Transcript: Martin Wolf and Raghuram Rajan on democracy’s year of peril

This is an audio transcript of the FT News Briefing podcast episode: ‘Martin Wolf and Raghuram Rajan on democracy’s year of peril’

Marc Filippino
Good morning from the Financial Times. It’s Marc Filippino here. Regular listeners will know that for every Sunday this month, the News Briefing is going to do something a little bit different. We’re running a series about the outlook for democracy hosted by the FT’s chief economics commentator, Martin Wolf. He’s been talking to leading political thinkers about what this year, a pivotal year for democracy, has in store for the liberal democratic system. So here goes, Martin Wolf, Democracy’s Year of Peril.

Martin Wolf
I’m Martin Wolf, chief economics commentator of the Financial Times. And you’re listening to episode three of Democracy’s Year of Peril. This episode features someone I have known well for many years. I believe we first met, though I’m not sure when you were at the IMF, and I did review a book very positively that you published about that time.

Raghuram Rajan
Yes, we met around that first book, Saving Capitalism from the Capitalists, which you were kind enough to write a review and, got us a certain amount of attention. That was just before I joined the IMF and then, you know, we actually met physically at the IMF, and it’s been a long and very, very interesting friendship since then.

Martin Wolf
Yes, indeed. Raghuram Rajan is one of the world’s leading financial economists. He’s currently a professor at the University of Chicago’s Booth School of Business. But his career includes roles as the chief economist of the International Monetary Fund in Washington from 2003 to 2006. He famously warned of the coming financial crisis back in 2005. He was chief economic adviser to the Indian government in 2012 to 2013, and governor of the Reserve Bank of India from 2013 to 2016, during which he dealt with a currency crisis and the need for banking reform. He’s a noted proponent of liberal democracy and its marriage to market capitalism.

And the timing of our conversation was fortunate. Just days before we sat down together, Indian Prime Minister Narendra Modi’s BJP party lost its parliamentary majority when it failed to achieve a predicted electoral landslide and will be forced to govern in a coalition of political rivals.

So, Raghu, how do you explain this surprisingly bad result for Modi? But before you explain it, tell me what your reactions are to this outcome.

Raghuram Rajan
Well, I’m very happy for India. Very happy for Indian democracy. India needs a strong opposition and this election has ensured that at least for the next five years, it has put a stop to the relentless move towards authoritarianism, which we saw before this election. So, yes, I’m very happy.

Martin Wolf
Then let’s get to what happened. How did this happen and how big was it as a sort of rebuttal of Modi and Modi-ism? Because when we look at the outcome more closely, commentators have pointed out there were actually quite small changes in vote shares, which led to rather remarkably big changes in seat numbers in certain important parts of India. Doesn’t it suggest that actually cheering, though it was, this was very far from a real repudiation of Modi and Modi-ism.

Raghuram Rajan
Well, yes and no, right? So you have to remember that over the last few years, the power of the BJP has expanded significantly, including through its control of the press and through its enormous money power as it gets funding from corporations and others. So this was an asymmetric election, and for the opposition to not just have held its own, but made some advances, of course, on the backs of alliances which they hadn’t created before. I think it’s an enormous sort of repudiation of the government’s policies, given the various channels it had to influence the public. Let me qualify that enormous. It certainly is the case that they weren’t voting for continuity. Many wanted change. Despite Modi’s widespread popularity and his ability to project a larger-than-life image through various channels. So I think there is a strong message here, despite the small changes in vote share.

Martin Wolf
Does this suggest, then, that those of us who are worried about the survival of democracy, liberal democracy, that so long as there are still reasonably free and fair, will come to that in a moment, elections, the power of the capacity of would be autocrats to control politics indefinitely is at least potentially constrained and that that is really quite a cheering reality?

