Strong hardware, weak software: two faces of the Indian economy

In an address to the nation to celebrate 100 crore of vaccines administered, Prime Minister Narendra Modi said, “Experts in India and abroad are very positive about the Indian economy. Today, not only are record investments coming into Indian companies, but new employment opportunities are also being created for young people. ”

Many have called this self-praise, typical of a politician. But days before the prime minister’s speech, India’s former chief economic adviser Arvind Subramanian had said something similar. Subramanian was the chief economic adviser to the Modi government during his first term and had a vision of the edge of the intersection of politics, economics and welfare.

In a presentation to the Watson Institute for International and Public Affairs, the former CEA distinguished between what he called the strong “hardware” and the weak “software” of the Indian economy. Physical (roads, rail, etc.) as well as digital (digital payments, transfer of direct benefits) infrastructure is the hardware of the economy, while software includes politics, center-state relations, harmony social and other less tangible growth measures. . Subramanian believes that while the government is doing a lot to create the “hardware” for economic growth, it hasn’t paid enough attention to “software”.