpees don't travel well. So you want to, so there's a logic to why these things are available, which is for poor people, they want something a little bit different. They eat, you know, whatever, makai ke roti and some sabzi and it gets tedious. And especially children, I think. Children often say, this is, I had that every day. So mother then says or father then says Chalo I'll get you a bag of chips I think those are very important for survival So you know if you don't And in that sense I am very much against being judgmental about what poor people do I think they have a hard enough life without us criticizing them True, true So they usually consume more chips and more samosas because of indulgent pleasure?

39:19I think not more Because of course we can afford anything But for them it's much more important And it's like a short escape for them Yes And what's with Laddu and Mithai The same Laddu and Mithai I'm just saying It's much more expensive It's much more expensive So it's a much bigger treat They might actually give it to the god Say you know you'll buy one Mithai And you give it to the god And then you share it among your family then you have done some you got some punya and you also got some mitai what if you wrote something about this somewhere it's a good one it's a nice one why is guava so so piara exactly what is in guava so guava turns out has a very is a very good source of bioaccessible iron.

40:21So the problem with iron is partly that many things have iron, but they're not very bioaccessible. Meaning they don't, even if your body gets it, it expels it basically. So you don't actually absorb the iron. The advantage of guava is it's a very good source of bioaccessible iron. And we have a huge anemia problem. we are like with a few other countries we are kind of where the anemia in the world is concentrated and so it was the Guava is it was more that it was an example of some very simple thing we can do to help with with with this anemia issue that there is not a matter of how anemia issue and Guava and economics it's related Well, anemia is a huge productivity issue.

41:20There's evidence showing that, you know, anemic people are 20 % less productive. So big gains from anemia, solving anemia. So that's one part of the economics. Economics productivity is like, you know, if you read the business press, it's like number one issue. So there's nothing so surprising about. And the second thing is, I think that goes back to what I said before about understanding behavior. So what's nice about guava is it's available everywhere. It's really like one of these things that grows in most villages. You don't have to, it's not, and it's tasty. And so people are willing to eat it without really, you don't have to, It's not, you know, that this special sag that you have to eat or this laddu that has made with this and that and the other.

42:20It's much more difficult to implement when it's something that people intrinsically don't. But if a guava, if you tell people that, yeah, eat more guavas, this is still easy. and I think that's the connection with what I was saying with the economics which is understanding what behavioral how do we deal with that people have certain behavioral patterns and if you give them a very difficult challenge you know you have to go to the city and buy this thing and regularly eat it some will do it but a lot won't but if you say that the government is a very good milta hai aap aap har roj ek kha le na perhaps a lot more people will do it true and why will earnings will go 15 % up because anemia just undermines work anemia you just your body doesn't absorb oxygen so you get tired it's very simple iron is you know hemoglobin is related to iron and if the body doesn't don't have enough iron you get tired faster It's very, there's lots of studies of that.

43:33Got it. And what is an S-trap curve of a poverty curve? So, this, the, nice, nice. So, think about somebody, okay, who has extremely low income. When you have extremely low income, you're tired all the time. We talked about anemia, but even just not having enough calories means you're tired. Or I give you maybe an example, I believe, more. Suppose you want to start a business. But you know A business where you have a shop Maybe you can have a shop A lot of If you go to slums all over in India You see that there are lots of shops People basically take Part of their front room And put a wall And put a shelf And then They put some stuff on it And so you are a little Kirana shop Typical, absolutely But maybe you can do all that without a lot of capital.

44:58But if you don't have any capital, you can't put anything on the shelves. And then nobody is going to come to your shop. It's a waste of time. So that means that the productivity of your investment actually goes up very fast as you get more and more investment. okay so what the idea of the S shape is that when you're very poor going from being able to stock two packets of biscuits to six packets of biscuits is still pointless nobody's come to your shop for the six packets of biscuits but if you go to biscuits plus you know some other chips per mixture plus you know other toothbrush plus toothpaste plus shampoo, then people will come.

