Poornima Dore on Regional Economic Diversity

In this episode, Shruti speaks with Poornima Dore about using regions rather than states as the unit of analysis, the importance of the construction sector, diversification, balanced regional development planning and much more. Dore is the director of analytics, insights and impact at Tata Trusts. She teaches at some of India's premier management and technical institutes and is also an active musician. Her research covers macro-regional growth, smart cities and local economy insights. She co-authored “Regional Economic Diversity: Lessons from an Emergent India,” a comprehensive study at the National Sample Survey regional level that quantifies regional output and talks about what kind of diversification can help India.

SHRUTI RAJAGOPALAN: Welcome to Ideas of India, where we examine the academic ideas that can propel India forward. My name is Shruti Rajagopalan, and I am a senior research fellow at the Mercatus Center at George Mason University. Today my guest is Poornima Dore, director, Analytics, Insights & Impact at Tata Trusts and a visiting professor at the XLRI School of Management. We discussed her latest book, “Regional Economic Diversity: Lessons from an Emergent India” (coauthored with K Narayanan). We talked about India’s structural transformation and how that impacts regional diversity at the substate level, urban agglomeration and clustering, diversification versus specialization of industry, migration and much more.

For a full transcript of this conversation, including helpful links of all the references mentioned, click the link in the show notes or visit mercatus.org/podcasts.

Hi, Poornima. Welcome to the show. It’s a pleasure to have you here.

POORNIMA DORE: Thanks, Shruti. Really glad to be here too.

Region vs. State as the Unit of Analysis

RAJAGOPALAN: In India, for all policy matters, we usually use the state as the unit of analysis or the unit of policymaking. But in India, even states are too large. Can you just walk us through what is left uncaptured when we think about the state as a unit and don’t delve deeper into specific regions within each state?

DORE: I also realized that if we take a step back, a lot of the narrative for many of these things is a country narrative. How are we doing in terms of GDP? Where are we on our SDG goals? How are we performing when it comes to COP? There is this large country-level narrative, not just in India, but even globally. Whether it’s a comparison or whether it’s even stand-alone, we talk country. And at best, as you said, we go to state. In India, we’re talking about Maharashtra. We are showcasing Andhra Pradesh or Telangana at Davos.

While all of that is very important, the fact is that each of our states itself are so huge, and by virtue of our population size and population density, there is just so much happening within each state that we are in danger of missing the wood for the trees when we are talking at that level of aggregation. What I have increasingly found in the course of the book, in the course of travel, is that each of these states is like a collection of subregions. That’s one of the arguments I try to make through the book, is that we need to look at regions that are contiguous, that are similar in nature, and often that is happening at a substate level.

That level of granularity, at least, is going to be important whether we are thinking about it as business leaders or investors or development practitioners or government, because that unit has so much happening. For example, one of the things that I tried to do was to look at output or value-added, regional value-added, and most of our metrics stop at states. We have state-level GDP that we’ve been reporting for so many years. In recent times, some amount of district GDP numbers have started coming up, but we don’t capture it for all states and at that same frequency.

If I have to say something at a substate level, I actually had to construct an indicator of regional value-added and then compare. The hypothesis was this: that probably we are going to find that at a state level, we have increased in terms of our output in absolute terms, but in relative terms, probably the narrative is similar. If you go at the regional level, the relative narrative has changed so much.

There are some regions that, say, in 2004 or ’05 were not in the top 10 at all, and suddenly, for example, southern Gujarat is at No. 2 now. There is that variation that gets masked when we are talking at state level. Part of the effort of the book was to uncover some of this and unpack it, so that we are all talking a little more about the region and thinking about it more, both from a policy or a decision-making standpoint.

Regional Differences

RAJAGOPALAN: What do you think is the No. 1 thing that is left uncaptured that surprised you when you started looking at regional differences, especially in terms of productivity, value-added, wages, density, so on?

DORE: I think the sheer quantum of output level differences hit me because we don’t have metrics for that. When I had to construct it and when I’m looking at the data, I’m seeing two trends. One is that the absolute numbers have really increased a lot. We’ve actually had a very interesting growth story if we look at 2005, 2011/’12 period, and even now it would be much higher than that too. In absolute terms, the Indian growth story seems to be all there and very, very promising and exciting.

At the same time, when we look at the relative variations, the relative variations are so stark. It means that if we looked at what Myrdal had to say about cumulative causation or Kuznets had to say about the inverted U, and you try to juxtapose that report with what this data is saying, you really find that we are moving forward, but we are moving farther apart also.

RAJAGOPALAN: Before I get to that convergence/divergence point that you just hinted at, to me, what was really stark is people like you and me, we’ve basically grown up in urban India—especially for me, a very large metropolitan area. I always conflate value-added and productivity with high density. What really struck me is that that is not necessarily the story everywhere. The place where there are most number of people is not always the place where there is a maximum amount of productivity.

That’s probably happening because you’ve taken this lovely snapshot in the midst of this structural transformation, where still lots of people are in agriculture, manufacturing has not exactly taken off except in clusters, and the urbanization process is not yet complete. It’s still very much in the works. What I found quite interesting, and completely surprised me, is there are places in India where you see the obvious story: high density of people, lots of clusters of firms and employers and labor and capital, and there you get this high-density, high value-add or productivity.

Then there are also these spaces which are completely working on very high level of skill, very few people relative to, say, another region in the same state which is largely agricultural, where there are lots of people, very, very low productivity, low value-added. Was this something that surprised you? Because it surprised me until I finished reading it.

DORE: No, I think it’s great that you picked up on that, Shruti. Because yes, I think some of these things came to me also as fairly counterintuitive, which underlined to me why we have to look at these granular questions and not paint things in a broad-brush way.

For example, I think I figured that a little more when I was looking at the per capita question. When we are looking at output in absolute terms and we’re looking at the per capita numbers, the regions that are standing out are very different. Uttar Pradesh, clearly, once the per capita question comes in, they actually move to the bottom 10 on many parameters because it’s there you are clear that it is the density story that is driving the economic narrative. But if you were to look at a per-household level, the numbers are not looking so rosy anymore.

RAJAGOPALAN: They’re terrible.

DORE: We know that intuitively. We know that in some of these pockets, healthcare access, education access has historically been problematic. I think when you look at it like that, then it helped me also see that some of these regions which are predominantly agrarian are also doing very well in terms of output. By that logic, then, parts of Madhya Pradesh, which are not very high on population density but are actually doing well, probably agricultural productivity has been showing good improvement over there.

