#DevTalks: Investment in the Energy Transition / Global and Domestic Dimensions

DISCLAIMER: This webinar transcript was loosely edited and there may be inaccuracies.

Ricardo Hausmann: I'm Ricardo Hausmann, and this is one of our development talks in our development series. And I'm really, really pleased and honored to have Suman Bery with us, the head of the National Institute for the Transformation of India, which is a new institution that it's taken sort of like the senior think tank of the government, where he's going back to India with this amazing accumulation of experiences. A, to really think hard about these issues. I'm going to to lead the conversation for the first half of the of this session and then I'm going to pass it on to Akshay Mathur, one of our own Mason fellows. I had the honor and the privilege of having him in my in my course. He's a senior fellow at the Center for International Governance Innovation based in Canada, and his own research focuses on issues of international relations, international financial architecture, global trading systems, global economic governance and global digital governance. And some of those issues will be relevant for the discussion today. The session has been titled Investment in the Energy Transition Global and Domestic Dimensions. I'm going to start that conversation by first asking Suman Bery issues of where is India going, where is India's growth going before we tackle sort of like India's energy transition and the global aspects of that transition. It's sort of like the F.T. chapter, though. The Economist chapter is very optimistic on India's growth. I would say that there's a consensus that India is likely to be a fast growing country. Everybody has their own opinions. Actually, you know, we have the utmost of economic complexity. We calculate country's economic growth potential. And in India, as always, it comes out at the top, at the top for our own logic and reasons. But in a you know, a lot of the talk is about India having a big domestic market, demography being in the right direction, with fertility rates coming down, with urbanization going up and with educational levels going up and so on now. And unfortunately, that's so first of all, India has been a big country for a long time. And so with China and and, you know, they had periods in which they were not growing and periods in which you were growing. Many countries have similar features of India in terms of demographic transition, urbanization, education and so on. And they've managed not to make much of it. So how optimistic are you about the growth of India going forward? And what are the sources of that optimism?

Suman Bery: Well, Ricardo, firstly, thank you for hosting this. And you know, I'm as you sort of, as you mentioned and so discreetly avoided, from the other place from what used to be called the Woodrow Wilson School. And the Kennedy School was always the other pool. So it's I am in that sense, both pleased but slightly nervous about exposing myself here. But it's terrific to be on a platform with you because of the enormous respect I have for you and for your very lateral view on the issues of of growth. And let me thank all of those in the room for giving their time to be present. Now, I am now here not as an analyst, not as a think tanker, but frankly, as a member of of my country's government at a fairly senior level. So what I would say is that. People look at the same data through different prisms, different lenses. So let it be said that, you know, I will indicate the both the reasons for optimism and also to some extent, but not extensively counter why there may be reasons or some of the cases that are put out for a less optimistic view. I think the first where one has to start is with institutions, including political institutions. Well, where one should start is actually from the fact which I became particularly aware of as the chief economist of Shell, which is that over the long run, there are two characteristics of India. And by the long run I mean about 25 years. One, which. While, of course, eclipsed by China. It has been amongst the top ten fastest growing emerging markets for quite a long time. Okay. And this is in the face of various shocks. And I would also say from the yen, now that where we are and you know this well is in response to various to a number of shocks, COVID and the war in Ukraine being the most important. Now, what does that say to me? It said it's also the case that. The amplitude of Indian growth has narrowed over time, which. Marks a transition from an economy which was very much dominated by weather shocks to an economy which is much more integrated into the world. And that has led to more resilience. And I think a topic that we should discuss is resilience. So I think the first question to ask is, so, you know, why has India continued to be a reasonably strong performer? And I would argue that it is because Indians themselves have a reasonable amount of faith in their institutions, particularly their political institutions. And also, as we were discussing before coming in here, there are other strengths, such as the quality of of the bureaucracy. Now, none of this is. Going to be different into the future. We've got to talk about a different future. But what I'm saying is that up till now, India has had full critics of India, some of whom have been associated with the Harvard Kennedy School. Will. On the basis of their own analysis, argue that the recent growth numbers have been overstated. They would argue that Indian institutions are not as strong as they previously were, and we can get into that conversation. But I'm just saying that one metric on these side and I want to hear from you, so let me shut up soon. So the. The reality is that India, which is a very diverse polity, has had five continuous full term parliamentary session. So all the way from 1998 to 2004, they have been parliaments that have completed five terms. And those of you who know your British politics know that in a parliamentary system that's not something you can take up. So the first point is that there is form and that that reflects faith in Indian institutions. The second point is that. There are so many things that. Keep India from its full potential, that if we have been performing reasonably well with all of these headwinds, with all of these drags, then you need to ask the question of whether the impediments to those have, you know, are being addressed. And I would argue that they are. I would say, though, that at the end of the day, you may want to focus on growth, but I think the real running sore of India over many years has been the issue of employment. So there's the question of whether in the future we can maintain in a much more troubled global environment a growth of the kind that we have have demonstrated in the past. And then there's the question about how whether the employment piece will accompany that. And I must say that the Kennedy School and in the work of yourself, Dani Rodrik, Robert Lawrence, I think are making us think about how the development model of the future might be different in terms of trade and manufacturing. And then, of course, the topic we are here to discuss, which is how does the energy transition affect any of this? A long answer to a short question.