45:48So the return to capital is steeply increasing for a while. You have more capital. You can just your shop. You have a shop. Your shop is worthless till you have enough. So that's the idea of an S-shape is that for a while, if you think of the left tail of the S, you know a little bit more and a little bit more and a little bit more doesn't do much so you know you have to give a lot you have to get a substantial amount before the business really flourishes because till then it's you know nobody's going to come to your shop for to see if you have the fourth packet of biscuit but they will come if you have many things and you know it's attractive and when I get there I'm going to think of what I'm going to buy but it's a nice attractive shop So it's very much this idea that as we get further up the S, S kind of goes up steeply for a while.

46:51And so that's if you make more investments, you get for a while the returns. And of course, then at some point, if you have a small store, there's no point investing more. So then it becomes the top of the S where it kind of flattens off. so you're saying that if you have to get someone out of poverty giving them small amount of money probably every quarter or every year is not going to make significant difference giving them one short lump sum money is going to make the difference yeah I did an experiment in Kenya where people got either you know I guess monthly small amount of money or they got all of that at the beginning so then this both of this continued for for so I'll actually say it in two steps so this continued for so the monthly small amounts of money continued for two years the lump sum that they got was equivalent to that two year amount okay what was it like what was the monthly it was I think it was so 83 cents a day in but at Kenyan real exchange rate so the amount it's smaller like a monthly in dollar terms would it be it would be something like maybe eight, nine dollars a month.

48:31A month. Okay. So like 800 rupees. Yeah. Somewhere around that. A month. A month. Into 24. Into 24. Or the equivalent in in one lump sum. One lump sum. And you see that the lump sum generates many, many, many more businesses than the so this is a randomized control trial. Some villages got this, you know, small amount. Some people... What's more remarkable is that some people were given a promise that they will get that small amount for 12 years. And the lump sum was only for the value of two years. And it still generated more businesses than the 12-year amount. Why? Because people, exactly what you say, you know, what will people...

49:26You know, you give them small amounts, they'll never be able to, either they're very disciplined and they save up and save up and save up, or there's no way to turn it into a business. So they buy whatever, you know, they repair, they spend it in whatever way that makes sense for them, but assuming it's very hard for them to build a business. Whereas you give them a lump sum, they know that this money will go if they don't turn it into a business, they turn it into a business. But then Has it ever happened That if you give lump sum money to somebody For no reason, just for free They end up misusing it?

50:07Sure, some people will But I think the most striking fact Is that You know, you don't really see There's lots of studies of this Of people getting lump sums Or getting free money of some kind and there's no evidence that it generates more laziness or more drinking and all the things that people imply. There's evidence on all of them and none of them happen. You've junked this theory, right? I've junked it for years and the evidence keep mounting that it's not true. Tell me, explain me if somebody is hearing this for the first time. Why do you think or believe that giving free money to people or giving freebies to a lot of poor people is not making them lazy?

50:57It's actually good for them. Yes, it's good for them. In fact, there is a... It's not ruining them. Yes, there is a study. Before USAID was shut down, they did a meta-analysis, which is like when you combine 140 different studies. and looked at the effect of that on work. And they found that people who get freebies, let's use the popular word, work slightly more, not much more, but slightly more, not less. The important thing is that they don't work less. They work more. And that's what we found also. When you give people in all of these studies, there was no evidence that they work less. Why?

51:44Why? Because I think we misunderstand what motivates work. I think being depressed and thinking that your life is basically, it sucks, is not a way to get people enthusiastic about working. When you give them an opportunity, they say, look, you know, you can do, now you can have a better life maybe. They are more enthusiastic about trying things. I think we just don't understand. But do they not get used to that, hey, because I'm getting things for free, I should just be this I'll give you an example In West Bengal We did a study Now 18 years ago 19 years ago There were women Who were Extremely poor So poor that the poor people in the villages We asked them who's poor in your village And they would say Those people are poor So we did a mapping and they identified the poor.

52:44So these were people who, the very poor people who live in West Bengal villages all thought were poor. They were given an asset, given. Usually, some got cows, some got goats, some got some trinket to sell in the local villages. They could choose. They chose whatever they wanted. And then they were given some handholding. Somebody from the organization came and said, yes, yes, you can do it. And that went on for a year. We now look at them 17 years later. We have data for them 17 years after. So we've been following them. 17 years after, the people who got that asset are 40 % richer. They're still richer.

