Can Modi 3.0 beat Germany? : Indian economic case study
Summary
TLDRThis video explores how Germany rose from the ruins of WWII to become the world's third-largest economy, highlighting the role of its middle-sized businesses, high-quality production, and strong industry-academic partnerships. It contrasts Germany's success with India's current economic challenges, offering insights and lessons for India to improve its education system, empower MSMEs, and create a more evenly distributed industrial powerhouse.
Takeaways
- 😐 Germany's post-WWII economic recovery was remarkable, rising from the devastation to become the third largest economy in the world.
- 🏭 The success of Germany's Mittelstand companies, which are small and medium-sized enterprises, played a crucial role in the country's economic boom.
- 💼 These Mittelstand companies are known for their specialization, high-quality products, and B2B business models, which contribute significantly to Germany's export strength.
- 🏫 Germany's strong industry-academic connection and emphasis on practical education have been instrumental in producing skilled talent that drives these companies.
- 📈 The German government's policies, such as the Kurzarbeit program for unemployment insurance, have helped maintain economic stability and protect workers during recessions.
- 🌐 The distribution of these successful companies across Germany, not just in major cities, has led to balanced regional development and economic growth.
- 📊 In comparison, India faces challenges such as high unemployment, a lower education budget, and a focus on agricultural exports rather than high-quality industrial products.
- 📉 India's industrial output is concentrated in a few areas, unlike Germany's widespread industrial strength, indicating a need for more balanced regional development.
- 🏢 The Modi government is encouraged to learn from Germany's model, focusing on quality production, education investment, and strategic economic policies to support MSMEs.
- 🌟 The video script suggests that India can achieve economic superpower status by adopting the Mittelstand philosophy and implementing supportive government policies.
Q & A
What significant event marked the beginning of Hitler's Nazi party's rise to power?
-Adolf Hitler and his Nazi party started to build a mass following after the significant event of the invasion of Poland in September 1939.
How did the World War II end for Germany?
-World War II ended for Germany with the unconditional surrender of all German land, sea, and air forces in Europe to the Allied expeditionary forces on May 1st, 1945.
What was the state of Germany's economy and infrastructure after World War II?
-After World War II, Germany faced rampant unemployment, major cities like Berlin and Frankfurt were bombed, over 20% of all housing was destroyed, and the German currency was in such a bad state that people were using cigarettes as currency instead.
How did India's economic situation compare to Germany's in the years following their respective wars of independence?
-In 1947, when the British left India, the country was in chaos with 3 million people dead due to the Bengal famine, 2 million due to partition, and 80% of the population living in poverty. In contrast, Germany, despite the devastation of World War II, went on to become the third largest economy in the world.
What is the current status of India's and Germany's economies in terms of global ranking?
-As of the information provided, India has become the fifth largest economy in the world, while Germany is the third largest economy.
What are the key differences in unemployment rates and per capita income between India and Germany?
-The unemployment rate in India stands at 88.1%, whereas in Germany it is at 3.6%, which is one of the lowest in the world. The per capita income in India is $2,730, while in Germany it stands at $54,000.
What is the role of 'Mittelstand' companies in Germany's economic success?
-The 'Mittelstand' companies, which are small and medium-sized enterprises, play a crucial role in Germany's economic success by being highly specialized, often becoming world market leaders in their niche industries, contributing significantly to exports and employment.
How does the German government support its 'Mittelstand' companies?
-The German government supports its 'Mittelstand' companies by establishing strong industry-academic connections, ensuring a robust education system that provides practical skills, and implementing policies like the 'Kurzarbeit' program to maintain employment during economic downturns.
What is the 'Kurzarbeit' program and how does it benefit the German economy?
-The 'Kurzarbeit' program is a German government policy that encourages companies to reduce employees' working hours instead of laying off workers during economic downturns. The government compensates for a significant portion of the lost wages, which helps maintain employment, consumer spending, and a ready workforce for when the economy recovers.
What lessons can India learn from Germany's economic model to improve its own economic growth?
-India can learn from Germany's focus on high-quality production, the importance of a strong education system, the need for strategic economic policies to protect workers during recessions, and the development of a robust MSME sector. Additionally, India can look to Germany's even spread of industrial growth across the country as a model for empowering its tier 2 and tier 3 cities.