Ricardo Hausmann: No, no. Well, it was it was great. So let me make a, I mean I'm tempted to make a very, I would ask you for a very quick answer, but in there is this debate going on whether the world is kind of like de-globalizing and consequently we can be less reliant on outward looking growth and so on. But there are other people who emphasize that the world is moving from trade in goods to trade and tasks and that the business services are growing very significantly and that India actually is a leader in these business services as it has, you know, global players like Wipro, that consultancies and business process outsourcing, increasingly knowledge intensive business process, outsourcing, coding and so on and so forth. So, so that in some sense counts as as a new phase of globalization that we're where India put its foot in a long time ago. And now the trends are benefiting that that dynamic. It's true that these tend to generate higher risk of jobs relative to the current endowment of labor in India. But is this or is this sort of like an important engine of growth going forward for India?

Suman Bery: Well, what, I think the deeper point that it raises is that the structure of India's balance of payments has for some time been quite atypical, quite unlike the rest of Asia. What do I mean by that? We've got a floating exchange rate and we bought my boat more or less run the economy for a current account deficit of about 2% of GDP because that's what we feel we can safely finance. Okay. So the current account you can think of is either the difference between saving and investment or you can think about the various elements on the receipts and the expenditure side. What we have is. A trade deficit of a merchandise trade deficit of around 7% of GDP, which is compensated for by what are called unrequited transfers, remittances and net service exports. Now, why is any of this important? It's important because it suggests that it's not necessarily a Dutch disease type of but that the economy has adjusted, including through the trade account, to to what is happening to foreign exchange markets and otherwise. So I'm saying that the balance of payments is advantaged by what's happening on the services side. It's less clear how inclusive growth and employment will react. And then the issue becomes what instruments you assign to the employment issue. If you know, if that's not being delivered to the structure of your balance of payments. And I think, well, it was Brazil a little bit like that as well, namely a large trade deficit, because they had no but but they don't have service exports.

Ricardo Hausmann: So you're quite unique in that. But in so a now let's move closer to the topic at hand. We know that there's a very strong relationship between a GDP and energy use. And yes, the world is becoming a little bit less intensive in energy, but still there is the dominant factor is that if India is going to grow a lot, it's going to need more energy. And we're in the context of this energy transition. So, on balance, would you say that the energy transition complicates India's life or does the energy transition have a silver lining that might facilitate the growth of output and employment in India?

