MC EXCLUSIVE Interview: Closer India-China ties viable, but ‘plus-one’ strategy must stay, says Kaushik Basu

What should be India’s strategy around trade deals amid tariff pressures?

India’s strategy must be one of strengthening trade relations with countries across the world. With US tariffs being raised to a self-destructive level, most countries are seeking greater economic collaboration. India must be an active part of this.

Should India continue to buy Russian oil at the risk of more secondary tariffs?

India should not allow its policy to be shaped by the threat of tariffs. Apart from anything else, the US tariff policy is so arbitrary that it is not possible to define a rational response to it.

How do you see the diplomatic reset between India and China? Is this an economically and geopolitically viable partnership, and how does it impact the China plus one strategy?

Greater economic interaction between India and China is in the interest of both India and China. Hence, greater trade and investment between the two countries is worthwhile, especially now when global trade is so fractured by the US tariffs. However, in today’s world of supply chains, we should always have a plus one strategy with every country; so that if one country cuts off the supply chain you are not caught floundering.

In your view, what is the single biggest opportunity India is currently under-utilising in the global economy?

The single biggest opportunity for India in the global economy is the provision of higher education. India has huge possibilities in the sector and seemed to be poised to get there but has, unfortunately, been losing ground. With globalisation, as the world gets smaller, students will be prepared to travel to different lands to get the best education. India can potentially provide top-quality higher education at 1/10th the price charged in the United States. Several emerging economies are trying to get into this space. India has another advantage that many of these countries do not have—the English language. Given our familiarity with English, if there is a serious effort by the government and the private sector to make India into a global hub for higher education, students will come not just from developing countries but even from the US.

There is another sector in which India has big potential—healthcare provision. India already has people coming from other countries for surgery and other kinds of hospital care. But with professional planning, the healthcare sector can become huge. Let me close by mentioning a business idea. If India operates ships with proper hospital facilities—with doctors, nurses and state-of-the-art operation theatres, and has them sailing in the oceans close to high-income countries, these can become major healthcare centres offering services much below the price that people in rich countries pay. This can be a major source of export and income for India and be of great value to people seeking quality healthcare at reasonable prices.

As the world changes, with the rise of technology, education and healthcare are likely to become much larger shares of global GDP. India has the potential to be a major player in these sectors.

India’s GDP growth rate touched 7.8 percent in the first quarter of FY26 and is among the fastest globally. How can India ensure that the growth is sustainable and inclusive?

India’s growth rate of 7.8 percent is impressive and does place India among the world’s fastest-growing nations. Indeed, India has been among the fastest growers since 2003. What is new is that the growth has become increasingly skewed and is going into very few hands.

How can India create more formal-sector jobs in a largely informal economy?

With the rise of digital technology, the demand for labour is declining worldwide. Currently, the advanced economies are feeling the greatest pressure, and some countries, like the US, are making matters worse for their own workers by making policy mistakes. India’s situation is different because it is an emerging economy where wages are much lower. It is possible for India to expand its manufacturing sector and step up exports as China once did, and Vietnam is doing now, but this needs intelligent policy design, including the reform of India’s labour laws. However, all this needs professionalism, and cannot happen with slogans.

Ten or fifteen years from now, the falling demand for labour will spread to all countries, rich and poor. Then we will have to think of collective solutions for the world. But, for now, there is scope for India to expand its manufacturing sector and increase its exports. It is unfortunate that today’s India is so focused on the total GDP that little attention is being paid to the middle and lower-middle income classes, and they are not getting the benefits of growth.

You have often spoken about inequality. What fiscal tools would you recommend to directly support the bottom 20 percent of the population, and can wealth taxation or UBI (Universal Basic Income) help in making growth more inclusive?

A lot of the problem would be solved if we paid attention to job creation, but I am also in favour of a progressive tax on the rich that ought to be transferred to help the poor. Free-market fundamentalists tend to assume that all inequality is a reflection of work—those who work harder earn more. In reality, a large amount of inequality occurs at birth—some people are born rich, and many are born abysmally poor. Clearly, this cannot be a reflection of the work done by the babies. There is every moral reason to use taxes to rectify this inequity.