Raghuram Rajan
I think there is some good news. This election was free. It was not fair, right? Free in the sense that people got to exercise their vote and they weren’t sort of inhibited in going to the polling booths. And it was conducted in secrecy. There wasn’t rigging. All that was good. And it’s good that India has, over the years, managed to create the systems to make this happen. That’s, you know, three cheers for Indian democracy.

It wasn’t fair in the sense that there was overwhelming power in the government. And, you know, some of the opposition leaders have been surprised that the message got through given the amount of space they got in official media. I think what is interesting, however, is this suggests a weakness in authoritarian governments. That is, they simply can’t read the message of what’s happening on the ground. They simply shut down the channels, which would give them a sense that things are not going well. And what they get back is an echo chamber. So the Modi government simply didn’t understand the amount of anxiety that was emerging with the growing unemployment, especially youth-educated unemployment and the kind of unhappiness with food prices increasing. So with the broader press applauding everything that was happening with Modi enjoying a larger-than-life status in India, with every foreign dignitary coming and showering him with praise, there was a sense that this was inevitable. The government was talking about getting 400 seats in parliament.

But people were thinking differently. What have you done for us lately, was in some sense the refrain. And lately it was, you know, not very much. Despite all the raves about the Modi government’s economic performance for the masses, the performance hasn’t been good since 2019, so it’s been five years of underperformance. The way to look at it is to see numbers like the consumption of mass goods. For example, two-wheeler sales, this is what the lower middle class buys. We’re talking about motorcycles and scooters. They reached their peak before the pandemic and have been declining since, suggesting the middle class is hurting. You know, Indian GDP numbers say India is growing at 8.5%, but consumption growth is a paltry 4%, suggesting that, again, broad consumption is hurting at this point. We collect very poor unemployment data. But what we can see suggests that, you know, people don’t have good jobs. In fact, the most stunning, astonishing statistic in India is agricultural employment has been going up. This is something that doesn’t happen in a developing country, which is growing fast because people leave agriculture for jobs elsewhere. The reverse has been happening in India.

So yes, there’s public anxiety about the economic future, but with the mainstream media sort of portraying every success of the government and saying, we’re growing at 8.5%, I think it’s also creating some kind of disconnect. The broader public is asking, OK, the country’s growing. What about me? Why am I not growing?

Martin Wolf
I want to discuss the economy and what the implications of this result are likely to be in the future. But let me first go back to some of the points you made earlier about what is not fair about the current situation, because that was, of course, a big concern. So explain a bit about how, first of all, parties are financed and how this enormous financial inequality between the governing party and the opposition is created and maintained.

Raghuram Rajan
Well, there is the usual route of corporate donations. Typically these used to take place through unaccounted money and were problematic for the corporation. How do you find unaccounted money to donate and problematic for the party receiving it? Well, the BJP thought of a fantastic scheme in which it basically promised corporations anonymity so long as they bought these bonds, which were called election bonds. And, they’ve donated to the party of their choice. Surprise, surprise, the ruling party got most of those donations or got the majority of those donations. And the ruling parties in different states also got some of those donations. So essentially, this was a very (inaudible) incumbent financing process. But the old ways of financing still exist that many business houses don’t want to even pry the official channel of financing. Many of them, therefore prefer staying with the traditional method of financing, which is, you know, send cash to the parties of choice. Again, the incumbent party benefits, partly because the incumbent party also has under its control the various investigative agencies which have the ability to disrupt that flow of cash by, you know, sort of raiding opposition-friendly sources so it becomes asymmetric business people fearing those raids will tend to give more to the official party. Even these election bonds, the Supreme Court basically declared them illegal and asked for the recipient data to be made public. They were anonymous earlier, so both the donor data and the recipient data were made public. And it was seen that a number of donations were made just before or just after government raids on those businesses. So effectively, the government was using both the channel as well as its control over various government agencies to ensure that funding went to the ruling party. That was the asymmetric part of it, which I think, last point, you know, just before the election, the tax authorities froze the Congress party’s accounts for some minor tax infraction seven years earlier. So this was yet another example of the brutal power of the incumbent government in sort of following constitutionally approved methods to essentially emasculate the opposition.