53:33It's not that they, and this asset was given to them once. Remember, that's why it connects to your question. They were given the asset in 2007, 2024. And we see that they are 40 % richer. Their consumption is higher. Their income is higher. Their children are doing other things. Their lives are transformed. It's more that I think people underestimate how hard it is. It's not that everybody does that. Of course, some people, you know, whatever their mental illness, I mean, there are lots of reasons why not everybody will do it. Yeah, they'll get drinking problems, they'll get some stuff, but that's going to be very small.

54:20But on average, the effects are dramatically positive. Why do you think is that? Like, why do you think? Actually, there are two questions to this. one is why do you think people who have been given free cows or free business opportunity or free money to start something why do why are they more motivated and eventually in 10 12 15 years they do better rather than just getting addicted to the free money or free stuff and misusing it that's the first question and then second is if there is enough evidence that people who have been given freebies they do better why do a large section of society believe that they'll get addicted to free money and be lazy and then giving money is not good the first part I'm going to answer quite specifically okay and the second one I'm going to give you say something and then speculate a little okay So the first part is, I would say, you know.

55:29And, you know, for a lot of people, it goes back to that S-shaped curve we discussed. It's the fact that, you know, it's not that they were sitting there waiting for, okay, I get some free money, I'm going to go on vacation. They were hoping that they get a chance in life. A lot of people want to do things in their life. And, you know, you are someone who's done something in your life. You know that you didn't come just from this sense that, okay, you know, this is programmed into me. It was a choice. You wanted to do something. And I think, why would we think poor people are any different from us?

56:12So if you give them an opportunity to give a better future for their children, better future for themselves, To live in a house that's You know You know Nice house Why would they just say that No, no I should just go drink When just this Why would that be the Psychological model That we believe in That's My answer to the first part of that First question Second question So There is actually now Fair amount of policy traction So in Bihar the GVK, which is part of the labor ministry. But it's a, I guess, I don't know, maybe a semi-governmental organization which implements social programs. They implemented this program I described to you, which is the one of giving cows, etc., which is called the graduation program, bizarrely enough.

57:13But that program, they implemented, I think for one lakh families. And for with part of that sample, we did a randomized control trial. And it's vastly successful, dramatically successful also. So I would, my view is that, you know, there is now some policy traction. When you look at how, you know, how difficult it is to keep going back to people and trying to support them, I think people understand that if you, so that's part of the answer. The last question is why? Because I think people partly have, I think they are, people need to feel that their success is fully earned. And so these poor people, they didn't earn it.

58:06I earned it. In fact, we don't recognize that a huge part of our success is always luck. We were born into the right kind of family. I was born into a family of professors. My family, my grandfather was a schoolteacher. My great-grandfather was a schoolteacher. We had books all over the house. So the fact that I can read and write and understand things is not an accident of, you know, my genius. It was just, you know, luck. It was luck. I was born in the right place. I was, you know, my parents encouraged me to discuss ideas with me. My father would give me math puzzles and we would discuss them.

58:49I mean, all of this cultural capital is luck. And I don't think of myself as being a genius. I think of myself as being someone who was in the right place at the right time. And I benefited from it. I think people underestimate how difficult it is for the poor to get out of where they are. It's just how much pressure is on them. And in reverse, they give themselves too much credit. And why do you think rich people, they don't do much charity? They don't actually give freebies. A lot of people don't. And I asked this question specifically to Bill Gates as well. and I asked him that when you go ask for money or probably just spend time with people with a lot of money why there are just few tech billionaires who are ready to give away their entire wealth versus the conglomerate who has accumulated wealth over years and years and years of money and they are not able to give money so easily what's the reason?

59:53You know I think sadly I think a lot of ways I have it, why will I? I mean deeply I find it deeply disturbing. And this is not everybody, obviously. There are people who actually genuinely are committed to the poor. And Bill Gates is an excellent example. He takes, I think, what is particularly, I think, laudable about his example is that he not only gave his money, he gave his attention. And that's a very valuable thing He's a very thoughtful man And he gave his intellectual investment to this project And I fully credit him for that So I think it's also that partly people don't get So I think what gets understood is It's also exciting to do these things To solve problems And I think a lot of people haven't also got that taste So a lot of it is also about You know, feeling that This is also a remarkable project And I think that here when they do charity It's also that people haven't yet got this idea That, you know, I'm going to Actually, this is going to give meaning to my life And I think there are people, of course Who do that or really More rich people give less money.