Outlines
🌍 Post-WWII Germany and India's Economic Trajectory
The paragraph discusses the aftermath of World War II, focusing on the economic and social devastation in Germany and drawing a comparison with India's situation post-independence. It highlights the drastic measures taken by the Allies, the unconditional surrender of Germany, and the subsequent economic boom that led Germany to become the third-largest economy in the world. In contrast, India, despite its progress, still faces significant challenges in terms of unemployment, per capita income, and exports. The paragraph emphasizes the need for India to learn from Germany's economic strategies and governance models to achieve similar success.
🏭 The Rise of Germany's Mittelstand Companies
This section delves into the role of Germany's small and medium-sized enterprises (Mittelstand) in the country's economic resurgence. It explains how these companies, often located in smaller towns, became world market leaders in their niches, contributing significantly to Germany's export prowess. The paragraph also touches on the historical context, including the British Merchandise Marks Act and its unintended boost to the 'Made in Germany' brand. The narrative underscores the importance of specialization and quality in German industry, which has been a hallmark of their success.
🎓 The Impact of Education and Industry Partnerships
The paragraph examines the German education system's role in fostering a skilled workforce and the strong ties between academia and industry. It contrasts the German approach, where students engage in practical, industry-relevant projects, with the Indian system, which is criticized for its theoretical focus and outdated curriculum. The summary points out the importance of aligning education with real-world challenges and the benefits of partnerships between universities and businesses in producing employable graduates who can contribute to the economy.
🛠️ The Power of Hyper-Specialization and B2B Business Models
This section discusses the business philosophies that have contributed to the success of Germany's Mittelstand companies, particularly their hyper-specialization and focus on B2B markets. It explains how these companies achieve high quality and specialization in their products, leading to a strong position in the global market. The paragraph also highlights the advantages of B2B business models, such as long-term customer relationships, high customer lifetime value, and the ability to charge premiums for reliable products and services.
💼 The Kurzarbeit Program: Germany's Unemployment Insurance Plan
The paragraph introduces the Kurzarbeit program, a German government policy designed to maintain employment and economic stability during economic downturns. It explains how the program allows companies to reduce working hours instead of laying off employees, with the government compensating for lost wages. The summary outlines the benefits of this approach, including job preservation, sustained consumer spending, and a quick return to full production when economic conditions improve. The paragraph also compares Germany's low unemployment rate with other countries and discusses the financial structure of the Kurzarbeit program, which is funded by contributions from employees and companies.
🚀 Learning from Germany: Strategies for India's Economic Growth
The final paragraph summarizes the key lessons India can learn from Germany's economic model, emphasizing the importance of high-quality production, empowering the MSME sector, investing in education, expanding beyond agricultural exports, and developing a robust welfare system. It calls for strategic economic policies that protect workers and promote economic stability, suggesting that India should adopt sustainable economic models similar to Germany's Kurzarbeit program to ensure continued growth and resilience in the face of recessions.
Mindmap
Keywords
💡World War II
💡Nazi Regime
💡Unconditional Surrender
💡Deindustrialization
💡Economic Recovery
💡Middle Stand (Mittelstand)
💡Hyperspecialization
💡B2B (Business-to-Business)
💡Industry-Academia Connection
💡Kurzarbeit
💡Economic Superpower
Highlights
Adolf Hitler and the Nazi party gained a mass following, leading to the invasion of Poland and the outbreak of World War II.
By 1945, after a series of victories and defeats, the Axis forces were out of sync, and the wars in Europe and Asia merged into a single global conflict.
Hitler's defeat in World War II and the subsequent division and occupation of Germany by the Allies marked the end of the Nazi regime.
Post-war Germany faced immense challenges including unemployment, city bombings, housing destruction, and currency instability.
India, post-independence in 1947, also faced significant challenges including famine, poverty, and economic exploitation.
Despite the devastation, both Germany and India managed to rise and become leading economies within a few decades.
India's current Prime Minister, Narendra Modi, has set a goal for India to surpass Germany as the world's third-largest economy.
India lags behind Germany in key economic indicators such as unemployment rate, per capita income, and exports.
The German economy's success is attributed to its small and medium-sized enterprises (SMEs) that are often world market leaders.
German SMEs are known for their specialization, high-quality production, and focus on B2B markets.