Martin Wolf
Yes, indeed, I was going to go into that because obviously money is one way that incumbents can reinforce their control. But another, of course, is if you’re in government, you can try to use the law in one way or another to make the life of independent centres of opinion, of opposition parties and people who might be inclined to support opposition parties very difficult. How far has that been an important feature of the emerging authoritarianism in India?

Raghuram Rajan
Well, it has been in these episodes. And, you know, you have to go back to understand why India doesn’t have as strong checks and balances as other democracies. India was essentially born in the midst of partition. When India was trying to get the various princely states on board into an integrated India, they were trying to essentially keep India together in the face of a really brutal, horrendously tragic partition, where India, the original British India, broke up into India and Pakistan. So in this environment, our constitutional assembly essentially decided to trust the central government with more powers. And over time, we have as a country tried to decrease those powers. But it is a work in progress. And every so often, an unthinking government sort of passes measures which it thinks it needs in order to combat the challenges of the moment, but of course, forgets that these powers will stay when somebody who is less sort of governed by the niceties of democracy can use those powers and in fact misuse them.

So one example is the Prevention of Money Laundering Act, which essentially is an economic act to try and get at large scale tax evasion, etc. but it has some draconian measures in it, including the fact that it can arrest people and keep them in jail without actually them going to trial, allowing the investigative authorities to take the time and still keep these people in jail. So this kind of act has been misused. For example, most recently a couple of chief ministers were put behind bars just before the elections because they were arrested under this act. So it’s very unfair because it allows the government to misuse its powers, especially if the investigative agencies are pliant. And one of the problems with a government which has immense political power, which the BJP had before this election, is that the bureaucracy thinks they’re going to be permanent and therefore doesn’t want to risk standing up to them. And every once in a while, when there is somebody who stands up, they made an example of, so nobody else has the courage to stand up. And so I think what you get is a pliant bureaucracy enforcing the will of the government. And unfortunately, the laws allow them to do that, laws which were crafted by previous governments. That has to change.

Martin Wolf
How far would you think, do you think the law itself, the institutions of the law, the judiciary has proved to be an effective constraint on the abuse of power by the government in the Indian context?

Raghuram Rajan
It’s been mixed. I think the judiciary has stood up once in a while. For example, in the election bonds case where it declared these bonds were not constitutional. But at the same time, the judiciary hasn’t taken a stand, a strong stand against some of these arrests, the detention of political figures, because actually the law allows it. And what is needed is a revamping of the law. I think the so-called independent institutions, the investigative agencies, etc, their independence has been eroded over time by a powerful government. This government has had a supermajority for the last ten years. And when a government has that kind of power, it is the rare bureaucrat who stands up to it. And in fact, the few who have stood up have been suppressed and have found that their careers haven’t moved forward.

So, you know, the bureaucracy turns and becomes blind. What is good about this election victory is that it suggests there’s a viable opposition. And, you know, for those who stand up, there’s some hope that they will be supported by the opposition, but importantly, that the government may change. And so tying themselves to a particular government may not be the best idea for their careers. That is a powerful force, both for the bureaucracy but also for business.

Martin Wolf
Now, another element of the BJP’s power and influence beyond the ones we’ve already talked is their ideology. That they have obviously mobilised an enormous amount of support around this Hindutva ideology or religious ideology, or maybe politicised religion is a better way of describing it. This outcome seems to suggest that there is a limit to that. I mean, my back of the envelope calculations suggests that certainly significantly fewer than half of Hindus have supported it, and they don’t seem to be getting more traction out of this ideology. Is that your view as well? And if so, does that encourage you to think that the possibility of really going to sort of open ended discrimination against minorities is less of a danger now that a more traditional view of India, including all Indians, is being to some degree reasserted?