Suman Bery: First of all, as you said, there is a need for energy because we intend to grow and want to grow. Second. I would say there has been more than I think is appreciated outside India, a very strong commitment to supporting all kinds of non-fossil sources of energy, particularly imported sources of energy. Since we import 80% of our oil and slightly less than that of gas. So from an energy security point of view, India has strong motivations to go down the renewables route. However we have been. Circumspect. From an energy security point of view, and also because of uncertainty in terms of technologies about exactly how fast that should go. And so at the moment, I would say we aren't hedging our bets, but we are backing a number of technologies while using public policy to initiate experiments in green hydrogen in electric vehicles. Your question is again really about, employment. I think whether India believes that as a consequence of embracing new energy sources. Whether this would actually be substituting for employment in some of the old industries, I would say that. That that is not a clear element of strategy just yet for one final reason, because I know you have to go, which is that India still believes that it cannot abandon the quest for a more vibrant manufacturing sector. Now, why it wants a more vibrant manufacturing sector is something we can talk about. We've already discussed that maybe the employment dividends will be somewhat weaker than they have been for past countries. But I think in terms of increases in productivity, in terms of skill levels and frankly, in terms of national security, because you need a strong manufacturing sector to support a domestic defense industry, we are going to continue down that path. So our needs of energy for industry are, if anything, going to rise. And what we are attempting to do through particularly green hydrogen, is to try and find decarbonizing technologies that allow us to reconcile the manufacturing impetus with the with decarbonization. But all of this is relatively new. And another technology that we are working on is carbon capture, utilization and storage. There are. You know, advocates of accelerating the green transition who basically say that they are going to be many more secondary jobs connected with rooftop solar, this, that and the other. I think India is cautious on this rather than betting the ranch on it at this point. But before you leave me, perhaps I could talk about what was in the title of that that I proposed for this talk, which was investment in energy transit, in the energy transition, global and domestic dimensions. Because what I've already talked about, the, you know, the particular construction of all of our balance of payments. But underneath the balance of payment are saving and investment growth. To come back to your first question, one reason to be optimistic about growth for the future is that certainly by Latin American standards, India has had a relatively high investment rate. We want to push it even higher. But embracing green technologies is going to mean. A big boost to capital expenditure, even if it substitutes for other capital expenditure, maybe one or two percentage points of GDP. And so the international dimensions are really. Does the world, does the world have the machinery for directing foreign, say, savings to the energy transition? And I think much of the discussion that took place in Washington last week was about financing the green transition, where a lot of it is going to have to be domestic, but a fairly substantial part is going to have to be global. And again, before you leave, I know that you are of the view that there are important opportunities for developing countries. Can I just hear from you why you think that accelerating the transition, rather than being cautious, may be in the interests of countries?

Ricardo Hausmann: Well, my view is that too much attention is being focused on what should each country do to lower its emissions. And not enough attention is focused on what each country can do to help the world lower its emissions. Because the world is going to need a lot of stuff if India is going to do an energy transition, it's going to need a lot of it's going to need to electrify many things. It's going to need to generate that electricity in clean ways. It's going to need a lot of stuff. Who's going to make all that stuff? The solar panels, the windmills, the transmission lines, the capacitors, the batteries, etc., etc. And somebody has to do it. And then and those people are going to have a booming market. Who's going to be in that booming market then? And so far.

Suman Bery: The answer is China. Right.

Ricardo Hausmann: Well. But you know, that's an interesting question for you that I'll let Akshay follow-up. But how is India going to play the fact that the world is trying to reduce its dependence on China and is that generating an opportunity for friend-shoring? How friendly do you want to be in the context of a world attempting to lower its dependence on China? But the other thing is that you know the world is going to to need to make things in a greener way. And green energy is very hard to transport. So maybe you want to use green energy where it hits instead of trying to transport the energy, use the energy where it hits. So that, then in, you know, you put solar panels where there's sun rather than putting them in Germany but where you know capital is cheaper so. So I'm very much interested in hearing your ideas on mechanisms to make more capital available for developing countries so that they can fund whatever investments are needed in a decarbonizing world. But let me ask Akshay to come over and I'll follow up with you after this session. But it's a fascinating conversation. You know, the world has this dower attitude and so on. But, you know, when you think of India, it's hard not to be optimistic.

Suman Bery: I think so.

Akshay Mathur: I'll ask one question and we'll open it up, which is this question. The topic today is investments in energy transition. And so the question at the heart of it is the capital. And where, in your mind, global or domestic or both are you seeing capital possibly come from? So in the global, we have multilateral development banks, the big asset managers, possibly some FDI within the domestic. We have our commercial banks, development financial institutions. Where do you see the capital come from for the investments that we need globally and domestically?