1:01:29There are few who give a lot. Because I think they also feel that it's not exciting for them. And why will I? And there's all this nonsense about this is going to just be bad for the poor. I really think this conversation is important because I hope people really look at the data. I've been looking at the data and I don't think I'm a pushover. I think I'm, part of the reason why I'm successful is that I'm known for being quite careful about these things. And I would say I'm not, and I know that the evidence is very clear that this is not going to, you know, ruin the lives of the poor. So they tell themselves these stories also.

1:02:12That's why the stories are damaging. Why do you think, why do then people also say, because if there's data that freebies are actually helping, that the freebie politics in India is ruining the country? So there is a question which is slightly distinct there. So I think part of it is what we discussed, which is the people don't like the idea that, you know, their tax money is being given to the world. This issue you read all the time, I must say, and depresses. But do you think that freebie economy or freebie politics is ruining country? I don't. But I still think, I mean, actually it's interesting that all parties do it.

1:02:54And I don't think it's ruining the country. But I do. And they keep topping it up. They keep topping it up. But remember, the country is also getting richer. It's not that the share of GDP going to the poor is dramatically exploding. So if the country gets richer, there's more GST. as we discussed and there's more money for welfare. So I don't see a reason why this is such a awful thing. But nonetheless, I do think that the one worry which is real and maybe is that there's a little bit of you know chasing visibility there. So you know, in Tamil Nadu it was famous that you know, before the election the chief minister would summon people and tell them this time TVs for everybody or computers for everybody.

1:03:43So there is a little bit of that. It's not clear that everybody needs a TV or needs a computer. So I do think that there is some amount of, you know, visibility chasing which makes it sometimes wasteful. So I think there is some reason to try to be very disciplined about these things and say that, you know, here's what the evidence says, and we should really invest this money thinking about the long term rather than here is a pre-election scheme which happens to be computers for every school. But it may be that that's not what they need. I do think that there is some validity to the concerns. Do you feel this competitive welfarism for popularity in winning votes, is it good or bad?

1:04:38I would say that overall, it's meant that more money is going to the poor. So it's good. I mean, I think, as I said, there are better ways to do it. And I'm happy that Bihar went through this. And they really went through the research. We discussed the research with them. So they were very mindful of the fact that money, eventually, if you want to do it for all the poor, money is scarce. and what would be a better model to give the way government is in like few specific states they're giving it to women thousand rupees a month or three thousand rupees a month two thousand rupees a month what do you think is a better way that giving them thousand rupees a month for next five years which or giving them up front like 60 60 70 000 up front so women's labor market opportunities are often very constrained.

1:05:33So will their family let them start a business? You know, I remember a lot of the women we worked with in that graduation program were actually either abundant women or widows or husbands who were, had, you know, had a stroke and were not going to do anything. And so they were actually working. And whereas a lot of our, you know this issue about labor force participation. And so I don't know whether women will be allowed, you know, this whole story that I told is about women being able to work. And so that's the reason why it may be different for women. In India. In India. And doesn't it become a big, like a hole or pocket or like big burden on a state's capital or like budget, right?

1:06:38Isn't that a problem? Because is that not harming state because they're spending literally lakhs crores of rupees? You know, another way to think about it is that the fact that there is social peace and that India is a relatively stable country and that there's not a lot of violence and all that has something to do with the fact that So, you know, the inequalities that are as glaring as they are, you started with inequalities, so I know you're aware of it, are not allowed to explode totally. That is, in some sense, the poor are not allowed to go to zero. So, you know, I think there is something there about maintaining social coherence that's critical in any society.