One could surmise that some of these regions that we don’t end up putting the spotlight on are having a story there. And so people who want to invest in agricultural implements or run pilots should probably think about spaces like these to unpack what’s going on and try to write on that story as well.

RAJAGOPALAN: It’s also like, not only do we think at a state level; normally, I just think Madhya Pradesh, Bihar, Uttar Pradesh—Hindi belt. At least that’s how the story plays out these days in the newspapers and so on. You realize that the difference in agricultural productivity between just Uttar Pradesh, Bihar and Madhya Pradesh is just so stark once you start disaggregating. And especially in terms of population density, again, the story in the three states is quite different.

Now, one of the things that you point out, especially when you’re talking about the difference between the 2004/’05 period and the ’11/’12 period, is that India is clearly in the midst of this structural transformation. This is something that started off post liberalization and has continued. The period that you capture is a period of massive growth, massive improvement, lots of changes within regional areas, within the economy and so on.

Usually, when we talk about structural transformation, we’re talking about some kind of either labor movement—that is, people are leaving their region of origin and they’re moving to another place either in industrial area or in urban area, so like a spatial shift or an economic shift that helps them get out of agriculture. That’s the standard narrative. We need to get out of agriculture, we need to move to industry and high-skilled services, but this requires a physical move in most cases.

How much physical movement do you see happening, either the temporary level or at a permanent level? And is that what is impeding the big structural transformation story in India, the inability to physically move from one region to another?

Construction as a New Sector

DORE: If I were to look at the larger structural transformation narrative that is standard, which is agriculture then moves to manufacturing typically and then the services story, we all know that India has skipped that stage and has seen the services sector probably fire up more in many such locations.

One interesting pattern which made me think was this: that construction as a sector has seen a lot of action in this time. Typically, some part of it gets captured in manufacturing or some part of it gets clumped with services, but we don’t call it out separately. That was something that I tried to do here even while looking at the information, was to call out construction as a separate sector. Because I don’t think one was able to do justice if one was putting it in one of these buckets because it is probably one of those segments that has boomed the most in this time, both in rural and in urban.

In many cases, you will see more in rural. There is so much rural construction that has been happening, both in terms of people building houses or roads or utilities getting created, or even this whole thing about small settlements becoming towns—not yet classified as such, but they’re actually becoming hubs where more and more people are moving.

I think this has been a time where there has been a lot of people movement, actually, but not all of that is necessarily permanent. There is a lot of this circular migration that has been happening. And I think as part of my book, I was looking at some of our programs on migration and skilling during those years. I’ve had the opportunity to actually run some of that, and it’s definitely a fact that people have been moving with six-month timeframes or nine-month timeframes.

You keep your base at the village where you possibly have a plot of land, but you are traveling to one of either the smaller urban centers or even a rural center where construction is happening, and you base there. Or you are a brick kiln worker, and you are going with your family there for a nine-month period, and then you are coming back when it’s harvest time, either on your own farm or doing sharecropping on somebody else’s farm. There has been a tremendous amount of movement, clearly, of people.

In some cases, I think it has been permanent as well, and the permanent movements are around certain trades where marketability is very high. If construction as a trade has a movement, they’re moving out of the village permanently, but they’re not staying in Delhi all the time. They’re there for two, three years while that construction is happening, and then the contractor calls them to, say, Bangalore, or then they’re moving to Lucknow. So they’re moving, shifting base continuously. As far as their village is concerned, they have moved out. And they’re visiting, say, during holy or a festival or Diwali, but that’s not their base anymore.

Similarly, certain trades like, say, plumbing—now, Kendrapara district in Odisha seems to be a great outsourcing of plumbing unit, and you will find the best plumbers. If you talk to them, they’ll say, “We’re from Kendrapara.” It’s become a thing where the next generation goes—cooks from Rajasthan. There are these trade routes that have been happening and which are also then connected with some of these sectors, which explain the movement of people and the way the economic geography is evolving.

RAJAGOPALAN: I’m glad you mentioned construction because you’re right, in terms of post 1991, it’s probably the biggest new sector that has emerged. And it also makes sense, in the sense that as India’s growth story started taking off, government revenue started increasing and people started getting richer, which meant both more personal construction at the household level and also at the government infrastructure level. The story lines up perfectly.

Construction’s Effects on Women

RAJAGOPALAN: And the other aspect of this, which often stays hidden, and I think Shrayana Bhattacharya was talking about it, is that this sector can also explain the gap between how much men have benefited from the reform story, in terms of labor force participation and opportunities and migration and movement, versus women getting left behind. Because as you said, typically the story with construction is unless you are female from a very, very, very poor household, you are typically not working in construction. If you are even in the second-lowest quintile, you tend to be the female profile who is left behind, and it is the male member of the household who is going in for construction and so on.

Now, the reason construction is this driver—does this in any way impede the structural transformation, or does it hasten it? I ask in the following sense: that because most of this migration seems very temporary, does this mean that because people are moving in this circular way, it impedes clustering, it impedes manufacturing, it impedes urban centers from becoming larger urban centers and that growth story? Or is this just, you are taking a snapshot at a moment in time, and construction plays a particular role, and eventually it’ll slow down and it’ll be something else?

DORE: I actually see it as a very positive move, and I think it’s nice that you brought it up. I just finished reading Shrayana’s book, actually, and I thought she does a very, very great job of bringing out some of these nuances. I think, yes, it is a fact that women do get left behind, and it is the male members who are largely migrating. But I have also seen evidence of significant family migration also where the wife and child and husband as a unit also move. A lot of that does happen in construction, but it is true that this is normally for the lower quintile of the population.

However, I think there are two side effects of this that I see. One is that the family is earning more as a unit because both are working and they are stepping out, and so it is definitely the first rung of moving to the next level of development or access. The terms of employment are not great, and a lot needs to happen there. I think some of the interventions around the construction welfare board, access to education, what construction workers are now eligible for and entitled to, and making those entitlements happen—I think a lot of work needs to happen there. But I see these as steps in the direction of an economy that’s moving forward.

It’s like a new sector where a lot of growth has been happening, and I think it will continue to grow for a significant period of time, because there are still many areas where roads need to be laid, still a lot of households where kutcha houses need to still become pucca. Many small towns need to have better housing and other facilities that need to get built. I see these as steps toward an economy which is becoming more mature, pathways to people having the next rung on the employment ladder and exposure.

