Bengaluru: The global economy is in a turmoil with persistently high inflation in the United States and significant challenges across Europe. Amidst the crisis, India is emerging as an economically resilient nation. The flourishing of Global Capability Centres (GCCs) has transformed India to be the knowledge hub of the world. The growth in manufacturing segment has also been significant with the manufacturing PMI is at a 16-year high for India. In an exclusive interaction with The Hans India, Janu Goswami, Behavioral Economist and Author.
Q: Having worked at the World Bank and now supporting a global real estate firm’s research division, how do you see the current global economic trends impacting the Indian economy?
A: Working at the World Bank was a wonderful experience and I had the opportunity to spend some time in their Washington DC office as well. I learned a lot about the application of economics through my research at the World Bank. Regarding global economic trends, inflation in the United States has been sticky, and the central bank in the United States – the Federal Reserve has not cut rates and I expect them to cut rates by the end of the calendar year 2024. Europe is also facing economic challenges. Although the European Central Bank (ECB) has cut rates to stimulate the economy, it will take some time for European economies to recover. Amidst these challenges, India stands out as a bright spot in the world economy today. Our nation has become the knowledge hub of the world with the flourishing of Global Capability Centres (GCCs). The growth in manufacturing has added further momentum and the manufacturing PMI is at a 16-year high for India.
With all these factors, India’s GDP is set to grow at a rapid rate. However, relying solely on GDP to measure growth would be inadequate for a country like India. Even per capita income is not an accurate metric, as it is an average, and in a country with high inequality, the average can be misleading. For example, consider a scenario where one person has an annual income of 10 crores and another person earns 50 thousand per year. The per capita income would be (10 crore + 50 thousand)/2, which is roughly 5 crore each. This does not accurately reflect the economic reality.
I suggest using a different model that takes a weighted average approach. For instance, we could assign 30 percent weightage to GDP, 40 percent to the Human Development Index (HDI), and 15 percent each to the Services PMI and manufacturing PMI. This would provide a more comprehensive score. This is just my suggestion, and I plan to write a research paper on this topic and debate the applicability of a weighted average model.
Q: You have a deep interest in philosophy, history, human behavior, international relations, and geopolitics. How do you integrate these fields into your economic analyses, and how do they shape your understanding of the Indian economy?
A: Yes, I have a deep interest in these because each of these fields play a vital role in understanding an economy. For example, understanding geopolitics gives me an edge in predicting the economic consequences of a future war. I have made accurate predictions about Middle East tensions, and the knowledge of international relations and human behavior which I acquired over the years helped me with it. Since the economy is fundamentally about humans, this understanding helps me make the subject all the more interesting. I use sentiment surveys and various models to decode consumer behavior and better comprehend the Indian economy.
Q: Balancing your roles as an economist, coder, poet, and footballer, how do these diverse pursuits contribute to your overall perspective and approach to economic research and analysis?
A: Coding helps me work with large data sets. I wouldn’t say I’m an expert coder, but I know how to use it for data analysis in economic research. Lately, I haven’t been able to play football due to a ligament tear, but football keeps me fit and improves my focus. Writing poetry is a hobby of mine and is unrelated to my economic research.
Q: Your books, ‘Blue and Grey’ and ‘Truth About Honesty’, reflect your intellectual and philosophical musings. How do your literary works influence your economic research, and vice versa?
A: The literary work, Truth about Honesty, focuses primarily on behavioral economics. Researching and writing the book provided me with valuable insights into human behavior in various situations. The extensive surveys conducted for the book included people from diverse classes and genders. This experience fuelled my passion and helped me understand and write about the economy in a more objective manner.
Q: With a goal to understand the complexities of human behavior and its impact on everything around us, what future projects or research areas are you most excited about, and how do you see them contributing to Indian society?
A: I am deeply committed to understanding human behavior and how consumers make different choices in various situations. My future research will explore why people engage in dishonest actions, ranging from minor dishonesty to significant acts. These ambitious projects will require cutting-edge technology and substantial funding. Through my research, I aim to encourage my fellow citizens to reflect on their actions and integrate honesty into their daily lives.
(Inputs by Janu Goswami, Behavioral Economist and Author. The views expressed are those of the author and do not represent the employer or any other organizations.)