The race that devours its runners: What India must avoid as it deregulates

If India treats deregulation as an administrative housekeeping exercise rather than a mission to expand individual agency, it will merely replace one dense thicket ofrules with another, only digital this time.

- ADITYA SINHA

The idea for this column began with two Substack essays that seemed, at first, to have nothing to do with India. One was Noah Smith's vivid portrait of China’s young working population trapped on an economic treadmill. The other was Gulzar Natarajan’s analytical dissection of China’s industrial vulnerabilities, specialised clusters, excess capacity, and the fragile social contract beneath the gleaming infrastructure. But read together, and through a Hayek-Friedman lens

these essays transform into a cautionary map for any state attempting reform. For India, which is now advancing deregulation and administrative restructuring at scale, they offer a simple warning: a reforming state can still accidentally build an involuted system, outwardly efficient, inwardly exhausted, if it does not design competition and deregulation with clarity of purpose.

Lewis Carroll once satirised political process with a scene in “Alice’s Adventures in Wonderland”, where the Dodo organises a “Caucus Race”: everyone runs in circles without rules, direction, or purpose until someone arbitrarily declares the race over and hands out prizes. It was meant as nonsense; today it reads like a description of certain modern development strategies. China's current economic moment, as Noah describes it, now resembles that race.

Gulzar Natarajan’s analysis uncovers the deeper anatomy beneath this despair: a country built on thousands of highly specialised industrial clusters, towns that manufacture 70% of the world’s spectacles, 63% of its shoes, or half of Japan's coffins. These clusters were once engines of competitive advantage, but have now become vulnerabilities. When export demand falters, the pain is not spread across the nation; it is concentrated brutally in the very towns where state-supported monocultures took root. A slump in exports erodes the livelihoods of entire local ecosystems.