Raghuram Rajan
Well, I think that it was much less effective as a theme in this election, partly because there was much more attention paid to the economics more than in earlier elections. The daily lives of people, the lack of jobs as well as the high food inflation. I think that on the Hindu nationalism front, you know, 80 per cent of the country’s Hindus, I think they are OK with maybe reasserting or asserting Hindu identity. I think a lot of, well-thinking people get uncomfortable once it moves to overt discrimination, to second class citizenry for Muslims. When it moves from, you know, reasserting Hindu pride to actually pushing down on other communities and victimising them. And, you know, at some point, you heard the refrain in the election, we have to live together. And this is not the way, by sowing further division. Which is interesting because the prime minister resorted to dog whistles after he found that his message of economic wellbeing was not resonating with the public. But that too didn’t work this time around, despite, you know, quote unquote, victories for his agenda, such as the building of the Ram Temple. It seemed as if people were saying, OK, that’s good, that’s reasonable. But what have you done for me economically and economically you know, the idea that these governments can buy their way through by offering benefits. Well, even that seemed to have limited budgets because people were saying, the best benefit would be a good job, and I don’t see that. So, I mean, all this is saying that a wise electorate over time and the important thing is over time, democracy has to survive all of that time. And fortunately, Indian democracy has, over time, they wise up to the fact that the rulers don’t have a lot of good ideas on moving the country forward. And there’s a lot of myth building as well as propaganda, which, if they have the means they can look through and make those wise decisions.

Martin Wolf
Let’s talk a little bit about the economy and economic management a little more deeply. I was thinking that this election reminds me a little bit of the election. I think it was back in 2004 when a then BJP government stood for election on the slogan of “India Shining”. And, the Indian people sort of said, no, it’s not really shining for us, of course. Then they actually lost power altogether, which hasn’t happened this time. But it does seem to suggest that being over boastful about the economic performance is not necessarily a good strategy. Would you agree with that?

Raghuram Rajan
I think that’s right, because if everybody’s doing so well, initially people are willing to blame themselves and say, you know, it must be me. But over time and when they look around and they see the problems are broader than themselves, I think their minds turn to, you know, what have you done for us? Of course, some of that can be deflected. You can blame the environment. You can blame the global situation. You can blame the state governments. But after ten years, there’s not that much you can blame.

Part of the problem, I think, is that it is very hard for these authoritarian governments that suppress criticism to know that they have to correct course. And and you might say, you know, this is so completely visible to the people in power, but they are cocooned. They live in a world of their own. And the sycophants go round and tell them you know what they want to hear. The messaging is very, very controlled, even to the people who have to make decisions. And they get the sense that you know all is well and they’re running the best of countries with the best of policies. So I think this is the fundamental weakness that was seen in this election.

So take a couple of examples of things that should have been rectified. If you look at manufacturing, you know, that’s supposed to create jobs, the most job intensive parts of manufacturing are actually smaller. Those sectors are smaller today than they were in 2015, ‘16. Areas like textiles, like garments, like leather, all of which are labour intensive. That’s what developing countries should be specialising in. We’ve actually shrunk. There are garment exports used to be over 4 per cent of the global trade in garments. They’ve shrunk by 20 per cent in a government which is focused on manufacturing. So the problem to some extent is this hasn’t shown up on the radar screen of the government. It has a recent paper extolling all its achievements just before the election. That white paper doesn’t mention the word unemployment. It actually doesn’t mention unemployment, which turned out to be one of the biggest issues. So if your labour intensive sectors aren’t doing well, if you’re manufacturing is becoming much more capital intensive in an economy which has an abundance of labour, your policies aren’t working. You have to go back and figure out why. But of course they haven’t. So for all the talk in the western press of this government has fantastic policies and then some disappointment that it’s not being brought back into office. I don’t think they realise that if you look at the underlying weaknesses, this hasn’t been a great government. It has its successes. Infrastructure built out. The digital infrastructure is they are building on what the previous government put in place and some notable legislative successes, the Goods and Services Tax, the Bankruptcy Code. A lot of that was in the government’s first term. In the second term, it’s been, you know, maintenance, of course, Covid was partly to blame, but even the Covid response was tragic in its incompetence in the response to both the first wave, where we underestimated the number of deaths and thought we were more immune, and the second wave, where we undercounted the deaths so enormously that, you know, WHO estimates of the excess deaths in India are about 10 times what the official number of deaths are. We say 500,000, WHO estimates 5mn. I mean, we essentially have not learned from these tragedies. And that’s part of the problem.