The German government has fostered a strong industry-academic connection, ensuring that education aligns with real-world challenges.
Germany's Kurzarbeit program provides a safety net for workers and businesses during economic downturns, unlike traditional unemployment benefits.
India can learn from Germany's focus on high-quality production, education investment, and strategic economic policies.
The Modi government is encouraged to increase India's education budget and improve the quality of education to boost the economy.
Germany's economic model demonstrates the importance of a robust SME sector, a strong education system, and strategic government policies.
India needs to empower its tier 2 and tier 3 cities to create a more evenly spread industrial powerhouse.
The video concludes with a call to action for the Modi government to learn from Germany's economic strategies and implement sustainable policies.
Transcripts
[Music]
Adolf Hitler and his Nazi party start to
build a mass
following September 1939 Nazi Germany
invaded
[Music]
Poland after one Victory had followed
another the axis forces are out of Step
the wars in Europe and Asia now merge
into a single gigantic World War the
largest war in history hi everybody the
year is 1945 Hitler had just lost World
War I and the Soviets Americans and the
Brits had taken over Germany May 1st
1945 the Allies have won the war is over
after 12 years in power and 6 years of
war the Nazi regime has come to an end
the designated head of the German State
signed the act of unconditional
surrender of all German land sea and air
forces in Europe to the Allied
expeditionary forces the world war had
killed 6 million German citizens Germany
was hit by rampant unemployment major
cities like Berlin and Frankfurt had
been bombed and more than 20% of all
housing in Germany had been destroyed
and the German currency was in such a
bad state that people were using
cigarettes as currency instead of using
the German currency Germany 4 years
after the end of the second World War
this was a life like you can't imagine
balanced between Devastation and New
Beginnings we looked across the Old Town
it was one big pile of rubble and just
like Germany in 1947 when the Brits left
India even India was in Shadows 3
million people had died due to the
Bengal femine 2 million died due to
partition and 80% of our population was
living in poverty as the British left in
1947 chaos erupted the India that prime
minister jawaharlal nehu inherited was
that of an economy battered by Colonial
exploitation in India nearly everyone is
hungry and each year famine claims 7
million India was a struggling agrarian
economy and poverty was widespread but
in the next 70 years while Germany went
on to become the third largest economy
in the world India went on to become the
fifth largest economy in the world and
now Modi G has promised Indians that we
will beat Germany to become the third
largest economy in the world but you
know what guys I hate to break it to you
that we are far far away from Germany
while the unemployment rate in India
stands at 88.1% Germany stands at 3.6%
which is one of the lowest in the world
while our per capita income is
$2,730 the German per capita income
stands at
$54,000 and most importantly in spite of
having 16 times less population than
India while Indian exports stood at 46
billion in 2022 the German exports stood
at $1.6 trillion in 2022 so if you see
even though it looks like our economy is
growing at a staggering rate except for
GDP we are far far behind in terms of
exports employment and even per capita
income and since India is now on its
part to become the third largest economy
as citizens of India our Benchmark to
judge the BJP should not be the Congress
or Pakistan our Benchmark must be
derived from legendary countries like
Germany Finland and Singapore and more
importantly it is our Prime
responsibility to hold the Modi 3.0
government accountable by using these
benchmarks so in this episode today
let's dive deep and try to understand
after the destruction that Germany faced
with Hitler and World War II how did
Germany become the third largest economy
in the world what are the most powerful
and revolutionary models of governance
that turned Germany into one of the
richest nations of the world and most
importantly as citizens of India what
are the lessons that we need to learn
from Germany to hold the Modi government
accountable people did you know that
while the German economy is booming its
population is only getting older this is
the reason why there are a lot of
opportunities for the Youth to build a
successful career in Germany because
Germany needs Talent at this moment and
they are creating a lot of opportunities
for the young a societal system with
jobs and even housing and here's where
leverage edu is here to help you out
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description this is a story that dates
back to 1945 during this time Hitler had
just lost World War II and he committed
suicide on 30th of April 1945 eventually
the Nazi surrendered to the Russians
Americans and British forces on 7th of
May 1945 the war is over ADF Hitler
commits suicide 6 years of suffering
sacrifice and
death the sights and sounds of Victory
in Europe Echo across the Atlantic and
around the world the general puts his
signature to the document which
acknowledges the complete defeat of the
German Armed Forces by those of Britain
Russia and the United States that the
forces of Germany have surrendered to
the United Nations in the wake of this
war many important German cities were
