Why does India continue to have an export problem? Sociology may answer

All kinds of policies have been tried to boost Indian exports, but nothing has worked. Maybe, sociology holds the answers

The latest trade data once again show that India hasn’t been able to solve its export problem. Over the last 75 years, India has succeeded in solving many problems. Food, health, education, low GDP growth rates, and much else. But there is one problem it has been unable to solve — exports. 

At least a dozen committees over 60 years have tried to find solutions. The government itself has been straining hard to provide all kinds of incentives. All manner of policies have been tried. Nothing has worked. 

India, despite its amazing businessmen, remains a poorly performing exporting country. Even the success of IT exports is really labour export in a disembodied form. 

So in sheer desperation, because India can’t afford to have a return of the foreign exchange constraint, the Modi government has gone back to import substitution. And as we can see from the burgeoning imports from China, even that has failed.

Hence my question: when economics has failed to provide the answers and explanations to this persisting failure, should we look elsewhere for the solution? Do the answers and explanations lie in politics? Do they lie in sociology? 

For instance, is something about our business communities responsible for this failure? Is it the nature of our political and administrative structure? Or is it a combination of all these things?

To the best of my knowledge, there hasn’t been any attempt to approach the export problem from these non-economic perspectives. That’s why I think ICRIER, RIS, IIFT etc., should consider these aspects. 

Sociology had started strongly in the 1950s, but by the end of the 1980s, it had lost its dynamism. It is no coincidence that behavioural economics began in the early 1970s and quickly led to a sub-discipline called the sociology of economics. But the tools of analysis and data were missing. 

Meanwhile, sociology went off track when it refused to study anthropological groups and chose instead to focus on randomised groups of individuals, like people in a waiting room or a classroom. It choked itself.  

Indian economists, of course, never went anywhere near the subject. Even the Delhi School of Economics, usually at the cutting edge, never had a course on it despite its mere 25-yard proximity to the department of sociology, which was thought to be for girls while real men focused on economics. 

As a result, we have a huge gap in our knowledge, a practical example of which is that we don’t know why the economic policy has failed so spectacularly in respect of exports. Persuasion, incentives, likely profits, nothing works. 

As to the political aspect, it mostly has to do with keeping domestic supply up. This has led to policy flip-flops that discourage businessmen from getting into exports. And insider information about policy changes has played a critical role. 

Nor have political parties and governments given any priority to exports in terms of allocating land, building infrastructure, providing electricity and subsidised finance. And there’s always the administrative aspect. Rules keep changing, which also discourages businessmen from the export business. 

As for our businessmen, exports require a completely different mindset than when supplying domestic demand. You can’t have shortcuts in quality and delivery. Most Indian businesses do not understand this and therefore take up exports as an addition to an existing business, not the main business. The difference between the two is vast. Labour and management are equally at fault because neither has been trained to understand export parameters as a completely different field. 

These are sociological problems, and someone needs to study them.