Martin Wolf
I think you bring out an immensely important general point, which I’m absolutely convinced, which is the great arguments for democracy are two one, that you can curb the power, possibly even change those in power when power is wielded irresponsibly. And the second great advantage is you do get feedback. You get, you cannot suppress people’s awareness completely of what’s going on. And these two big strengths of democracy are sort of emerging here.

Raghuram Rajan
I would add a third and a fourth in today’s world for India. The third is that what you want is empowerment of people at the grassroots, and they have to have the willingness to protest. The willingness to stand up when they’re not getting good public services. In a more authoritarian government, which takes photographs of people protesting and then limits their benefits or goes after them in other ways, you know, bulldozing their houses in some cases because there’s some question about the legality of their property. If you have a government run by fear, you don’t get protests from the grassroots and the protests come out only in elections. That’s when you suddenly get a rude wake-up call. If those elections are free, of course, that can also change. But what this says is things get bottled up because there’s no outlet, and service, especially from the government, can actually deteriorate because there is no ability to demand better service. You fear being locked up by the local police inspector because he doesn’t have to answer to anybody given that democracy is being suppressed. So I would say that’s number three.

The number four, I think as important in this interconnected world, is trust by other countries. So one of the big success points in India today is exporting services to other countries. Services such as medicine, consulting and so on. And all these are very data intensive. And as we’ve seen with, you know, companies like TikTok selling in the United States, governments are very, very anxious about data on their people going to other countries that cannot be trusted to keep them private, especially to keep them private from their governments. And I think what democracy allows, especially democracy with strong checks and balances, is much greater trust. Would you rather buy your financial services, your telemedicine, from a country where you could believe in the democracy and then the checks and balances on the government, which would keep your data secure with a company that’s providing these services rather than open for the government agencies to pull through and perhaps use them as a means of blackmail. So I think this is a potential advantage for India if it only recognises it. Privacy laws, which the Supreme Court has asked for, if well enacted, would not only protect Indian citizens, but would also inspire trust amongst other countries. This is something the government has to understand, which it hasn’t understood so far.

[MUSIC]

Martin Wolf
Let’s turn now a bit to the future. India is obviously already is the world’s most populous country. They believe it’s going to become a much more important country, and it’s obviously profoundly important what sort of country it is and what role it plays.

So let’s start with the economy. There’s sort of a government commitment to or aspiration to make India not just the third-largest economy in the world, which doesn’t seem very implausible given its population, but a fully developed economy, a high-income economy by 2047, which will be the centenary of independence. That’s not a very long time from now. That’s 23 years from now. And I think you would agree that India is certainly quite a long way today from being an all round, high-income country, as we understand it, a high income country, not least given what you’ve already said about unemployment and so forth, extraordinary low labour participation rates, notably among women and so forth. Is this aspiration, this goal if you are talking to people in the west, people elsewhere, is that plausible? Should we take it seriously on the current trajectory? Is that the sort of country that India will plausibly be in a little over two decades.

Raghuram Rajan
Not on current trajectory? And that’s why I think India needs a new vision, something which we chart out in our book, Breaking the Mould book I wrote with Rohit Lamba. Here’s the point, that, you know, if India follows the tried and tested method of east Asian countries manufacturing-led growth, there are a few problems in that path right now. One is China has indicated that China is still very much ensconced in manufacturing and still has a lot of cheap labour that it can bring in from the western provinces. But also, if India goes full into manufacturing, it’s competing with Bangladesh and Vietnam, not with western workers. It’s also increasingly competing with robots.