1:07:41So I don't even think that this is, I think the rich should understand that, you know, the access to a stable, large economy is partly funded by these social programs. You have publicly said that tax havens should go. Yeah. What do you mean by that? Should go, meaning every country should want them gone. I mean, why would you want tax havens? It's a bit like, you know, it's undermining your own project of taxing people. And then, I mean, there's a little bit of cynicism sometimes in the sense that governments often want to, you know, pretend that they are very serious and then not do it because the rich are very powerful.

1:08:27But beyond, I see no reason to have any sympathy for tax havens. But why do governments don't ban tax havens? Which one would be the most lucrative tax haven in the world?

1:08:45Probably less. I think both Switzerland and Monaco are probably, but they're less and less good tax havens. They're not tax, like great tax havens. St. Lucia and all of that would be great. No, they're great tax havens, but they are a little bit less. You know, people are, you know, what Monaco does is it is like, you become a resident, no taxes. It's much more like legit. Now, if you move to St. Lucia or Granada, it's a little bit dodgier. It's shady. It's shady. So there is some trade-off there. But I think both Monaco and Switzerland are moving towards a more, they're more complying better.

1:09:32So I think that this is changing And I think it should change totally But why a country like India doesn't ban these tax havens? The question is what does it ban mean? So we are also, I mean, Mauritius and Dubai are big investors in India So Indians take residency in Dubai and so what does it mean? You can't invest in India if you're a resident of Dubai? Dubai gives you no taxes. So it's not that, so the question is more what counts as taxable income in India? And there are countries, the US for example, which are much more tough about that. They don't, you know, you can't just say that I'm leaving bye-bye and I won't pay taxes pay taxes and, you know, and Sweden has an exit tax.

1:10:31You have to pay to leave. So there are countries that can do much more. But it's a matter of, you know, you can't tell people that you can't move to Dubai. So therefore, you know, you have to think of what that when you say ban, what does it mean? So if there was a world agreement that says that, you know, if Dubai does it, we'll stop all trade with Dubai. then indeed you would have the problem would be if Santa Lucia has to grow all its crops because we're not going to give them any food Iran has a trade after all using trade to coerce countries is not unknown so we could do it we could say that you know Granada gets no more rice and then they will presumably have to collaborate a bit more but why why it should happen like because countries like probably let's say monaco or the uae they survive on the fact that they're building such a good safe secure country and which is probably tax efficient for highly ultra net high worth individuals whatever you want to call them like they attract that is how they attract or else they are just going to be deserts and barren lands but why but the amount of damage they do to countries which have many many many more people it's a matter of people right so eventually we want to to help a lot you know people large populations and these countries do huge damage to but it's only it's always going to be like a like a debate of our how do you like do citizens of these countries matter more because that's how they make money versus some other country where there are more people but I think the debate is more about I mean it's true that there will be a debate but it's a you know when my economic moral is that I'm going to exploit some other country then you could say that that country has a right to push back So, I mean, Europe is basically, I think this minimum tax on corporates will happen.

1:12:56So, you know, all companies will have to pay. If they want to sell in Europe, they can't just locate in St. Lucia. So, I mean, Europe, after all, is providing their market. Why should Europe subsidize their lifestyle? Europe should do exactly that which is they should impose a high minimum tax on any income that comes from selling in Europe or ban selling in Europe I think that will happen actually that happens in India as well right like even if you're in some other country and you're selling it here no and we don't have a place of business you have to pay at least not personal tax but you have to pay the GST and stuff like that We don't pay, I mean, we don't have any tax on meta, on, you know, on alphabet.

1:13:49I mean, are they paying any taxes on anything? No. But they must be paying GST just to operate here. They're not paying corporate tax. No, but they're not. And the Indian entities must be paying, no? Because they are not making, they're not selling anything here. They're selling advertising online. So, I don't think they are, I mean. I'm not an expert on Indian tax law. So if I'm wrong, I'm wrong. But I doubt that they're paying much in taxes. Interesting. I doubt they pay very much because, in fact, Europe is fighting this battle against Trump to tax the Alphabet and Meta and, I guess, Microsoft or whatever, these companies.