left in Ruins Berlin which is the
capital of Germany was heavily bombed by
the Soviets the poor city of Hamburg was
destroyed by bombing and even the
industrial area of statguard was
destroyed in the war the Red Army
smashes its way to the Heart of the City
in 18 days 93 German divisions have been
destroyed
125,000 German civilians have perished
in the rubble of the city 6,000 have
committed
suicide Berlin has been virtually
annihilated so in the Indian context it
is almost like saying Mumbai Surat Delhi
and Chennai were bombed so do you
realize if he lose these cities to
bombing it would push India 30 years
behind because these cities stand as the
pillars of our economy so the question
is when the most important cities of
Germany were destroyed to such an extent
how did Germany rise to become an
industrial Powerhouse and an export
Legend well as it turns out the majority
of the German trade and Export were not
coming from cities like Berlin or Munich
it was coming from the small and
mediumsized businesses which were spread
all across Germany as in even in the
tier 2 tier 3 cities of Germany these
companies are a special category of
companies called middle standand
companies and here's where ladies and
gentlemen I wanted to show you something
absolutely mind-blowing if you visualize
the industrial hubs of India on the map
of India this is what it looks like if
if you see the industrial output of
India is coming from a few pockets of
the country while the rest of the
country is far far away from growth or
is engaged in agriculture but if you
look at the map of Germany this is what
it looks like do you see these red dots
every Red Dot represents a World Market
leading company and the bigger red dots
represent a cluster of 45 Market leading
companies now mind you these are not
Market leaders in Germany these are
Market leaders in the entire World
economy so they are World Market leaders
each of these companies export products
all across the world and they are Market
leaders in the world for example there's
a company called Maya whift which is a
World Market leader in building cruise
ships which generates a revenue of $898
million and has a market share of almost
50% then there's a company called
Ableton that makes electronic music
mixing software and hardware for DJs and
again it is a market leader with a
market share of 54.2 7% in the entire
world and Tetra is a market leader in a
niche market of ornamental fish food now
you tell me guys can you think about
Indian companies that are World Market
leaders it's quite difficult to think
right but you know what guys Germany
doesn't have one or two World Market
leaders just as of 2014 Germany had
1,400 World Market leaders which were
midle Stan companies and all these
companies come together to contribute to
the export superpower of of Germany so
the question is while on one side Indian
companies are struggling to compete in
India against the Chinese products then
how is it that these German companies
are becoming Market leaders in the
entire world economy well this is
because ladies and gentlemen the mle
Stan model operates with four common
business philosophies and each of these
business philosophies are very practical
and can be applied by every entrepreneur
very very easily so let's understand
them better firstly middle Stan
companies are hypers specialized
companies that produce just one type of
products for a very long time and then
they diversify but they produce these
products in such high quality that they
go on to become unbeatable in the world
market and this is something that has
been a part of the German DNA for
centuries and you know there's actually
a funny story that before World War I
the britishers passed an act called the
merchandise marks act and this Act made
it compulsory for German products to be
labeled as made in Germany because the
Brit thought that people would see these
inferior quality German products and the
German trade would suffer eventually the
britishers will be able to trade better
and they would be able to make more
money but guess what these German
products were of such high quality that
made in Germany became a trademark and
soon enough German companies started
charging a premium of 20% because of
this reputation this is the power of hyp
specialization and highgrade production
in case of Middle Stan companies you
will see hypers specialized companies
like manques that only make charging
apparatus for electric vehicles then
there's a company called electri Sola
that makes just wires but they make such
high quality wires that they used in
Mars rower secondly 85% of these middle
Stan Champions are B2B businesses why
because B2B businesses by Nature have
three very critical attributes firstly
in the B2B business customer acquisition
is based on value whereas in b2c it
could be based on marketing gimmicks for
example if you're selling a fridge to a
consumer you can use gimmicks like voice
control give it a fancy do and get Shah
ruk Khan as your Ambassador and the
fridge will start selling like hot kaks
but when you're selling a refrigerator
to a business like a restaurant your
product has to be topnotch you need to
provide powerful cooling you need to
provide huge space you need to make sure
that the refrigerator is energy
efficient and most importantly it has to
function without any glitches because if
the refrigerator doesn't work and spoils
the inventory on a Friday evening it
would be a nightmare for the restaurant
T know so in the B2B market value trumps
gimmicks and here's way ladies and
gentlemen the the middle Stan companies