The point is, manufacturing today, especially the lower skilled aspects of manufacturing, the rents in that have been completely decimated. You cannot sort of make your way through cheap labour because everybody else has that. And so India really has to think about what it’s going to do, especially given that in manufacturing there is growing protectionism as countries try to preserve whatever little they have left of it. It needs a different path. It cannot follow the Chinese path. And so what is that alternative path?

Well, clearly there’s a lot of domestic demand. It can exploit a lot of demand for domestic services, including health and education. But if it wants a leading sector, with which to generate exports and generate income from that, it would seem that rather than low-skilled manufacturing, higher-skilled manufacturing, but especially higher-skilled services must be the way to go. Today, India has, maybe around 5 per cent of global trade in services, less than 2 per cent in manufacturing. And these services are not just your old IT services. It’s new services like consulting. JPMorgan has 3,000 lawyers in India writing contracts for the rest of the world based on, you know, American, European law, not Indian law.

The point here is that there is a prospect of using India’s better-skilled people in a much more productive way, where the rent still exists today, a consultant in India can perform the same services that a consultant in the US can, but costs about a fifth as much. So labour arbitrage is not in manufacturing any more, it’s in services. And so India, if it focuses on this price to work with the world to open up global services, has a much better chance of generating a leading export sector there than in old style manufacturing.

Last point here, India has 300,000 chip designers working for Qualcomm, Nvidia, Broadcom. It doesn’t manufacture a single chip. And these chip designers are well-paid. That’s the kind of industry India needs more of. But to do that, India has to recognise that its biggest asset is also its most vulnerable asset, its human capital, 1.4bn people. But many of them are poorly skilled, in poor health, without adequate supports. And so what we need to do is improve every aspect of human capital support, ranging from early childhood care to, you know, improving the quality of our schools to improving the quality of our universities and making them more sort of idea-generating centres. That’s enormous work. But that’s what is going to make us jump to the kind of developed country status, as the prime minister is talking about. If you just do the math, if we grow at the six, 6.5 per cent we’re growing at today, that’s overall GDP. Of course, to get per capita GDP, subtract about a per cent and a half for the population growth. We don’t reach anywhere near developed country status in 2047. We’re still at around $10,000 per capita, which is at this point middle middle income, because you can redefine what it means to be rich. But without that redefinition, we are still middle middle income, even if we do extraordinarily well at six, 6.5 per cent growth for 23 years is extraordinary performance. Only China, Korea in the heyday beat it. So India has to do a lot more. And let’s wait and see if that’s possible. But it needs a change in vision. The old vision doesn’t work any more.

Martin Wolf
Let me turn to two final questions about where we now go. Narendra Modi has been an extraordinarily successful politician, without a doubt, and an extraordinarily talented politician, a wonderful speaker. I’ve watched it. Now the Indian people have sort of rebutted him. So how does he respond? What do you think he’s going to do? It seems to me there are two ways he can go. One, he can say, well, we got something really quite importantly wrong. We have done things in ways that clearly the Indian people didn’t much like. We got to focus on doing the economy and economic reform and providing opportunities for all of Indians, much more and much less of this ideology. This political authoritarianism, that’s one possibility. Or he will decide well, actually, the problem was we weren’t authoritarian enough. We allowed the opposition, actually to oppose us. We allowed the election to be reasonably fair. Let’s do the authoritarian thing properly. Which way do you think he’ll go?