Families, I think, that are moving out and are traveling are also growing in terms of how they see the world, how they engage with markets, what goods and products they are exposing themselves to. And I do believe that even the women who are experiencing these are going to, in time, be moving one step ahead. Whether they’re in construction themselves, their ability to flex their muscles and navigate or negotiate is increasing every day, the way it happened for us when we came to Delhi to study and we saw this big place and we started living life on our terms.

As time is evolving, I think this is a force for change. I also see the women who stay back in the village who are running their farms or who are holding fort alone, building a lot of resilience.

RAJAGOPALAN: There’s some lovely literature on this, how they become the primary economic decision-makers, and therefore that also has political consequences and social consequences—

DORE: Exactly.

RAJAGOPALAN: —when more and more women become the economic decision-makers.

DORE: Exactly. I think these are things which are, of course, going to take time for it to fully play out, but I don’t see this as an impediment. I see this as very positive, construction as a very constructive growth engine, which will open up pathways to better movement. I think this talk now about—and with Aadhaar and other things, universal access to ration card or the universality of certain entitlements means that movement is slowly and steadily improving.

The side narrative is also with regions becoming a little tighter. The way we have my country, my nation, similarly, my region, employment for people, domicile, that narrative has honestly always been there as part of local political discourse. That will, of course, be a countervailing force to this movement narrative.

But I think UPI [Unified Payments Interface] is another big change where money can move very quickly. That makes it easier for people to move as well because sending money back home is not so difficult anymore. If I have to be honest, I’m a little optimistic about some of these patterns because I see them as constructive steps forward for better mobility, better access and hopefully at the next rung. But a lot more to be done on social security and entitlements.

Roadblocks to Migration

RAJAGOPALAN: Actually, it’s great you touched on that. What I meant by impediment was not that this is not a great story. My worry is more, what is forcing them to have one foot in the village and one foot in agriculture? What I meant by an impediment is, what is preventing them from embracing this story all the way? You talked about both social welfare entitlements and social security. Is it that most of the entitlements in India are tied to the local geography, and most of the subsidies are rural and agricultural, that is, people can’t take it with them and move? I think that could be one possibility.

The other is, of course, the land markets are terrible. We’ve bifurcated the land market to such an extent that most states, it’s not easy to change the land use of agricultural land, and it’s not easy to buy and sell land. Even for the buyers, there are limits, there are ceiling limits on how much they can own. That automatically depresses the prices for the sellers who want to exit these tiny pieces of largely unproductive land, which they’re using to mostly feed the household and maybe some more vegetables that can be given away in the market, and so on, so forth.

Is that what is going on in terms of impeding them? Or is it that the urban areas—it’s entirely an informal sector, it’s not a great place for a family to move, urban housing is impossible? How do you see this story currently where most of these families still have one foot in the rural unproductive agricultural sector?

DORE: I would think that there is some amount of inertia there at play as well because historically, you have had a place in the village. Even if you are not actively participating in agriculture, you would not want to let it go entirely, even if you have brothers or sisters or other people holding fort there. Historically, there has been this thing about having your own land and having roots there. But it is also true that, as you said, our cities are not geared to receive this influx that is happening. There is a lot of pushback. The entitlements are not—and let’s not even use a word like entitlement services—access to basic services in the city versus the village, I think there are challenges on both ends.

I actually think that there’s a lot more which has to happen in the smaller cities and smaller towns, which are going to be places where people are going to move to. We do have an opportunity to build for the future there where you invest in housing, you invest in sanitation, you prepare the smaller centers for the influx that’s going to come in. So that you are not only populating a Delhi, Bombay, Bangalore, Indore but you’re looking at tier 2, tier 3, tier 4. The conversations I do have with the Smart Cities Mission and AMRUT cities and folks there—my view on this is that a lot more growth is going to come.

One of the things that I try to look at here in the book was that, is this growth narrative happening more where proximity to 1 million-plus cities there, or is it happening in other cities also? When one tested for that—I did not go with a hypothesis in mind, but naturally, most of our investments have been toward our larger cities.

Clearly, there isn’t that correlation that the higher output or the higher diversification, et cetera, is happening only near the larger cities. That brings out this fact that a lot is happening with the smaller cities as well. If they are going to be hubs where growth is going to happen, where access to skills is high and therefore has the potential to draw more money, investment, et cetera, then it’s a great opportunity to buck the trend and invest in some of these places, have construction happen there, build for the future.

So that these questions that you were highlighting, that do people who move have that security of where they will stay, how they will live—because if I just zoomed out into the larger question of agglomeration or regional growth, there are two kinds of choices. One is, firms are choosing where they will set up units or factories or where they will grow, and people are choosing where will they move. These are the two cuts. The firm is making a choice and the household is making a choice. That’s what is driving whether a region is going to grow or not. If we think about where are people going to move more, it’s likely to be some of the smaller urban centers going forward.

RAJAGOPALAN: Absolutely.

DORE: If we prep for that a little in advance, then we are likely to have better facilities and make it easier for our families or households to want to settle there and not see it as a temporary makeshift arrangement.

RAJAGOPALAN: Yes, absolutely. India’s already far more urban than the numbers reflect.

DORE: Yes.

RAJAGOPALAN: One, because the previous census is completely outdated and the new census is still not out, two years and counting. That is one problem. The other is also, there has to be a technical change in definitions from the government on how a region is categorized as a city or as a rural area, and there’s a lot of reluctance in that. Kerala, which is mostly urban, is still reluctant to do that because most rural governments end up getting far better fiscal packages, intergovernmental transfers, so on. There’s that story going on.

Convergence or Divergence?

RAJAGOPALAN: Coming to clusters, there are two things going on when it comes to clustering. In India, when we look at it at the state level, there’s a divergence. The richer states are not converging with the poorer states, or rather the poorer states are not converging with the richer states. As it happens in the growth story, there’s that entire idea of catching up, and that has not yet started happening in India. We still have divergent outcomes. That is, the richer states are going to get richer faster than the poorer states are going to get richer.

You also find some evidence of this at the substate level, that is, at the regional level. There are some areas where there is convergence, and there are lots of areas where there is actually divergence going on. What explains whether there is going to be convergence or divergence at the substate level?

DORE: Shruti, I’ve tried to look at this from two, three parameters. One being the whole economic structure. What is the economic structure of the region? Can we look at factors like output, like the economic mix, which is how specialized or diversified is that region? Similarly, what is the density of the population? Can we look at size in terms of geographic area or population? These are two ways in which you are large because you have a huge workforce, or you are large because your geographical area itself means there is greater arable land or forest cover, et cetera. One strand which I tried to look at was this whole part of what is the economic structure like. I call it economic structure, but these are the subparts about size, composition.