utilized their quality proposition if
you look at companies like Liber they
specialized in fridges and freezers for
the longest time and they provide high
grade specialized pharmacy fridges
medical fridges and even commercial
fridges and just by selling fridges they
made €1.1 billion e this is the power of
hyp specialized B2B business secondly in
the B2B space the benefit of a discount
comes at a very heavy cost and this
again helps you come out a premium and
here's an example to help you understand
the same let's say you run a sneaker
company and you have two payment Gateway
options one is a reliable branded
software that costs you 2% of your order
value and the other is a less Reliable
Software that cost you 1.5% of your
Revenue now let's say you choose the one
with 1.5% fee so that you can save up on
this 0.5% cost now imagine this guys
after you ran ads for 10 lak rupes on
Instagram 1,000 customers paid for your
product the customers money got deducted
from their account but your payment
Gateway never registered the sale in the
first place which means your inventory
does not get shipped to your customers
at all even after the money got deducted
from the customers's account now do you
realize as a business owner what kind of
a nightmare this would be after spending
LHS of rupees instead of having 1,000
happy customers you will now have 1,000
haters who would consider your company
to be a scam so do you realize this 0.5%
discount comes at a very very heavy cost
when it comes to B2B products so in the
B2B space if you build a super reliable
easy to use and efficient product even
if you charge a 20% premium customers
will happily buy your products because
the risk of a 20% discount for the
client is much higher in the future in
this case even if the payment Gateway
costs you 3% of your Revenue you would
still opt in for it because of the
nightmare that you experienced and a
classic example of a high stake B2B
business is sap which stands for systems
applications and products and this
company since since 1972 has been
focused on helping businesses manage
their systems better that's it and just
a few years into business until today
they have been such a critical backbone
for billion dollar companies that today
most of their clients can't imagine
their life without sap and guess what by
capitalizing on this Niche B2B market
today sap generates a revenue of 31
billion EUR and thirdly in the busines
to business space because you provide
such high value your customers will with
you for a very long time unless you mess
up really badly so the customer lifetime
value is very very high these are the
superpowers that a businessto business
client brings to the table and all of
these things put together it gives the
German msmes three incredible
superpowers number one since their
customers stick with them for a very
long time they have a very consistent
cash flow which eventually gives them
constant profits number two these
profits are then invested heavily into
research and development which further
helps them build great products which
are better than the competition and
lastly when you have consistent cash
flows you can retain and build a
formidable team even during a recession
this is a reason why as time passes
German Middle St companies become more
and more powerful with their products
and cherry on the cake 71% of the middle
Stan Champions are located in small
towns of Germany which have a population
of less than 1 lakh people so you know
what happens instead of millions of
people trying to cram into the economy
of a city like Mumbai the entire
population of Germany finds opportunity
not just in Berlin or Frankfurt but even
in the small towns in Germany and this
is where ladies and chman the M Stan
companies achieve a virtuous cycle
number one because of great products B2B
clients sck with them for decades this
give them consistent cash flow and
profits these profits help them retain
talent and invest in R&D and eventually
consistent research and development
helps them build the best products and
services in the world which again gives
them very heavy profits now now after
listening to all of this a lot of you
will tell me bro all this is very easy
to say but the question is how did the
German government help these mital St
companies become so successful and why
are Indian companies failing well the
first and perhaps the most important
thing that the Germans did very well is
establish a very strong industry
academic connection so let me help you
understand the difference between Indian
engineering and German engineering
education and you will understand what
this means people in Pune University
engineering students have to submit
something called the B project in their
fourth year so after studying 40
subjects over 4 years you have to pick
one subject that you intend to
specialize in and ideally you are
supposed to apply your knowledge to
solve a real world problem for example
in India there is a dying need for an
efficient waste management system so
ideally a group of four civil
engineering students are supposed to
collaborate and spend their entire
fourth year under the guidance of a
professor who would guide them into
research and solving a real world
problem so they are supposed to visit
different Waste Management plans talk to
businesses research and find gaps in the
Market design different solutions and
apply those Solutions eventually to fail
and succeed in designing a better waste
management system for India and
eventually after going through this
iterative process by the end of the year