1:14:38Europe is fighting and Trump basically forced them to not tax them so I don't think actually we would dare Meta paid 5 ,993 crore in income tax in 2026 to the Indian government yeah but is that because they are as a fraction of their revenue let's do it as a fraction of their revenue coming from India that's the part I don't know so the point is that they pay some tax based on I think there is some some rule that all the services which are being availed here you will have to pay taxes here on that. You probably don't have to pay personal income tax because probably Mark would be making that's a personal citizenship but I think company the place of business the profit tax we don't get the profit tax I do think that the top co must not be paying but the Indian co must be paying yeah the Indian co is probably paying I'm saying the Europeans are fighting this battle as we speak.

1:15:42So I don't know exactly tax. I'm not. Tax law is now two steps away from me. But I can tell you that the Europeans are fighting this battle. And Trump is very much. That's why they are so pro-Trump. You could imagine a law which says that every country, every market gets the same share of. You know, if you were operating in a market. After all, we provide them with a huge market. Yeah. We're the consumption market. Yeah. Why do we provide them free? So the question is, what's the scale of it? So I think that's one question. And then the question of personal income and paying taxes on it is a distinct question.

1:16:24So I do think that those are separate. You know, it's interesting to me because yesterday I was having a conversation with Samir Saran. he said the same thing that we give such a big large humongous consumption market and a potential market which is growing and getting richer and we don't price it right and we are just giving it away for free he said the same thing you are saying the same thing almost every thought leader is moving in this direction but I think Europe is fighting this battle right now so it's not it's the signals are there which is that Europe is trying to get these American large American global service providers to be taxed based on the revenue that they are getting from European countries.

1:17:13China, how do they do it? China doesn't allow these people in. Apple is there, right? Apple is there, but Apple is a company also in China. They're producing. Different things. They don't allow WhatsApp or Google. So they don't have the same problem. They're like they're closed economy. Do you think for economy to grow, keeping it closed makes sense? Just like what China did. I think China never kept it closed. I mean, when it started growing, China was always, what they did was they undervalued their exchange rate. So that's a little bit like closing because Chinese things were cheap and foreign things were expensive.

1:18:02But they were never closed. They were always open because they realized that at this point, we need chips. If you want to do, you know, if you want to be competitive in AI, we need chips. And if you don't get the chips, we'll just zero chance. And NVIDIA is not, you know, we need to, it's an American company. We'll have to pay that. So I do think that there is no alternative to, you know, especially in today's world, to using the world market for the key input. So I don't think we can afford to be closed. And I think we did very badly when we were fully or almost fully closed. we were, you know, everything was such a pain to get that people weren't using the right inputs and everything was a little bit of a juga and all that.

1:18:58You know, before 91. Before 91. So I don't think, I think we've been there, done that. I do think that, do we have to be, is perfectly open or partly open? These are harder questions. But, you know, the Chinese certainly were not fully open. And they always kept their exchange rate undervalued, which then is a way to basically close it partly. Talking about China, that gets me to our economy again. We are in this race where we're going to be competing against China and US at some point in a couple of decades or years from now. And we are at this point chasing Japan. right so it's like our GDP is almost going to be around that yet an average Indian is probably 10 or 11 times poorer than an average Japanese does it mean that we are growing as an Indian and we are we have arrived or does it just mean that it's some number which is good for books and pride and it actually means nothing I mean the GDP comparison I already said this means very little to me there is some significance.

1:20:11Of course, we have more sway in the world than, you know, whatever, you know, Guyana, because we have more of a, we're a bigger market. You know, if we banned, like China has, alphabet, it would be costly for alphabet in a way that's not, if Guyana bans alphabet, it's not going to be so. But I think the size matters. But first order is very little to do with what we should really take pride in, which is quality of life for our people. And quality of life, is it improving? It has improved in some ways. But I think especially if you look at the amenities we provide the poor, there I really think, I mean, if you go to the kind of the, not the central part of Delhi, but like Rohini or Dwarka or places like that, I know Mumbai less, but it is such completely desolate places.

1:21:23I mean, the urbanization is so low quality. There are no parks. There's dusty. Children get to play in the dust rather than in some place which is healthy. I mean, the quality of the air is terrible in Delhi. It's so terrible that people, I mean, some estimates are that, you know, people are losing 10 years of their life. I mean, these kinds of numbers should really, that's quality of life, right? It's just how long do you live? If you're sick from the age of 55 because your lungs get weak, then that's low quality of life. And I think a lot of people, except those who can afford to get out of Delhi and go to the house in Goa in the winter, or those who can have, you know, air purifiers in every room and good ones.