RAJAGOPALAN: And value-added.

DORE: And value-added. The other part is to look at access. One is, what is our economy structured as, regionally? Two, how can we describe it from three lenses of access, one being access to finance. What is the credit footprint like? Because “is money available?” defines a lot about what kind of economic activity can happen in the place.

Second being access to skills. The logic being that if you have a skilled workforce or if you have people with certain skill sets, there your chances, your odds of being able to perform better economically are higher, or you’re going to attract that kind of industry.

The third being access to markets. Do you have proximity to a city? Do you have proximity to coastal areas where there are ports? I would have liked more regional indicators of infrastructure and government policy, which I wish I had been able to layer in, but at that granularity, it was not there at the time.

If we look at two, one being of economic structure and the second being of access, what I tried to do was look at data across the NSS [National Sample Survey] regions. To unpack then state to a region level where how we chose to define it—and I also discussed a little bit about what are all other ways in which historically this has been defined.

Then when I was looking at the census and NSS—they’ve spent a lot of time looking at these definitional questions of how do you cut the country or slice and dice the data—I found that the NSS region is a very interesting framework because it looks at regions as geographically contiguous. The national sample survey has, over the years, built this framework to understand how geographically contiguous areas with similarity of language or socioeconomic profile can be categorized into these subcomponents.

By that definition of NSS region, India, which has so many states and union territories where that number comes to roughly 35, at the NSS region level, you have 75 to 85 NSS regions. In 2004/’05, the country was broken up into 78, actually, but for my study, I dropped a couple of the union territories which did not have statistically significant data. Seventy-five or 85 regions of a country is a fairly wide enough—it’s not as large as a district, which is more than 650 units, but it is more than state and union territories, which is around 35. It is still giving you a lens which is deeper and which is able to tell you something where data has consistently been collected in the country, which is publicly verified.

I was looking at some of these filters to look at the information, both in what kind of information on these two axes and what information, which framework can one look at. On this, what I tried to do was layer the population census data because that had granular information of a certain variety. And access to finance is not captured by either of these—so RBI data, which looks at banking and financial access, credit, et cetera. If we unpack regions now with that and we ran a cluster analysis on that, it tells us that some of these regions are actually closer together in their descriptive behavior, regions which actually belong to different states.

What I mean to say is that parts of Orissa, like southern Orissa, is showing or on these parameters is behaving much more like central Maharashtra or Gadchiroli. They are tribal. They are densely forested. They have serious issues around access to health and sanitation. At the same time, their agricultural output seems to be fairly strong. There are these patterns that this kind of a cut has thrown up, which forces one to think that the regional story—to answer your question, what is defining these clusters? It is parameters like these.

What is the economic composition? Is it specialized or diversified in terms of the economic activities people there are taking up? What is the extent of access to finance? What is the extent of access to skills and places which are similar on these parameters that are showing some common characteristics which can possibly help us plan or help us build policies with a different cut or a different lens?

The Cluster Effect

RAJAGOPALAN: You’ve set it up in such an interesting way because, in your book, the entire story of regional economic diversity is one of clustering and agglomeration. That’s not very surprising given the very large literature on this. But what is interesting is, when we think about convergence or divergence, the places that have clustered look like other places that have clustered irrespective of state boundary, and those are converging. The places that have not clustered are diverging from the places that have clustered, irrespective of which state we’re talking about.

The convergence and divergence story now is no longer as standard as, oh, Bihar is not converging with Kerala. It is more that there are some parts of Bihar which might be converging with some parts of Odisha or some parts of Maharashtra, and there are some parts of Kerala which are not converging with anything else. It’s that kind of a cut which is super interesting. I think it’s helpful to get into the idea of clusters and agglomeration.

The standard economic story around clusters—and you’ve hinted at this briefly—is people move because people are looking for different economic opportunities, and firms are looking for places to set up their particular enterprise. Firms are more likely to set up where they can find the labor which will match their capital, and people are more likely to move wherever they can find employment for their skill. This is one of the reasons we start seeing clustering. And the opposite of that is, as clusters start getting larger and larger, you get the opposite. Instead of clustering, you also get a lot of diversification, so now you have lots of people with lots of different skills, lots of firms with lots of different kinds of production profiles or production processes, who all end up in the same place.

At the region level, what is driving the story in India when it comes to clustering? Is it reduction in transport costs, which is a standard story in more developed countries? It’s the transport cost which makes people move. Is it just discarding an unproductive sector, which is becoming worse and worse, toward a more productive sector? It’s not just transport costs, it’s actually a change of occupation or a shift in that sense? Is it that actually new kinds of firms are being born and more numbers of firms are being born? What is driving the cluster effect in India? Is it that places that used to be clusters are still clusters, and now everyone’s just using that as some Schelling point to move?

DORE: First of all, thank you for describing the diversification process so beautifully, Shruti. I think you explained it better than I could have. It’s a very interesting thing to see and understand. A lot of what has happened when I have been traveling on work is, you see that there is one firm that sets up their unit, and then that creates more jobs, and then the ancillary unit comes up alongside. Pune is a beautiful example of how your auto and auto-related clusters started coming up. It was a university town to start with, but then that meant that education and higher education institutions started growing there as well. IT also began to layer itself there for similar reasons.

It has another twin benefit of being like a sister city to Bombay. Spillover of things which Bombay would like to have easy access to comes up in Pune, and today, it is one of the shared services hub in India. A lot of entities are setting up their shared services practices there. This means that people want to live there. Hill stations around Pune begin to do better. This is the narrative that I think you’ve already described, that it starts with maybe one or two activities, and then there are more and then people also gravitate toward that.

The neighboring cities and towns like Sangli—Lavasa is not the best example because, for structural reasons, they didn’t do very well—ideas like that begin to take shape because of that. Now, what the information seems to tell us is this, that if we look at India’s example vis-à-vis other countries, for many countries, what has driven their clustering has been specialization. They specialize in a couple of sectors; they build their policies around that. They build that competitive advantage, and that seems to be driving how they’re growing.

If we look at India—and you can look at Lall and Mengistae or other studies before, which guided me to this question—diversification seems to be very closely describing a co-traveler in our growth journey. It is not specialization. It seems to be diversification. I try to go deeper into that question, that what is really driving our narrative, is it true at the regional level? At a country level our studies may say certain things, but at a regional level, what is driving it?

