Pranav—More on the Doug Irwin paper
Here's yet another installment on the Doug Irwin paper that I've spent way too much time reading through. It's nowhere near the last.
So far, we've been through how India drifted through an import substitution system for decades, with its political inertia coming in the way of any reform. Eventually, however, we hit a terrible crisis — one that seemed impossible for us to dig ourselves out of. But dig we did, and alongside Deng Xiaoping's reforms to Chinese administration, these were perhaps the most consequential policy decisions in world history.
Here's how we did it:
Once Rajiv Gandhi had died, the semi-retired PV Narasimha Rao was selected as the compromise Prime Ministerial candidate. Rao was a socialist, and had supported Indira Gandhi's socialist policies from the 1970s.
Going into the election, there was no mention of the fact that the old socialist regime would be dismantled. Congress won, but barely. Rao took office as the head of a minority government.
As soon as he was sworn in, Cabinet Secretary Naresh Chandra briefed him on how terrible things were. He also directed Rao to go to the IMF for support. But there wasn't, at this point, any broader strategy on how the situation could be handled. As Rao admitted, "I don't understand Economics."
Rao needed a reputed Financial Minister — to convince international agencies that India was serious, and negotiate with creditors. That, he found in Manmohan Singh. Singh was a soft-spoken man that didn't always advertise his desire for reform. He had also served often at high levels of government.
Before he took office, Singh asked for the complete backing of the Prime Minister. He received it. A dream-team was assembled. Manmohan Singh led Finance. Chidambaram was appointed the commerce minister, with Montek Singh Ahluwalia as his secretary. The PM kept the industries portfolio, aided by Rakesh Mohan, who had written in favour of industrial de-licensing. The PM's Principle Private Secretary, Amar Nath Varma, coordinated the whole effort.
Over the next five years, this dream team would meet every Thursday in the PM's office to push things through.
The first key challenge was the devaluation of the Rupee. While Rao was horrified, he let it go through:
On July 1, the Rupee was devalued by 9%. There was, predictably, much public outcry.
The second devaluation was planned for July 3, but Rao got cold feet. Luckily, when Manmohan Singh called the RBI to stop the process, he learnt that it was already underway.
People were mad. The Congress was morose. Both Singh and Rao defended the measure in public.
Next, in ten hours, major trade reforms were carried out:
India had something called a Cash Compensatory Support program, administered by the Commerce Ministry. The idea was to compensate exporters for an overvalued Rupee. It made for 0.5% of our GDP — a big component of our fiscal deficit.
To abolish this — even if the Rupee had been devalued — was to enrage exporters. Montek therefore suggested the idea of "exim scrips" as compensation. This was a reintroduction of the import credits idea that the M Document had outlined.
The whole thing became a race against time. It was meant to be introduced alongside the second devaluation, to sweeten the deal. This was, ideally, a month-long process, with multiple rounds of back-and-forth between ministries. In the hands of Montek and Chidambaram, however, it was turned around in five hours. The whole package was announced on July 4.
On July 24, 1991, Manmohan explained the origins of the crisis to the parliament, as part of his budget speech. On the same morning, they also announced the end of industrial licensing. Meanwhile, the government's monopoly was eliminated for many sectors.
This was a decade's worth of reform, carried out in the better part of a day.
The next year, some incremental reforms were carried out. The list of restricted imports was trimmed significantly. Tariffs were cut down — the highest tariff rate was slashed from 355% to 100%.
The messaging around these reforms was clever.
Singh harkened back to the Nehruvian idea of 'self-reliance', by arguing that India was self-reliant if it could pay for imports from the proceeds of exports.
Liberalisation was posited as a choice between export promotion and import repression — where the government had already repressed imports to the extent it could.
He made a strong case that, before this, while India made a show of self-reliance, in actuality, it was utterly dependent on foreign aid.
See you in the next one. It'll probably be the last of this series. Fingers crossed.
Krishna—Hospital space is tricky
I spent most of my time reading about the hospital space today, and some very interesting things I got to know:
- There are three categories of hospitals: Primary (No beds), Secondary (Less than 200 beds), and Tertiary (More than 200 beds). Most of the listed players are tertiary.
- The volume of IPD patients (i.e. patients that are not admitted) is higher around 75% but most of the revenue, i.e. more than 70% comes from OPD patients (patients that are admitted)
- EBITDA margin is one of the key metrics looked at in this space since hospitals take in a lot of debt and this metric is a good way to figure the operational efficiency.
- Only ~32% of government hospital beds are in rural areas, which serve 69% of India’s population, while ~68% of beds are in urban areas serving 31% of the population
- IPD (inpatient) services drive most hospital revenue. However, the revenue per bed decreases significantly after 3-4 days of patient stay. Average Revenue per Occupied Bed (ARPOB) is a crucial metric tracked by hospitals.
- A good occupancy rate, A decent Average length of stay (3-4 days) will generally result in higher ARPOB.
Anurag—Immunity to bad air
I’ve been reading up on AQI (Air Quality Index) lately and have always wondered if humans can develop immunity to bad air, the same way we can for certain toxins, water contaminants, or even some forms of poison. While I’ve tried to refer to credible sources as much as possible, I’m not an expert, so I can’t guarantee that everything here is factually and biologically accurate. Still, I found some interesting points worth sharing.
