The lessons from the 2012-13 'Taper Tantrum', about the vulnerabilities of India's consumption-led growth model, were largely overlooked due to policy missteps by the United Progressive Alliance (UPA) regime.

The shocks from the United States' tariffs and the ongoing US-Iran conflict have again exposed these structural weaknesses, reminding us that external disruptions can quickly destabilise an economy overly reliant on consumption-led growth and capital account flows. We need to understand the 'why's.

The 1991 liberalisation dismantled the Licence Raj, but growth-friendly real sector policies remained limited. Traditional structures and entrenched interests continue to govern the real economy, though our financial sector witnessed sweeping changes and reforms. Independent regulators were adequately empowered, capital and commodity and insurance markets modernised and opened up, and banking supervision strengthened - creating a vibrantly competitive and widely trusted financial system.

This imbalance produced a peculiar trajectory: India became home to the world's largest number of "filthy but rich" cities, where wealth accumulation outpaced improvements in infrastructure, environment, and basic public services. A recent report said 190 of the world's 390 such cities are in India. Why is this happening?

Large-scale manufacturing, despite honourable exceptions, never truly gained momentum in India. Could the causes lie with excessive policy-focused government presence? In contrast, a different growth engine quietly got created in the real sector in the form of skilled manpower, fostered through the proliferation of state-promoted technical and medical training institutions.

By the time liberalisation arrived in 1991, India's trajectory intersected with profound global transformations such as the end of the Cold War and the dawn of the internet. Individual mobilities increased. Alongside, widespread economic development in erstwhile colonies and a storm of financialisation in the developed world were creating a vast demand for skilled manpower. India's reservoir of human capital came into its own.

What now exists is a distinctive, largely unplanned growth model - driven by the aspirations of talented individuals and the entrepreneurial energy of technically qualified professionals. Services exports and worker remittances have become the most reliable engines of expansion, setting India apart from manufacturing-led paths pursued elsewhere. India is now the world's largest recipient of inward remittances ($135.5 billion). These help subsidise the ever-growing merchandise trade deficit and, together with robust services exports, stabilise the external account. However, handling externally created, periodic turbulence in capital market flows is a different matter.

TCA Ranganathan The former chairman of the Export Import Bank of India is a banker with a theory of everything.

India's long-discussed "missing piece" of manufacturing is unlikely to take off quickly. Instead, we could realistically begin reforms in healthcare, a sector where low-hanging fruit already exists. Over the past two decades, India's healthcare sector has shown rapid growth, marked by the arrival of branded hospital chains, corporate healthcare groups, and advanced diagnostic centres. These developments have created islands of excellence in metropolitan areas, showcasing India's ability to deliver complex medical procedures at globally competitive costs.

Yet the urban-rural divide remains stark: while metros boast world-class facilities, rural and semi-urban regions often struggle with inadequate or even absent healthcare infrastructure. Excessive financialisation has also distorted incentives. In large cities, doctors are frequently remunerated through top-line linked salaries, encouraging unnecessary diagnostic tests or avoidable surgeries. Patients, meanwhile, face uneven hygiene standards, doctors with limited attention spans or sometimes even unsafe practices. These issues reflect a system where investor targets can overshadow medical ethics, leaving patients to bear the cost.