'License Raj mentality is still all over': Toronto economist flags India's growth bottlenecks after visit

After spending two weeks travelling across different parts of India, economist Kevin Bryan on Saturday says the country feels strikingly similar to China in the mid-2000s in terms of ambition and growth - but warns that three persistent structural issues could hold it back if left unresolved.

Bryan, an Associate Professor of Strategic Management at the University of Toronto, shared his observations after his latest visit. "Another two weeks in various parts of India. I have said before that India feels like China 2005, where I briefly worked, in ambition and growth. However, three major issues need to be solved," he wrote on X.

The first, Bryan said, is what he described as the continued dominance of an outdated bureaucratic mindset. "First, the License Raj mentality is still all over government services," he wrote, adding that "almost every govt interaction is poor from the first step".

Bryan, who is also the Chief Economist at CDL Toronto, listed examples drawn from daily experience: "(joke of an e-visa site, need to scan passport for Wifi, blink your eyes on video to get a SIM, queue at office 1 then hand token to office 2."

At the same time, the economist argued that while the state has too many rules, enforcement on the ground is weak. "If govt in India has too many rules, individuals have too few. Anarchy everywhere, from supply chain fraud to pollution control to, of course, the roads," he wrote.

He contrasted this with his experience of China two decades ago. "China 2005 was not like this," Bryan said, stressing the importance of trust in economic systems. "Relational contracts - that is, trust - are essential for growth."

Infrastructure, he said, is the third major challenge. While acknowledging visible improvements, Bryan argued that India's ambitions are not matched by the scale of its planning. "Finally, infra, indoor plumbing, roads, and airports (are) getting better. But at current level of growth and income, plans are way too small," he stated.

The management professor called for more ambitious investments, saying: "HSR (High-Speed Rail) on the quadrilateral, at minimum, plus all hands on deck reduction in air pollution (it's car and coal, not ‘Diwali fireworks’, guys!)."

Bryan also pointed to what he sees as India's underlying strengths. "People read, and hustle, and have ambition," he said, before drawing a comparison that tempered his optimism. "But was also in Bhutan and you realize 'it doesn't have to be like this'," Bryan wrote.

Referring to Bhutan, he highlighted how a much smaller economy has achieved higher living standards. "Bhutan has no industry other than high-end tourism and selling hydro to India. Population and size of Vermont. But quite a bit richer than India, safe and calm roads, good standard of living, clean air."

"You can have these things and still grow the economy," he added.