1:22:15I think for the rest, it's a bit of a, you talk about quality of life. That's the trend of Delhi Used to have much better air Now the poor are richer in Delhi But the air they breathe is terrible So you said poor are richer in Delhi Yeah I mean that they Compared to 1990 Okay The poor in Delhi are much better paid even in even inflation adjusted but that does that mean that their quality of life is higher you had another paper you wrote another paper marry for what yeah what does it mean you know what determines marriage is a huge economic choice you know you can and it's always been you know there was in the middle ages there was in Europe there were a lot of people died very young and a lot of you know widows who were older meaning they were 28 would marry 18 year old boys because they wanted a farm a strong boy to work on their farm which their husband they had been widowed and so it was always an economic choice they were buying labor so So, you know, and now in India, in a sense, we do the reverse.

1:23:49We buy labor. I mean, women, very cheap labor who, you know, she works like 12 hours, you know, khana banana, you know, taking care of the elderly, this, that, school, get the children to school, come back, cook for their, you know, they have very long days. So in a sense, there's always that element of, so is marriage an economic choice? Of course. And the question we were asking was, how much of it is, you know, how important is caste in these decisions? And we found that despite being an economic choice, caste is very important. How? What did you find? we found that the premium on getting a groom from your from and this is not necessarily the choice of the woman but of the family a premium on groom who is from the same caste is like the difference between a high school degree and an MA that's a big difference So people were willing to sacrifice a lot of education for caste matching.

1:25:07And you've seen that different castes have different wealth structures. How? Even in 2026, there are some castes who end up getting wealthier than others? Yeah. But I mean, we discussed this. In the end, it's not that social connections matter, family, you know, kind of background you come in, the fact that your uncle who can give you a loan of 10 crores to start your business matters. So why wouldn't it be? And your uncle is from your same caste. There's nothing surprising about that. Do you think in future, now that the AI is coming, the inequality will be more or less? I think that what's going to happen is that especially the middle class will be hollowed out.

1:25:56But then will the UBI come? You know, I think we are a little bit, I mean, moving towards covering more people in, you know, the fact that, you know, the PDS covers 75 % now is not accidental. We are moving towards including a lot of the middle classes into these schemes. Whether UBI will come anytime soon, no, because I think we are still, our tax capacity is still extremely, I mean, as we were discussing, if we start to try to trust the rich, they will move to Dubai and put their money in Maldives. And so I'm skeptical that we're going to get there anytime soon. OpenAI recently published a paper and they're working on it very openly.

1:26:51Yeah. That at some point, because AI is going to do most of the jobs, then we will have to launch universal basic income. Do you think that's the future? I think the part that OpenAI is not open about is how will we fund it and who's going to pay the taxes. And I really think that it's very easy to say that productivity will be high so we don't need workers and we can give them UBI. All sounds good. But then you ask them, OK, then shall we have a 70 percent tax rate on the rich? Because that's how we'll fund it. How will we fund it otherwise? I don't understand this. This conversation is a bit dishonest in my view.

1:27:36We really need to talk about paying much higher tax rates than we are facing now. And then I'm very keen to join that conversation. I have thought about it, but I just don't see the fiscal side of it needs to be honestly dealt with before we can talk about UBI. it's like the rich who are making consolidated wealth should be taxed way more way more that's the only way I mean if you want to get into the UBI conversation there is no are you in favor of that though? yes I'm in favor in the UBI whether it's UBI that's a more difficult question the question of I said of taxing the rich more yes whether right now we need UBI or we need to have more targeted if in India we went to do that we are still pretty poor we may want to do more targeted investments than that.

1:28:39There's a lot of other things we need. We need urban infrastructure. We need to deal with the pollution in our cities. There are many things that are valuable whether I would say UBI is the number one on that list. We need to improve our education institutions. You know, there are many things we need to do. That's a much harder question on whether we should go directly to UBI or we should invest in other things. Should we tax the rich more? Yes. There is one thing which came in my research, which is about you were in Dehara for 10 days. And even in jail, there was inequality. Yeah. What inequality was there?