they are supposed to present a thesis of
around 100 Pages which consists of a
detailed analysis experiment results and
proposal of a new solution to the waste
management problem so this way Indian
Engineers are supposed to apply their
knowledge to become better problem
solvers but you know what happens in
most of our engineering Coles firstly
the professors are incompetent because
they themselves have never solved a real
world problem secondly our students are
loaded with so many stupid assignments
and an outdated syllabus that they spend
all their time copy pasting useless
information from one file to the other
and thirdly because of a stupid rule of
compulsory 75% attendance in lectures
the student does not find any time to go
for site visits at all so you know what
the students from our batch did they
simply copy pasted their research
materials from random research papers
from the internet and and compile them
together eventually they submitted that
to the university now since the
professor herself is incompetent lazy
and ignorant they simply drop a
signature and pass the candidate and by
the way if the professor holds a grudge
against the student then the professor
will over scrutinize a project and
torture the student until the professor
is satisfied and if you don't want to go
through this hassle you know what you
can do you can simply buy an engineering
project for 10,000 rupees in Pune in
fact there's a shop in Pune which will
give you a catalog of be projects which
which you can buy and submit to the
university so you don't have to solve
anything or take the hassle of
researching and developing engineering
Solutions at all this is the reason why
even after four years of education the
engineering students of India remain a
book with no practical skills at all in
fact according to the skill India report
of 2024 more than 35% of our btech
students were unemployable almost 30% of
the MBA students were unemployable 60%
of the it students were unemployable and
more than 75% of our poly Technic
students were unemployable now now mind
you these are not unemployed students
these are unemployable students which
means even if these students are offered
a job they cannot take it because they
don't have the skills for that
particular job but you know what happens
in Germany German universities have
established robust Partnerships with
Industries all across the country and
these Partnerships are not just about
providing internships or job placements
they are about a deep integration of
academic learning with real world
challenges for example the Technical
University of Munich has part partner
with companies like BMW semens and
Airbus and these companies actively
participate in shaping the curriculum
offering guest lectures sponsoring
research projects and providing
state-of-the-art equipments and
Facilities to the students so while
Indian engineering students waste their
time copy basting assignments and
studying an outdated syllabus a German
student is acquiring those skills that
are specially needed in companies like
BMW semens and Airbus similarly BMW
might even present a challenge to the
t's engineering students for example BM
BMW might challenge the students to
develop a new lightweight material for
manufacturing electric vehicle batteries
and then the students work under the
mentorship of both T professors and BMW
engineers and they get to experiment
prototype and test their solutions by
applying their knowledge eventually
while an Indian engineering student is
copy pasting random information from
research papers a German student is
building a strong thesis on how to build
lightweight material for Ev batteries
and after the project is done while an
Indian engineer struggles to find a job
a German engineering student gets a job
in BMW itself and while Indian companies
struggle to hire good engineering Talent
M Stan companies get access to great
talent because of such collaborations as
a result while Indian companies produce
media core products German companies end
up building world class products
eventually leading to better exports and
hence better income for both the German
people and the German economy this is
the power of German education system and
here's why ladies and genten I have an
important message for the Modi
government if you look at how much India
and Germany spend on education it will
blow your mind in spite of being a $4
trillion economy Germany spent 4.6% of
its GDP on education in 2023 whereas in
fi23 India spent only 2.9% in education
so do you realize what this means India
has a population of 140 CR people and
Germany has a population of 8.38 CR
people if you do the math while India is
spending
$81.60 per person Germany is spending
$2,957 per person on education which is
26 times as that of India so you tell me
guys in this fast-paced
technology-driven world if we have such
an incompetent engineering education
system and we spend so little on
education how are we going to beat China
or Germany and it is so sad to know that
if this continues for the next 10 years
we have to say goodbye to becoming a an
economic superpower this is a second
reason why Germany has become an
economic superpower while we are still
dependent on China and this is something
that the Modi government desperately
needs to work on which is increasing our
education budget and increasing the
quality of our education if this is very
very clear to you let's come to the last
and perhaps one of the most amazing
government policies in Germany which is
their unemployment insurance plan and
this is all the more important for India