Suman Bery: Before I answer that, I think that sort of seduced by the fact that Ricardo was my interlocutor, I may have thrown too much economics at people. Can I just get a sense of, you know, how many people with an economics background are in the audience and stuff? So. So that was not inappropriate. Okay. So the. I'll build on, as it were, the conceptual framework that I laid out to try and answer your question. Everybody asserts that the world is not short of capital. Everybody asserts that individual green projects in emerging markets meet a rate of return test. So in a world with smooth financial intermediation. The, you know, the pools of capital that exist out there should find their way to high-return projects. And so the question becomes of a, is that set up correct? I mean, is it really the case that there's a lot of capital chasing good projects and B, you know, what can the global community do to facilitate that? Some of you may have heard Larry Summers talk about secular stagnation. Some of you may have heard of Ben Bernanke 15 years ago. Talk about the savings glut. And I think all of that is quite relevant to the discussion at a global level that we're having right now. Why do I say that? So. The concept of Bernanke of a savings glut went back to 2006, shortly after a lot of Asia had its difficulties, something called the Asian financial crisis in the late nineties. And the consequence of that, as with most financial crises, was that investment in Asia plummeted because financial crises cause disruptions. And so Bernanke was trying to explain why the U.S. was had a large current account deficit in 2006, but that, as it were, formulation, had stuck around. That formulation is that because. Asia, Japan, China, Some other parts of Southeast Asia are strong savers. That there wasn't enough. Investment in the rest of the world. And this was why interest rates, real interest rates went to rock bottom for the last 15 years. Now, we all know that that story has changed with the inflation to the last couple of years. But it's anybody's guess whether it's changed permanently or whether we're still in a world of global excess savings. I'm going to assume that we are in a world of global excess savings. And where we are right now is a kind of transitional shock caused by, you know, the reaction to COVID and tight labor markets and what have you. So. What I understand is that because of issues like country risk, the old country governance risk exchange rate risk, the certification of green projects that the world's pool of so-called ESG investing is largely being directed to ESG pools in the advanced countries. You're an asset manager, and maybe you have some view on all you have in an asset manager of how asset managers think about these things. So the that set up then suggests that there are either real or overstated risks and that you need some kind of a set of either intermediaries or structures so that if these are not genuine risks but they are overstated risks, that these be mitigated by some kind of global action so that all the money that's waiting on the sidelines can find its way to this kind of capital and. You know, in this India is going to be a fairly big enchilada. Okay. So what might be some of these measures? What might be some of the changes? Well, what's on the table right now is to use the balance sheets of the multilateral lateral development banks to certify the quality of. Of these projects to pool them like housing loans or a pool that came to us to kid. But the concept stays the same. And I believe this happens a lot in Europe and maybe in the US as well. Financial intermediaries pool, as it were, eligible projects. The legal structure is such that the cash flows from these projects are appropriately used to service the debt or whatever that come to them. So it starts to point to a whole range of global reforms and domestic reforms to let the underlying quality of the investments shine through rather than the uncertainties and the risk. So, I mean, that's the broad structure. But given your, you know, your asset management background, I'd be glad to have a follow-up question from you before we open.

Akshay Mathur: I don't have a question, but maybe just a remark that I think to your point on developing intermediaries and institutions, there's been some attempt with the National Investment Infrastructure Fund and other such instruments to be able to create that those intermediaries to plow those capital into more green projects within India, because that was clearly an issue. A separate issue is, I think, which we still have to resolve is greenwashing, but greenwashing that is also being enabled by a lack of a global taxonomy. And some effort has happened with the with the International Sustainability Standards Board coming together. That's giving a little bit more of a clearer picture. But the process is not complete. So I think that's also being used as an excuse. But I think you've, I think, laid out a framework that should be open it up because I think people can ask follow-up questions to that particular. So should we open it up? If you have I have a set of questions, but I'm happy to.

Suman Bery: If you could just give me some idea of your background.

Akshay Mathur: Please identify yourself and your program.

Attendee: Thanks a lot. I'm Rebecca. Second year MPA/ID and I'm currently on educational leave from the World Bank, so I will go back working on infrastructure finance. And you gave us one examples of what the multilaterals could do, but I wonder if you see also other alternatives of what needs to be done to get private sector investment into the green transition.