Raghuram Rajan
Well, it’s hard to say at this point. Again, what is important is can we come out of the cocoon? I mean, towards the end of the election, it almost seemed as if he thought he was anointed by God to lead India. And if he believes that, and if he believes that his policies are derived from a different place and, should not be discussed, challenged or even sort of renegotiated, I think we’re in for a somewhat volatile time as reality descends. So it could be an in-between state where business continues as usual, but comes up against the limits that democracy imposes now. Now that he has to take the support of coalition parties, now that the opposition actually has a significant presence in parliament and cannot simply be ejected from it. So, we have to wait and see. I think all three possibilities are there. You know, a recognition that something is deeply wrong. We have to re-examine everything. I think I would down with that at present. An attempt to pretend that nothing much needs changing. Business as usual. But take the support of coalition parties and the constant frictions as this is managed. That, I think may be more likely. And the doubling down, that’s also possible, becoming more authoritarian. But I don’t think, given the fresh breath of life that has been injected into Indian democracy, that that will be easy either. So it is going to be an interesting next few months as we see which ruling party emerges from all this. It’s going to be fascinating. By the way, there are dissensions within the ruling party also about the aggrandisation of one person. And so even that will start showing up at some point. Probably not now when, you know, he’s beginning a third term but will show up over time.

Martin Wolf
And my very final question is the really sort of global side, the sort of situation of democracy in the world? India is such an important player in its own right. We have an American presidential election coming up, which also looks very much like a contest about the future of democracy. What difference do you think it would make to the world and to India if Donald Trump, as opposed to Joe Biden, became the next president of the United States? And what might that mean for the world as a whole?

Raghuram Rajan
Well, I think that, to some extent, it introduces a huge amount of volatility into global politics. You know, the concerns about the part of the United States. I mean, President Trump’s, mind was hard to discern in the last term will be equally hard this time around. How much is posturing in order to get a better deal? How much is truly belief? And, you know, he and his potential administration have already made pretty important comments, both on geopolitics as well as global trade and investment, about the reluctance to see China emerge as a serious competitor and so on and so forth. So I think it’ll make a huge difference. And I think there will be a lot of collateral damage on the way. If the policies as announced so far actually implemented, a lot of emerging markets and developing countries depend increasingly on an open world and are at this point some of its biggest supporters. And as you eliminate that, I think a bunch of populist nationalist leaders are going to say, we told you so, giving them a greater ability to assert themselves within their own countries. I think an integrated world, so long as you take care of those falling behind, is really good for democracy, and I hope we see more of it.

Martin Wolf
But at least for the moment, we can say that in this year of elections, the outcome from India has been for those of us who share a deep belief in democracy and a concern for its future. Really very significantly encouraging. And so it’s actually a rather happy day. Is that the case?

Raghuram Rajan
Absolutely. You know, I look back and say, this is a country which is supposed to be poor, supposed to have weak institutions, supposed to have a largely semi-literate electorate. And the decisions they gave is really wise. So there is hope for democracy that somehow, you know, things can turn out right.

Martin Wolf
And this is a very important moment. I agree completely. Thank you so very much for talking to us.

Raghuram Rajan
Thank you.

[MUSIC PLAYING]

Martin Wolf
As Raghuram Rajan wisely notes, there are real dangers for authoritarian leaders when they surround themselves with sycophants and suppress any and all criticism. This showed itself to be vividly true in the case of Narendra Modi. Understanding the relationship between global strongmen, specifically Donald Trump and Vladimir Putin, will be the subject of the next program in this series when I speak to Russian foreign policy expert Fiona Hill.

Fiona Hill
Trump is extraordinarily capricious. You know, he can flip on a dial about how he thinks about individuals and countries. It’s really more about individuals and fellow strongmen. He gets along. So he thinks with people like Putin and with Xi. But certainly people who likes to think that he is like he likes to think of himself as this, you know, major international strongman figure.

Martin Wolf
I’m Martin Wolf, and you’ve been listening to episode three of Democracy’s Year of Peril. It was produced by Sandra Kanthal, production help from Sonja Hutson. The sound engineer was Nigel Appleton and the executive producer is Manuela Saragosa. The FT’s global head of audio is Cheryl Brumley.