If you look at some of the tables or the charts that I’ve tried to put in, through maps, so that visually also, it comes through that we have at least two or three more sectors firing in the regions that seem to be doing very well. That is very telling. I meant that that is very telling because that means that our story is not “We specialized in auto, and we built that as our competitive advantage,” as, say, Germany may have done, or—Japan, Germany, some of these countries, their narrative, at least what we know of it, is of a few sectors firing growth.

Importance of Diversification

RAJAGOPALAN: You’ve partly answered the question I had when I was reading the book, which is, is it a story of diversification or is it a story of specialization? Because it can be both when it comes to clustering. What you are talking about is, in India, very quickly you have clusters that develop into larger clusters that develop into larger urban areas, which become diversified. A cluster never remains a single firm or a single industry cluster for too long in India. Is that a good way to think about it across different regions, across different states?

DORE: I don’t know if it is happening very quickly because some of these have been in the pipeline for some time, and today we are seeing them take that shape. I also think that there are segments where that clustering has not happened in this way, which makes me also question that from a policy point of view, should we be going the SEZ [special economic zone]—one district, one product, that kind of a route—or giving primacy to certain products? The narrative that I’m seeing here is that diversification seems to be important for us, and we seem to be doing it well when we do it. That’s one. We should play to our strengths as a country.

The second part is this, that it’s not an all-out diversification. There seem to be limits to the benefits of diversification. There is a point beyond which an inverted-U story is happening. At best, three or four sectors is what a region should look at. I do make this premise toward the end of the book, and having looked at a lot of the data, that we tend to move toward diversification in places where we are growing well. There are still many places where we have not diversified at all, and that’s hurting us when that is happening. But we probably need to look at a model of specialized diversification.

What I mean by that is, have the three or four sectors and specialize in those. Don’t spread yourself too thin, but have a wider canvas that you’re playing with so that the regions are able to have things going for them when the chips are down, say, in a couple of sectors. That’s making general intuitive sense also, but it is also playing to our strengths that at least two or three things going together well is something we can manage. We seem to do that well, and somewhere, maybe it’s fundamentally ingrained in how our brains work.

I have not gone into the causality of why that is so, but I think if it’s a strength and if it seems to be working for us, we should look at this principle of specialized diversification. I would like to think over time how, from a policy perspective also, we could maybe encourage that, incentivize that and create ways in which, say, a region is not just an IT hub, but we are creating some pathway for it to be a little more than that, which then gives it a broader play.

RAJAGOPALAN: My sense when I was reading your work on why we don’t have these single highly specialized industry clusters is basically that Indian policy—and this is since the very beginning, this is since independence—has done two things. One, it punishes scale. The second is, it punishes scale specifically when we talk about hiring labor. What we end up getting in India is, even in the clusters, we end up getting lots of small firms.

If you’re talking about a cluster like auto, which is very capital-heavy, then it’s an SEZ, something like the Sriperumbudur corridor in Tamil Nadu. Something like that is where you get a cluster because you introduced one or two firms, you gave them some privileges in the special economic zone, and then more followed.

What we end up seeing is the clustering problem or the lack of specialization or not enough specialized clusters. But actually, the problem might be somewhere quite far removed from it, at least in the data, which tends to be labor or which may be, why can’t we scale up firms? What are the regulatory or compliance issues which are preventing firms from scaling? Because that’s really when you get a highly specialized cluster. That’s my sense. One way of thinking about it is, you’re right, SEZs. But what are SEZs really giving us?

They are, in part, letting us escape the regulatory issue, which is punishing scale everywhere else in India. But within the SEZ, we can suspend the crazy regulation that punishes scale. That’s really what is going on there. We can suspend some of these labor laws; we can suspend some of these land issues. I think your intuition is absolutely right that that’s where we need to go. I can also think of ways to do it without creating special economic zones. I think the special economic zones will create themselves if we solve the problem of factor markets in India more broadly and we stop punishing scale.

Bangladesh has managed to get textile factories going where you have 15,000, 17,000 workers. In India, it is difficult to get a lot of factories which have even 1,000 workers or 1,500 workers. We don’t see too many of them. I think that might be one explanation of what you see and what you describe toward the end of the book. Do you think my hunch is right, or is this too simple?

DORE: I agree, Shruti, that it is a fact that we are punishing scale. What I meant to say with the SEZ approach is, the way it is structured today is still a little one-size-fits-all kind of a thing, which is not how we will be able to create employment or create jobs or build this whole thing about—make every district or every region vibrant. That is not the model which is going to work well. This question about punishing scale is also related to contract labor very closely because it helps to keep things informal. The incentives are skewed toward pushing toward greater informality than formalization.

We don’t have ways to capture it except for, say, the economic census or ways like that. But if we actually wanted to capture the productivity of these smaller firms also into our economy to make financing easier—because there is a whole access-to-capital issue which is not happening because creditworthiness for these informal firms becomes harder to establish. You don’t have a track record, so nobody wants to lend to you. You are then in that cycle of where the factor payments to capital is higher than the factor payments to other segments.

Unlocking some of that on the regulatory front is extremely important. I would like to hope that the energy that we are seeing around Startup India and things like that, we need to take a little more risk on the factor markets front and let the market play and settle. So that people and firms are able to get better returns out of what they invest in locally, and not be prescriptive about what the region needs to produce, but to unlock markets, make access better.

I think you also asked this question about is it transport, is it infrastructure? I do think infrastructure has an important role, and in the last 20 years at least, I think we have seen better roads, better connectivity, more airports, greater corridors which are getting active. I think we need a lot more of that because if you can’t reach somewhere, then nothing is going to—particularly the eastern part of the country. I think the eastern and the northeastern part of the country—

RAJAGOPALAN: Especially the hilly regions of the country.

DORE: —hilly regions need far better . . . Some of that journey, I think, has already started, but I think we need to do a lot more in terms of general access directly through infrastructure. Teledensity and network infrastructure also needs to improve in a number of pockets. I think the benefits of UPI are to the small businesses, but if we want the benefits of that to reach the last mile, which is the consumer, they need to have better access. I think everybody has a lot to gain by better digital access. I’m hoping that some of these are spaces which will see a lot more action in the coming years.

Urban Specialization vs. Diversification

RAJAGOPALAN: There I completely agree with you—all kinds of penetration, whether it’s roads and infrastructure, transport, all of those things. One of the interesting things also I learned from your book is that the very large metropolitan areas actually look quite different from the regular urban centers, which is not that surprising once you start discussing what’s going on. That even the very large metropolitan areas need to be disaggregated. That was the other big learning I got. Because normally we just think of these big metropolitan areas as, oh, this is one really important cluster, but what you actually point out is that these are a collection of clusters. It is not a single cluster.