Suman Bery: Yeah, Okay. So I mean, there are four players. If you're talking about an individual country, there are private sources of funds. They are, if you like, official sources of funds. So that's on the sources of funds side. And then there are private investors on the recipient side, and there is the they are public investors on the recipient side. And so, you know, you you have, as it were, a an assignment issue or at least a classification issue. So what proportion of public demand should come from official sources. What proportion of public demand should come from private sources? What proportion of private demand should come from private sources? Most people tend to think that it would be official to public and private to private. And there are reforms or issues in each one of those. The focus right now is on the multilateral development banks. And this is relevant for India because India is the president of the G20 and these issues are being discussed in the G20 and I can talk about the G20 people. So the discussion in Washington last week was on reform of the multilateral development banks. On a couple of dimensions. One is to sweat their capital so they could expand, so that they could expand lending. And secondly, whether and how to shift that overall mandate from lending for country development to lending for what are called global public goods, of which claim which is is, I think, the one that's gaining the most attention. And the expectation is that much of the enhanced lending from official sources would go to. Additional investments by the private sector, by the official sector. And let's be clear at least where India is concerned that those investments may be in mitigation, but they may also be in adaptation. Okay. Now, you know, I'll take an example from another country, the Netherlands, in which I lived, and they have been preparing the Port of Rotterdam for higher sea levels through the construction of high seawalls and dikes. And, you know, the Dutch are past masters of the stuff and they've been thinking ahead. So that's a case where climate change creates a need for adaptation, additional public investment. And if they were to borrow from the World Bank, then the idea would be that the World Bank designates a portion of its enhanced lending for this adaptation activity. But there are also, as Ricardo was saying, immense needs in terms of upgrading transmission mechanisms in on the mitigation side as you try and revolutionize your whole policies. Still, many of those investments are going to be undertaken by the public sector. And the question is, should all of this be financed by domestic taxpayers or should it be financed with external borrowing? Because there's a case to use borrowing for something like this because it yields a positive return over a long period of of time. So that's the kind of set up for enhanced official financing from particularly the multilateral development banks to support climate changed climate change, associated incremental expenditure, particularly investment expenditure by the public sector. Now let's just talk to the private to private that that's the discussion that action I was having about bundling, because again, a practical example, our large scale enterprises for all kinds of reasons, partly because it's economic, partly because they want to be part of global supply chains. Our steel industry has invested heavily in decarbonizing steel and is in the forefront of bringing in hydrogen into the into the steel process. Now, all of this stuff takes money. It repays itself over time. But they. Typically don't face a capital market or borrowing constraint, but an entity like the IFC at the World Bank, or as it were, other pools of funds. Investor pools of funds could be directed at that. And indeed, India itself has issued so-called green bonds in order to to help, but not so much the private sector, but the government undertake its own green investment. I hope that gives you a sense of the framework within which people are thinking about these things right now.

Attendee: Thank you so much. Thank you. Thank you so much for a wonderful talk. That's it's a really fascinating topic. So I know it's not like you, China, the U.S. So, yo, we promote these Korean files from public sector and private sector. We also implement they like that faith encourage people to heal tax credit to promote that to investment to China. So they are pleased to introduce a leg of that to fiscal policy intervention or, you know, financial policy intervention to promote a basic Korean transition. Thank you so much.

Suman Bery: Well, we've had a so-called renewable purchase obligation for all. Distribution companies. An important point I should make is that India, in the cold fossil fuel era generation, was entirely in the public sector, starting from about 1950. India followed the practice of Britain because Britain had been the colonial power. So you may be aware that when a Labor government came into power after the Second World War, they too were very influenced by socialist policies by the Soviet Union. And so one of the first things they did was to nationalize many of their infrastructure industries. And so from 1947 until Margaret Thatcher in 1985, 86. Many of these industries in England were nationalized. India followed suit. And so all of our generation was power generation. Largely coal-fired was done by federal-level and state-level publicly owned power plants. This started to change in the mid-nineties. I think I'm right in saying so. The regulatory system allowed the private sector to start investing in at that time, coal and gas-fired plants, but the dominant ownership remained in the public sector. I'm saying all this because for whatever reason. In the case of renewables. India. The leadership has been with the private sector, so investment in solar investment in wind has been led by private companies, private entrepreneurs, raising their own capital and dependent upon a secure regulatory framework for offtake. And as part of this change, the distribution companies were required to to include a portion of renewables in their mix, because to begin with, renewables were more expensive than than coal-fired power. So that is the equivalent in India of a feed-in tariff, if you like, a renewable purchase obligation. Now. You asked also about outright fiscal incentives. I'm more aware of that in more frontier areas such as green hydrogen and the manufacture of electrolyzers. So the cabinet has just approved a green hydrogen mission or program, which is supported by what we call a product linked incentive scheme for green hydrogen and for the production of Electrolyzers. The idea being that these are new industries for India and that while the government won't guarantee the market that has to be earned on the basis of competitiveness, it will provide a capital subsidy once production is up and running. Individual states, which are important players, have can have their own fiscal rebate, except for the fact that they don't tend to have unlike Chinese provinces, they don't tend to have a lot of fiscal handles because ever, ever since we went to a goods and services tax, the number of taxes over which the state has jurisdiction, the states have jurisdiction has diminished. So the main contribution is in terms of the provision of land. So the provision of land for favored industries is one way that the states can support the green transition.

Attendee: I'm a postdoc here working on energy technology, innovation questions. I am. So you mentioned PLI and Manufacturing, and I'm curious to hear from you how India's engagement with industrial policy should look like moving forward, given that we have been doing industrial policy for a long time now and there must be there's been a lot of failures, there's been some success, particularly in pharmaceuticals. So yeah, what kind of learnings are there and how should that inform future engagement with trying to bring manufacturing capability onshore?