1:29:20Like jailers of certain studies. Just give me that example. In 1893, I think, or something, you know, Indian Penal Court, which now we have replaced, but it was what we were jailed under. There was a provision which said that people with bachelor degrees can get bindi or vegetables. The others get, you know, they get different diets. So we were going to get, if we could prove that we had all bachelor degrees, we could get vegetables without dal. Otherwise, you just get dal roti. That was literally the law, which is that if you, it's an amazing, you know, you're jailed, but you will get better pindis if you are a graduate.

1:30:17Why? This is in 1893. They have other values. I mean, it's hard to, you know, those castes were much more accepted. All kinds of things were different. It's hard to go back to that point and ask so much why. Did you learn anything specific in those 10 days when you were in jail, which nothing else in your life can teach you? You know, we were very privileged because a lot of friends were with us. I think being alone, I would have gone nuts. I think with all my, I was there with really many of my very close friends who are very close friends now. Even today. Yeah. Last question that I have. You said GDP is quite not a metric that we should be looking at.

1:31:04It's not like a number we should, like somewhere you don't take GDP very seriously. I don't take it very seriously because I know a little bit about what goes into the sausage. And a lot of it is, for example, the informal sector, which you might notice is big in India. The informal sector is actually not measured on a yearly basis. OK, it can't be done. So what they do is they kind of use a coefficient. They estimate it from some model which they, you know, build every five years, I think. We're using some NSS data to connect, you know, if this is how much spending is happening in the formal sector, this is how much spending is happening in the informal sector.

1:31:51Now, the fact that the informal sector is shrinking now because of GST and all that, and the formal sector has grown, all of this, how do you take into account? So when you talk about the growth rate is actually not 8.7, but 8.6 or 6.8, these second digits after the decimal, I don't have much faith in those numbers. I know how they're manufactured a little bit. So yes, India's got richer. I don't think there is anyone who's disputing that. how much richer exactly and you know how good is our measure and what should we measure what number should we look at if not GDP you know I think we do need to look at GDP it's just question is should we invest more in measuring it or are we doing is it and if we don't invest more then should we put so much faith in that number that's more the question I'm not saying we should give up on it because I don't think it's still the globally accepted measure of the size of an economy.

1:32:59I'm not going to be the one who says that, you know, give it up. But it's certainly the case that we put too much on, this year 6.8%, last year 6.7 % burgia. It's so kind of, you know, it's a squishy thing. So you don't want to spend too much emotional energy on that kind of comparison. You can say that we are doing okay. As an economy, we can see that the GST collection this year was the record. And so this quarter was a record. And that's a measure of transactions. So that's in some ways as good a measure as GDP. It sort of gives you a sense of scale that things are improving. The GST is higher.

1:33:49Now, of course, GST, what gets covered by GST varies and the rates vary. So you have to still bury us into those numbers to see exactly what that implies. But it's not, I don't think any statistic is telling us that, you know, the economy is not growing. It's just how fast, et cetera. Then there is, you know, people have different views. So I think we could do better on many things. no one number tells you the full story so there's no point in trying to think of the the holy grail doesn't exist fair well alright thank you so much thank you for spending time with us and explaining the basics of things I really enjoyed talking to you it was very fun thank you what was that story of when you had a phone from the local committee two hours before you came what is that story and you were feeling sleepy What was it?

1:34:50It's at 4 o 'clock. Who is at 4 o 'clock? I was asleep. I knew that people might call so I switched off the phone and went to sleep. I told my wife that today is a long day because there will be many celebrations. If I don't sleep now, I will go to the evening. I'm tired. I'm tired. Really? I'm tired. I'm tired. Thank you so much for watching this episode until the end. Now you have to know what you need to do. First of all, subscribe to this channel so that we can get more valuable guests. Number two, tell me what you liked in this episode. And who guests you want to watch this episode? We have to take this episode in this podcast.

1:35:41and this episode must be able to share with someone who will get a chance to change something in life because one conversation can change someone's life I'll see you next time until then keep figuring out