What’s happened is, something like Delhi or Mumbai, it clearly has some kind of lighthouse effect. It’s attracting people to that particular point. Because it’s attracting people, industries or sectors that may not have already developed start developing in and around that area. This is really the story of what is happening in Thane, or what is happening in Dombivli. Mumbai is a great example because now increasingly more and more action is happening in the suburbs.

The broader question I have is, is it necessary that larger cities are necessarily more diverse, metropolitan areas are more diverse? Or are we just regionally categorizing an area which has highly specialized clusters, and we’ve just put it in one box because geographically it makes sense to put it in one box? It has one shared airport; it has one shared railway station. We’ve just called this one area. What is the story in those? I know we have only four or five of those in India, so they might be easier to study as specific cases.

DORE: My sense of what’s happening with the metros, Shruti, is this: that, A, they have grown very, very fast in the sense that—not fast over time, necessarily, but I’m saying in the way in which development has not been able to keep pace with the influx of people, let’s put it that way, or the speed with which commercial or business activity has taken off there.

The good thing, of course, is I think their output per capita or the output of these regions has been really very high. If one had to look at growth engines in India today, it would be our metros. At the same time, I think what has also happened is that urban planning has not kept pace with the way these places have grown. That also means that Delhi is moving radially. Bombay is growing longitudinally.

Thankfully, Bangalore is in a place where it has grown, but it does not have boundaries of different states the way Delhi is, where you have this whole administrative thing of how will you classify it as NCR [National Capital Region], and so on. I see this as also being a transition over time. Because, say Bombay, it was textile mills, trading, and then it grew over time and has become the financial capital now. Things have not necessarily worked out in Bombay the way they had thought.

For example, the central business district (CBD), which is in Vashi—CBD Belapur, it used to be called in the days when we just started working. And Unilever and many others had set up their other offices there in the hope that a lot of work, as well as people, would move to these suburbs. What has happened over time is that that part has not fired the way it was expected. Bandra Kurla Complex (BKC), on the other hand, has become the alternate hub to south Bombay.

RAJAGOPALAN: Absolutely. Especially because the mill land got so badly tied up, right? They couldn’t grow there, so now the entire city has shifted north, or rather the hub has shifted north.

DORE: Also a lot of mill complexes have now got converted into commercial establishments. Your lower Parel, Kamala Mills, and all of those areas, Peninsula Business Park.

RAJAGOPALAN: Yes. All your hipster cafes.

DORE: Yes, all of that.

RAJAGOPALAN: With paper straws.

DORE: All of that is on what used to be earlier mill—

RAJAGOPALAN: Mill land.

DORE: —area, has now become an agglomeration of a different kind. The shopping centers are there; the business, second level, after south Bombay. Next pit stop is Parel, lower Parel, that part, which is the mill area. The next pit stop after that is Bandra Kurla Complex. Then you may go to the others. Another very interesting pattern in Bombay is that a lot of the startup ecosystem is in the IIT Bombay area, Powai.

It is a city. If we looked at this particular metro, it has these segments that have grown. It is still part of one narrative because the reasons why they have set up is because of proximity to the financial capital. BKC would not have happened if it was not for the real estate prices being really high in town. I see these as part of the same city because it is movement within that city, or choices which are happening because of how one part of the city is operating.

It would not be unfair to call it one region. It’s still not a collection of regions, but parts of it like Kalyan-Dombivli, like Thane, which are then outside of even the municipal jurisdiction, are managed, planned differently. Their incentives are different. Those segments, we would necessarily need to even treat them as separate million-plus cities.

Regional Diversity in the Bombay Metro Area

RAJAGOPALAN: They are all million-plus cities, but they are still thought of as the greater Bombay area. There are people who move to Thane but work in Bombay because the housing costs are too high in the region where they work and so on. How do you see those areas developing? I know there is a big push that each of them already had their own municipal operations, which are separate. Each one of them is thinking of getting their own individual metro systems and so on, which will link to a broader system for the entire metropolitan area.

How else do you see that story unfolding, in some sense? Because there is a big difference in the economic development between the suburbs and the original Mumbai region. The second thing that is different is, in the suburbs there is a lot more industrial activity. There’s a lot more even farm activity if you think about dairy. Dairy farming is a serious thing in some of these suburbs like Kalyan.

Whereas in the Mumbai region you don’t have heavy industry, certainly not. You have light industry, you have much more informal establishments. That is one important distinction that I see. How else do you see this regional diversity within the metropolitan area unfolding?

DORE: Interestingly, as we are speaking, I’m just pulling out the segment in chapter five where we talk about economic diversity at the regional level. I’d actually tried to look at, A, these million-plus cities and look at how does the diversity index work for these. We had constructed a diversity index for each of the regions, which was basically, what is the concentration of economic activity that people are employed in? Which are the sectors that people are employed in?

If one is capturing it by a measure, which is the diversity index, that goes on a scale of zero to one. If it is closer to one, it means that it is a highly diverse region in terms of economic activity. Closer to zero is less on that axis. This was done for all the regions that were captured in the book. I also did that particularly for the million-plus cities just to see what is happening at the million-plus city level. Kalyan-Dombivli is ranked highest on its diversity mix.

RAJAGOPALAN: Wow.

DORE: It has a 0.89.

RAJAGOPALAN: Because it still has dairy farms, also and it still has startups. It’s one those places.

DORE: Correct. Do you want to take a guess of which one is number two?

RAJAGOPALAN: Thane?

DORE: Thane.

RAJAGOPALAN: Ghaziabad.

DORE: Thane. Very good, very good. Ten marks. 0.88. Thane is at 0.88.

RAJAGOPALAN: Thank you, Professor Dore.

DORE: The next one after that is Hyderabad, also a 0.88. Then we have Pune Pimpri Chinchwad, which is 0.87. Bombay is actually fairly down there. Greater municipal area of Bombay is fairly down there because it is largely financial services, trade, real estate. Nagpur is higher than Bombay.

RAJAGOPALAN: No, now after reading things at the regional level, this is now no longer surprising me because I’ve read your book. Unlike the listeners who are getting this for the first time, which is, the story in India seems to be, first there is some kind of cluster. People move to that cluster. Then that area diversifies a little bit, and after it diversifies, then again there are gains from specialization. It again starts specializing because the mill land is now no longer productive use of that land. Or dairy farms, very soon as Kaylan develops further, it is not going to have too many dairy farms because that is not going to be the best use of that space.