Suman Bery: Well... Let me answer historically, then on to contemporaneously. So clearly. Under Prime Minister Nehru and for a long time after until 1990, I would say the dominant view was even though India has had a competent private sector for a long time, there was distrust of the private sector and it was believed that India could only become a significant manufacturing power through the application of industrial policy. And we had hideously complicated rules on the licensing, on the licensing of capacity, on on transfer of technology, walling out the rest of the world, throwing out IBM, Coca-Cola, etc. So that was then that started to change in the late eighties and then in the early 1990s. And from the 1990s onwards, I would say the pendulum swung to the other end where essentially the slogan, if you like, or the mindset was, you know, integrate with the world no matter what, because that's going to make you strong. And that worked in the work for a while. We had strong growth and developed capability. Historians will judge both for the US and for India with the simultaneous rise of some of a power as substantial as China in this period upset many of those calculations. Certainly politicians have come to that conclusion. I, as an economist, see it slightly differently. I see it that China was such a big, as it were, a force in the global economy to use the economist's terms of trade. It turned the terms of trade against itself. It generated a lot of employment, but it was really foreigners who benefited as much as the Chinese in that the world got a real income increase from a huge supply of cheap intermediate goods, cheap consumer goods and what have you. So that's a real income game that the rest of the world gained. But politicians. Don't necessarily only look to real income gains, even though economists feel they should. They look at employment, they look to industrial capability. And then I think COVID was a wake up moment, I think. In India itself, the so-called hollowing out of our manufacturing was a teaching, a teachable moment. I have to say that a lot of the instincts of the BJP as a government were to believe that domestic strength is measured by domestic manufacturing capability. And so all that led to the rediscovery of industrial policy, symbolized by the phrase almond butter. Articulated by Prime Minister Modi in what would have been May of 2020. No, I think the jury is out on what it takes in terms of domestic political economy to make industrial policy work for you. But let's not throw the baby out with the bathwater, because where India is in the digital space, where it's in the pharma space, less perhaps in terms of manufacturing, and there's a puzzle there. This has reflected nimble policy, intelligent policy, good cooperation between the private and the public sector. I think critics of the PLI worry about two things. One is that in aggregate these are large sums which the government could use otherwise fiscally. And the government response to that is that if we can get these sources of growth going, then they will pay for themselves fiscally. And otherwise. And the second concern is whether the political economy of India will actually allow these schemes to be terminated because they are meant to be time bound or whether the pressure of lobby will be that this again becomes another elephant in the street, you know, sort of argument of forever. But I think India has much more self-confidence now. And so I think a very important part of the evaluation of the alliance, since I'm at the head of meeting, I'll try and make sure that those that those assessments are honest assessments and then we'll see.

Akshay Mathur: I think he was also asking about the green Industrial policy. Is that your question?

Attendee [inaudible]

Suman Bery: Yeah, well. I think there's a balance that the I.R.A. demonstrates, which is that you've got a very successful low cost producer of much of the green infrastructure. But nobody wants reliance on a single source of supply. And again, you know, as an economist. You have to accept that there's been a, well, fair game by all the learning by doing that's taking place in China so that we get all this infrastructure going down the cost curve much faster than I think it would have otherwise. But do you want to be locked into it? That becomes the issue. And the issue then is who? How do you avoid impairing your competitiveness by going for a higher cost model? What does that then mean for your ability to compete in global markets? And does that then lead which many liberals like myself would not want, is that you end up with different market areas defined by security, you know, sort of carbon clubs and stuff like that. So I mean, there's an innate logic to liberal economics, which is that you are most competitive if you source from the lowest cost producer. But making that a source of vulnerability is is what you have to avoid. And I think that's a balancing act that the Europeans are trying to pull off. It's something we have to think about, but we have much less many fewer fiscal resources. So we can't match the I.R.A. So we have a low cost labor advantage, but we don't have the fiscal resources.

Akshay Mathur: How much time do we have around to? We're done. Okay. Right. We're finished. Right. Okay. Okay. Well, all that's left is for me to thank you on behalf of the Growth Lab at Harvard. Ricardo, who I'm impersonating and the staff here, the researchers who make the development talks tick every time. And, of course, students have come from different parts of Harvard.

Suman Bery: And I'm very grateful for all your time. You are cared for, in a sense, devoting as much time. I'm sure that your wife must think I'm a terrific distraction. But thanks for your attentiveness, and I hope I've added your knowledge about India, which is my purpose. Thank you very much.