From what I understand, our bodies can adapt to certain stresses, like high altitude, but air pollution isn’t something we can develop a beneficial resistance to. Prolonged exposure doesn’t make the lungs stronger or the body immune; instead, it leads to accumulating damage over time. People living in polluted areas might notice fewer symptoms, like coughing or eye irritation, but this is more about sensory habituation. In other words, they get used to the smell and dust, yet the pollutants continue to harm their bodies.
There’s no medical proof that we build an actual defence mechanism against pollution. In fact, long-term exposure can weaken the natural systems, such as the airway cilia, which protect the lungs. Research even shows that persistent pollution can reduce our ability to fight off infections and make certain vaccines less effective.
I also compared this to how our bodies handle alcohol. It’s true someone who drinks regularly may tolerate more alcohol, but their liver and other organs still suffer long-term damage. In the same way, a resident in a polluted city might not cough as much as a newcomer, but toxic particles can infiltrate the lungs and bloodstream, causing inflammation, weakening organs, and resulting in other harmful effects. According to the World Health Organization, there’s no truly safe level of exposure to some pollutants like PM 2.5, meaning the damage can keep happening without us noticing immediate symptoms.
Another point is that we simply haven’t evolved the genetic defences to cope with modern pollution. Evolution occurs over thousands of years, and the spike in air pollution has happened too quickly for our bodies to adapt. While some fish species living in heavily polluted waters have developed rare mutations to survive, those changes took many generations. Humans haven’t had enough time to develop similar protections, so our biology is largely the same whether we live in a pristine forest or a smog-filled city. Evidence from heavily polluted regions supports this, since life expectancy data show that people living there suffer serious health impacts despite being exposed to high pollution since birth. If their bodies were truly adapting, we wouldn’t see such large health effects or shorter lifespans. It’s a bit like long-term smokers who stop coughing not because their lungs are healing, but because the parts of the body that trigger coughing are damaged. So, even though people in polluted areas might look like they’re managing just fine, they could still be accumulating soot in their lungs, weakening their immune systems, and facing other unseen injuries. In essence, humans are resilient in many ways, but we don’t become immune to polluted air, atleast won’t become immune in our lifetime. Every breath in dirty conditions can be harmful, and over the years, this damage piles up. Just like someone who drinks unsafe water might stop noticing the taste but still suffer serious long-term illnesses, people breathing polluted air might not feel bothered every day, yet they’re paying the price over time.
Bhavya—What is a green economy?
I have been developing an interest in in green economy, what climate investing is all about, and how things around the same work.
And lately, I have been reading some interesting blogs on Aeon and today I came across an essay today on “green growth” and whether we can truly reconcile economic progress with environmental sustainability. It’s a fascinating topic, especially when you consider how the idea of “decoupling” fits into the bigger picture. Decoupling, as the essay explained, is the ability to grow economies while reducing resource consumption and emissions. But here’s the catch: while it sounds promising, achieving it at the scale we need is incredibly difficult.
This idea aligns closely with recent debates surrounding policies like those under the Trump administration. For example, while promoting fossil fuel industries might boost short-term economic growth, it pushes us further away from the decoupling needed for long-term sustainability. Policies that dismantle support for renewable energy or electric vehicles reinforce our dependence on resource-heavy systems. These actions underline the central argument of the essay: green growth isn’t just a technological challenge—it’s a political one.
The essay highlighted how efficiency gains, like those from renewable energy technologies, often get offset by increased consumption—a phenomenon called the “rebound effect.” Trump’s focus on expanding fossil fuel production could amplify this effect, as prioritizing traditional energy sources often leads to compounding environmental harm rather than mitigating it.
What struck me most was how green growth isn’t just about adopting new technology; it’s about creating policies that minimize systemic risks and foster equity. For instance, carbon pricing or policies that support circular economies could counteract the rebound effect by reshaping consumption patterns. In contrast, policies favoring deregulation or fossil fuel subsidies take us further from these goals.
The takeaway is clear: achieving true green growth requires not just innovation but bold and deliberate policy shifts. Without this, we’re left with growth that deepens environmental crises rather than solving them. It’s a reminder that our economic priorities must align with the planet’s limits if we want a sustainable future.
Tharun—How a clerical error formed the $ 30 billion chicken industry
Cecile Steele was supposed to receive 50 chicks from a hatchery in 1923, but a clerical error resulted in her receiving 500 instead. Nobody predicted that this would lead to the $30 billion chicken industry.
In the early 1900s, chickens were largely kept for eggs. Only when their output had been lowered were they slaughtered for meat. But Cecile Steele had 450 more chickens and no room to store them. Since returning these chickens was not an option, she chose to keep them in the limited area she had. Out of the 500 chickens, 100 died. And Cecile decided to sell them for the meat at a discount, which resulted in a large profit.
She made so much money that she began doing it on a regular basis, and her husband quit his job as a coast guard to join her. Within three years, they were raising 10,000 chickens. And thus started the age of breeding hens just for meat.
They were fortunate both in terms of timing and location. Steele's farm was located in an area with plenty of land and affordable prices. Following Steele's success, several other farmers began breeding chickens primarily for meat.
This accident gave rise to the modern chicken industry.
Then scientists started tweaking the genes to produce more meat.
Penicillin was also discovered around the same time, and scientists discovered that giving the antibiotics to agricultural animals caused them to grow significantly quicker. This had a number of consequences for the meat business, climate change, and other issues that I would not want to bore you with. If you want to learn more about this, I highly recommend reading this article, which is also the source for this post.
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