Dr. Raghuram G. Rajan is the well-respected Governor of the Reserve Bank of India. He became the Governor in 2013 and is an independent and decisive person.
He is a man of deep intellect and enjoys a “rock-ar” status among Indian media. He has, often, pursued policies that the Central Government of India has not always agreed to wholeheartedly.
Typical of his style, he recently did some plain-talking; this time on the topic of ‘Jugaad’ – the Indian, way of frugal innovation.
Dr. Rajan took a strong objection to the concept of working around difficulties by hook or crook.
He cautioned that this mentality encourages an attitude of shortcuts and evasions.
He expressed fears that Jugaad will neither lead to improved quality nor to sustainable economic growth.
Dr. Rajan asked the audience (& India) to stick to the strategy of building necessary institutions and end the need for Jugaad.
Why Dr. Rajan is wrong about Jugaad
Let us first understand the meaning of the word Jugaad.
The reputed Financial Times provides a fairly clear definition of the term.
The key points to note are:
- Jugaad means thinking in a frugal way and being flexible
- It is about finding a low-cost solution to any problem in an intelligent way.
- Jugaad is about developing a ‘good-enough’ solution that gets the job done.
This definition easily disproves Dr. Rajan’s key objection against the approach – that Jugaad leads to low-quality and “ends justify means” approach.
Entrepreneurs in developing world developed Jugaad approach to solve the practical challenges that they routinely faced – the resources are scarce and the purchasing power is very little.
It is short-sighted of Dr. Rajan to ignore the challenges that Indian entrepreneurs face even today and preach from his “ivory tower”.
Let me be very clear – Jugaad doesn’t encourage using crooked means or shortcuts.
What it does is recognize the constraints and then forces the innovator to find a way out.
In fact, Jugaad itself is, often times, a victim to the social malaise of using crooked means.
As for Dr. Rajan’s belief in institutional mechanisms, the various financial crises & scandals that have affected the developed world do not inspire much confidence in relying on them.
In fact, the latest Volkswagen cheating scandal should put to rest any blind faith in such notions, despite what Dr. Rajan says.
He is right in concluding that there are no easy ways to the top.
However, he is wrong in making Jugaad as a part of the problem and not a legitimate approach to solving problems.