I think all these areas, the time when you’ve captured them when they are more diverse—my sense is when you run this study, maybe another 10 or 15 years from today, they will come back to look more like Bombay, and then their satellite areas will start looking like what Kalyan-Dombivli looks like today. Is that a good way to think about how this is happening?

DORE: Yes, I think so too, because they will specialize a little more, and they will still probably be in the 75 to 80 range of diversification. Maybe not so close to 0.9.

Rethinking Balanced Regional Development

RAJAGOPALAN: One important question I had before I let you go. You start the book with India’s plan goals historically. That India needs to grow, it needs to grow faster, poorer regions need to catch up, and there needs to be balance in regional development. This has been a five-year plan goal since the very beginning.

Now, by the end of the book, when I finish reading how India is transforming structurally, the first question I had was, does this goal make any sense, or is it totally stupid to hold onto this goal? What does balanced regional development even mean, and why should we strive for it? Shouldn’t the thing we strive for as a country be that people are able to go wherever they wish to go, they’re able to access whatever market they wish to access or whatever, whether it’s an education market, labor market, whether it’s employment, urban areas?

Isn’t that the important goal, that we make it frictionless for them to transition? Balanced regional development as a policy goal almost seems like they’re going to do something stupid to get in the way of that. That’s how I was thinking about it, but how do you feel about this? That’s sort of where you begin the book. That’s your motivation, but you end at quite a different point from where you started.

DORE: That’s a great question, Shruti. My reading of this would be that it’s a fact that this balance is hard. It’s like one of those targets you set yourself up for which is really utopian almost. I would still like to believe that making it frictionless is definitely something which has to happen, which needs to happen. Simply because the size of the population, the number of people who are going to get impacted by this is so huge. It is the fastest-growing country in the world. If this is the population that we are talking about, then there have to be ways to make access to this populace happen. That is one. Definitely making business frictionless, making money transfer frictionless, making the ease of doing business and ease of living as a whole is essential.

At the same time, I would not want to let go of that broader principle or dream of balanced regional development for the simple reason that I do believe there is still going to be a significant set of people that are not going to be able to move in the near future. They are going to be where they are. There is going to need to be some amount of NC2 development to reach there. If we are looking at the most marginalized communities or tribal populations, there are people who have chosen to be there and who are maybe not wanting to move. A similar story is also that there is only so much capacity that some regions are going to have to be able to absorb the flows of people.

What we are going to see is undue pressure on infrastructure or policy if it’s going to be completely driven by “let people move wherever they want to, but we will not focus at all on in situ development.” I would like to ideally see a case where we are doing both. We are making it frictionless. We are saying the fundamental right where you can work from anywhere is something that the constitution is meant to guarantee, and we put in things that allow for that, whether it is the ability to access a ration card wherever you are in this country, the ability to put your vote.

You had asked an earlier question, why are people so tied to the land? It’s because their vote bank is there. If they do not have voting rights in certain parts of the country, there is going to be no way for them to exercise their agency. They will want to have some foothold in some place where people can exercise agency. These are things we have to think about. There are no, of course, clear and ready answers. But, A, making movement frictionless, using our digital narrative where we are doing quite well today to really build on that.

Not all the answers are going to be digital. We have to take care of our basic physical infra-issues, which is healthcare, education at the rural points because children who are growing up in the village, they’re going to be able to come to a city or something only much later in their lives.

RAJAGOPALAN: They have to be educated and skilled for it.

DORE: Exactly. If we miss out on the first 10, 15 years of what their personalities can become—my own daughter, I know we have a limited time span where we are going to be able to influence how she thinks and what she’s going to be able to do. That’s a much larger narrative if we look at a population like ours as a country. My vote would be for significant amount of energy to go to make regions vibrant. Vibrance is about making healthcare of a certain standard, making education available, making the workforce capable to be able to move anywhere and deliver anywhere.

I would say a lot of Indians are going to go abroad as well. You write a lot about how the Indian workforce is going to be something that caters to a global market or a global audience. We have to have our people ready for that, not only for the benefit of this country but globally. We have to have a workforce that is fit, that is able, that is able to deliver, and to have this place as a market for those goods and services that are going to come from other places. I think it is in the greater enlightened self-interest for both to happen: for it to be frictionless, but also for regional economies themselves to be vibrant enough to be both great producers and consumers.

Guarding Against Prescriptivism

RAJAGOPALAN: I completely agree with that part. The reason I thought this is a crazy goal is that usually the way it has translated into policy action is not how you are describing it. You are describing the government needs to provide basic public goods and services and then quasi-public goods. It needs to get into healthcare and things like that. Whereas normally the government’s idea of balanced regional development is we put iron ore in that place, now we got to put an iron ore in this state, in this area.

We put a textile clustering there. These hundred smart cities, they can’t all be clustered around the greater Mumbai metropolitan area, where there’s actually a demand for smart cities. They need to be four in each state or something; we’re going to divvy it up. That’s what I mean by “Is it a sensible policy goal?” because you are absolutely right. We do need every region to have the opportunity to become productive. Whereas the way this is normally translated is, they put an industry or a sector in a place where it just makes no sense. Firms don’t wish to go there, and the labor doesn’t wish to go there. It’s like this planned economic development, planned balanced regional development.

That’s the part which makes me wonder if that makes sense anymore. You’ve clearly moved far away from that. You are now thinking very much about the government just providing public goods, public services so that the market-based structural transformation can center around itself. The people who don’t wish to move, of course, they don’t have to move.

DORE: Absolutely. You are right in that the tendency of things to become prescriptive is what we need to guard against. I’m teaching social finance this semester. One of the students actually asked me a very good question on the side that, how do we solve for some of these things where this prescriptive format of decision-making—why don’t we let people decide? Can we unlock things? Which is, I think, along the lines of what you would also say. Can we think of policy which helps things be a little more frictionless, which lets people invest in the industry that is locally going to work? Because people know. The intuitive local business sense has to be allowed to play out.

I would definitely like to see a space where we allow, say, social finance to play a more important role, microfinance to trigger what kind of local businesses will grow better. Let the MSMEs [micro, small and medium Enterprises] choose what areas they’re going to find the market in and specialize, and that will then help people to be competitive. Otherwise, you are going to be stuck in a situation where you say these three sectors we have to build, and so we’ll give you these tax incentives, and then there’s another layer of subsidies around that. And then there’s more taxpayer income which is stuck there, which need not necessarily be making the market.

