Why Raghuram Rajan Is Wrong - Everyone's Making Chips

Anmol Jain

May 28, 2024, 07:05 PM | Updated 07:05 PM IST

VD Savarkar's Birth Anniversary Today

Vinayak Damodar Savarkar 
Vinayak Damodar Savarkar 

Good evening, dear reader.

Vikram Sampath's two-volume biography is the best thing to read on Vinayak Damodar Savarkar. (Today is his birth anniversary)

The next best thing is this article by Shraddhanand.

  • The article is both a lament about the lack of study on Savarkar and a review of Savarkar's works over the decades.

  • It also reviews how Savarkar's contemporaries, particularly those from the Left, viewed him back in the day. (Hint: unlike today's Leftists, they had a favorable view of him.)

Do not mind me pestering you over this, but if you're a fan of Savarkar or simply wish to know more about the father figure of Indian revolutionaries, you must read Shraddhanand's piece.

Click here to read.

Amar Govindarajan, with Anmol Jain & others at Swarajya.

No one's listening to Raguram Rajan!

Foxconn manufacturing facility in India
Foxconn manufacturing facility in India

China has set up its largest-ever semiconductor investment fund to develop its domestic semiconductor industry.

This is contrary to Rajan's Recipe: In his book Breaking the Mould: Reimagining India’s Economic Future, he asks whether India can grow and develop by prioritising service sector growth rather than industrial growth.

  • He has often decried India's push for manufacturing-led growth, especially under the Make in India and PLI schemes.

  • Instead, Rajan advocates a services-led export model for India to grow faster.

  • "Export-led services growth will be much less environmentally harmful – the world cannot afford India to follow China’s path, even if it were open to it."

  • It looks like neither China nor India is heeding Rajan's advice.

China's chip push: It underscores China’s determination to achieve self-sufficiency in semiconductors amid escalating tensions with the US.

  • The Biden administration has imposed strict restrictions on China’s access to advanced chips and chip-making equipment.

  • It is also urging allies — the Netherlands, Germany, South Korea, and Japan — to tighten these curbs.

Everyone's investing in chip making: The US and EU are also heavily investing in semiconductor production, with nearly $81 billion funneled into the sector.

  • US' 2022 Chips and Science Act: $39 billion in grants, $75 billion in loans and guarantees for chipmakers.

India's case: No one in their right mind is advocating aping China. But it'd be suicidal to give up on manufacturing:

  • when China is weaponising its supply chain dominance for geopolitical ends.

  • when 8-10 million new workers enter its labour force every year.

  • when India has failed to expand the share of manufacturing sector beyond 20 per cent — both in terms of output and employment.

Bottom line: India must combine the manufacturing and service sector models for faster growth. It doesn't have to be a zero-sum game.

Venu is surprised: People seem to have moved on, pandemic is not an election issue

A BJP-NDA hoarding in Alappuzha
A BJP-NDA hoarding in Alappuzha

My colleague Venu Gopal Narayanan spent significant time in central Kerala covering BJP candidates there for Swarajya's '50 Ground Reports' project.

When we asked him about one story that stood out, he pointed to the electrifying buzz he sensed in Alappuzha, a tropical coastal seat in Kerala.

What was different this time? Unlike previous elections, it was a dark horse stirring things up — BJP’s Shobha Surendran, who ran a "sharp campaign" from a modest party office but with a well-organized team.

  • Also in 2019, Alappuzha was the only seat won by the Left in Kerala, by a razor-thin margin. The rest went to Congress.

  • Heavyweights: Congress's KC Venugopal, a seasoned winner from 2009 and 2014, was up against sitting Marxist MP AM Ariff.

Venu observed the shift on the ground: The voter anger was looking for refuge in BJP instead of Congress. BJP’s development messaging resonated due to appreciation for central schemes like direct benefit transfers.

  • Modi Effect: Increasingly, voters expressed admiration for Narendra Modi, even if they were not yet BJP supporters.

  • Shobha Surendran: Popular among women voters, even elderly women showed respect to her in ways uncommon in Kerala.

  • BJP's traction among fishing and shrimp-farming communities, who looked to the central government for solutions.

While Kerala voted in Phase II, Venu contended that if Shobha Surendran secures more than 20% of the vote, it could spell trouble for KC Venugopal and shake up Kerala's political landscape.

You can dive deeper into this and Venu Gopal Narayanan's other ground reports here.

Postscript: "People seem to have moved on," says Venu, "interestingly, the pandemic isn't an election issue."

  • However, wherever he went there was an unusual buzz about national security — "with many believing the Modi government will secure national interests regardless of international opinions."

Maybe the focus on national security did not end with the 2019 polls, as many projected. It still resonates alongside other issues!

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