I think I’m somewhere in that mix of, some things we need to behave like a welfare state, but for the others, we really need to let the market play out and strengthen its ability to be accountable. I would see a better role for the judiciary, for things like that where you enforce law enforcement, make some of these strong. We are not incentivizing people to cheat, we’re not incentivizing people to game the system, but we are letting the market function really well. I would love to see that. I think planning as a function needs to think in a more out-of-the-box and less prescriptive kind of a format.

Policy Background

RAJAGOPALAN: Before I let you go, I want to also get into a little bit about your background. This might be helpful to our listeners who have an academic and rigorous training but wish to work in policy, which is exactly how your career has panned out. You, of course, work as the director of analytics, insights and impact at the Tata Trusts. You yourself not only do research and you look at how you wish to see India from a policy perspective, but you’re also funding people through the Tata Trust, people who are working on this kind of research. You’re also looking at policy and evaluating the impact of specific policy programs or specific philanthropic programs that Tata Trust funds.

How do you see this transition from standard Ph.D.-in-economics kind of academic training into what you see at the policy level? What are academics missing? What are the sorts of things that academics, especially economists in India should be working on that they don’t work on? Because you have this very unique lens, and you’re able to see what’s happening on the ground.

DORE: I actually became a researcher by accident. I think I was doing work on the ground and visiting the markets as part of what I was doing at Tata Capital, advising CEOs, CFOs, or planning financial structures and then later development programs. In that process, I felt that I would like to revisit what have the greats said and done on these issues of access? And how do you make capital more thoughtful? How do you solve for some of the deeper questions?

I came to the Ph.D. later in life, and it was more of a felt need. I did not know how it would translate into work or opportunities or even career, but I think I wanted to visit what the greats have said. I also wanted to unpack these questions for myself with some amount of, in Hindi we call it thehrav, which you don’t get when you are on your day job and on the accelerator. I was not able to do it with too much thehrav because I did it side by side with my work. I don’t know if I would necessarily recommend that route to anybody because it’s very killing.

RAJAGOPALAN: No, I remember when I saw you toward the end, I think you were defending your dissertation. You were still working full time, and I think you were in your third trimester when you had to defend. And I remember meeting you and I was like, “Oh, good God. How are you doing all of this and still managing to get this done?” Thehrav or not, you certainly checked off the superwoman box that day when I saw you. This is, of course, many years ago.

DORE: Music to my ears. My daughter, Devika, she participated in my Ph.D. defense from the inside. I think I have been richer for the process of having gone through this rigor because I think the way I look at some of these questions and the way I’m able to unpack some of this—I feel that I have a body of work that I have read, or that I have familiarized myself with, that I can lean back on and draw from when I’m trying to build or think or plan. And I found it extremely, extremely, very useful. It’s, of course, great to be able to put it in the form of a book, which I’m able to share with a larger audience.

That process also, Shruti, for me, has been a way of pushing the narrative forward or bringing more people into the conversation. I realize that there are more people like me who are thinking about these questions when they travel, when they see the world, whether they’re on the business side or working in policy or on development. I met a lot more people as part of my work and Ph.D. journey who have similar questions.

One of the things which I found to address what you were asking is that I think what the world of practice needs and what often Ph.D. students work on, there is sometimes a gap. It could be you are researching a question because your guide had three students before that, and this is the fourth question in that. You do not know which question to pick, so you think that’s an interesting area to work on, which is fine. It depends on your life stage and how you get into your Ph.D. journey. I also think there are a lot of very important questions for the world of practice that need deep work, and a Ph.D. or a research process is a great way to do that homework, which can be of great use to the community of practice as well.

The regional question was something that I had the opportunity to engage with. I do see a lot of Ph.D. students, say in the sciences, working a lot on, say, cancer care or medical treatment or things like that, which their labs are clearly focused upon to contribute back to the world of practice. I would like to see a lot more of that in the humanities and social sciences and economics spaces too. I do see many young people doing that as well. And my suggestion there would be, or my hope there would be, A, a lot more conversations between academia and practice and government, because a lot of these institutions talk different languages but are working toward similar goals.

From my seat, where I have the opportunity to engage with business and government—and I think I’m very fortunate and also, I think chosen these spaces where I get to meet, and it’s something that I look for. And I make sure that I’m in the room where those conversations are happening because I see a lot of cross-pollination possible. I do not believe it is possible for any one agency to crack it completely.

For example, something like you are doing at Mercatus, where you are seeding entrepreneurs or ideas in places like these—I think universities have great opportunity to push the boundary of thought to test and pilot things which the commercial sector may not be able to do immediately, and so partnerships of that form can be extremely potent. I think students should also go and spend a lot of time on the field. Fieldwork should not be something that you are like, “Oh my God, now the guide is insisting, and so I need to do.” I think, look at it as one of the best experiences of engaging with the world outside.

I think I have learned the most when I am out there meeting people, talking to them and understanding real-world problems. That helps you define your problem statement much better and create something that will be valuable, not just for an A-star publication, but for the world to use in the times to come.

Making the Broader Connections

RAJAGOPALAN: You know what I really like about the book—which is, of course, the outcome of all the work that you’ve done over one decade, maybe even longer—is you’ve taken a subject which is classically a development economics/plan policy, development policy question, and you’ve merged it with ideas that we typically only study in urban economics or we only study in industrial organization, when we’re talking about clustering, when we’re talking about agglomeration.

So this is the thing that I actually find missing in most academic work when it’s talking about India. It’s very narrow. Nowadays in development economics, the thing that is in vogue is randomized control trials. Looking at the narrowest of narrow slivers and not making these broader connections that—people don’t live their life, they walk into healthcare center, they say, “Oh, now this is the health economics part of my life.” And then they exit that, and then they enter their office and then they’re like, “Oh, this is the clustering part of my life.” That is just not how we function as human beings, right?

DORE: Absolutely.

RAJAGOPALAN: We make certain decisions. And our economic, social, personal household decisions, education decisions, everything is deeply entangled. What I really like about the book is, other than shining the light on just how vast India is and that we need to get more granular and what that granular snapshot looks like, the lovely thing you’ve done when you show the difference between 2004/’05, and ’11-’12, that period, you are actually showing us that structural transformation that is taking place, which is development.

There is a labor part to it. There is an urban part to it. There is an industrial clustering part to it. There is diversification and there is economic development and infrastructure building. All of those things are going on simultaneously, which is quite lovely to see in any academic work which is trying to influence development policy.

This was such a pleasure both to read and to chat with you. We never catch up like this, so this is truly a delight. Thank you so much for coming, Poornima. I can’t thank you enough.

DORE: Thank you so much, Shruti. And thank you for seeing the book through this lens which gives it so much color. Thank you.