because under the Modi government
unemployment in India has reached
dangerous levels but if you look at
Germany it has a strange superpower if
you look at this graph you will see that
in 2020 this is what the unemployment in
the US looked like as soon as the
pandemic hit the unemployment
skyrocketed but if you look at Germany
Germany only experienced a minor bump in
unemployment fascinating isn't it but
again after the Russia Ukraine war
started in 2022 it had such a drastic
effect on the German economy that in
2023 the real GDP of Germany declined by
0.2% gerous economic advisor slash their
growth forecast for the country
Germany's leading economic institutes
have revised the country's growth this
year down to basically near of
stagnation Germany is taking an economic
hit due to vastly increased energy bills
caused by Russia's invasion of Ukraine
but again in 2023 while Italy saw their
unemployment rate touch 7.5% France
stood at 7.4% Spain hit 11.9% whereas
Germany's unemployment rate was at a
record low of just 3% so the question is
even during the worst recession of the
decade how is the German market so
resilient well this is because of a
German government policy called The
kurza Bite in this program instead of
resulting to layoffs during economic
downturns companies are encouraged to
reduce employees working hours and to
support workers during this reduced work
time the government steps in to provide
a significant portion of their lost
wages and this action gives the German
economy an insane advantage over
American economy so let's understand
this using an example let's say there is
a large automobile manufacturing plant
in Wolfsburg which employs 2,000 workers
but due to a global recession the demand
for new cars has plummeted by 50% which
has forced the plant to reduce
production Now While most American
companies would simply lay off 20 to 30%
of their Workforce this German plant
decides to implement kurab bite program
so the government approves their
application and allows them to reduce
their working hour for all employees by
50% so now instead of working for 48
hours a week the employees will work
only for 24 hours a week and for these
24 hours that they work the workers
would receive their full salary but for
the next 24 hours of wage which they
lost the government would compensate
them for about 60% of their lost wages
so for the next 6 months the company
only has to pay 50% of the salary to the
employees while the government pays the
employees 60% of their lost wages so if
somebody makes €3,000 the employer would
pay $1,500 and the government would pay
them € 720 so in total they would make2
, 220 as compared to €3,000 and this
Arrangement ladies and gentlemen brings
three superpowers to this MSM ecosystem
firstly the jobs of the workers are safe
so the family doesn't have to live in
stress secondly since the workers are
still getting a major chunk of their
salary they would keep spending that
money into buying groceries personal
care products and household items so
again the revenue flows to these fmcg
companies which again helps them retain
their employees and last and most
importantly since the plant maintains
its entire skilled Workforce after 6
months when the demand for cars shoots
up while the American companies struggle
with hiring training and deployment of
new Workforce the German companies ramp
up their production without any delay
because they never let any skilled
worker go so the German factories are
always up for production the German
employees are always safe and the German
economy is always booming this is how
the kuraby program prevents a shock to
the economy and the job market even
during the times of recession now you
might tell me bro what are you saying
this is like giving free now so just
like Congress promised to give 1 lakh
rupees a year here the German government
is paying the salaries of millions of
people so are you saying that the
government must pay the salaries of
these people using the tax Bas money
well guess what this money in Germany is
not coming from the tax Bay of Germany
it's coming from the employees and the
companies itself long story short if you
make €3,000 a month you would contribute
1.2% of your salary and your employer
would contribute another 1.2% per month
to the kuraby fund and just like
insurance when you lose your job you
will get paid 60% of your lost pay by
the government so it's not a freebie
it's an economic Master stroke which
keeps the economy running even during
the times of recession this is how
ladies and Gentlemen by building a
robust ecosystem with great education
great welfare system and a great culture
of producing the highest quality
products in the world Germany has built
one of the most powerful msme ecosystems
in the world and more importantly since
these Middle St companies spread all
across Germany the growth of Germany has
been very even and not concentrated to a
few pockets in the country and this
brings us to the last part of the
episode and that are the lessons that
India needs to learn from the rise of
Germany using the middle Stan philosophy
lesson number one the first thing that
India needs to focus on is building high
quality products and not cheap quality
products because if we want to become an
export superpower we have to move Beyond
agricultural products and build high
quality electronics and machines lesson
number two to produce such high quality
products we need to empower our our msme
sector and if you look at Indian msmes
just like German msmes our msme employs
100 million people and contributes close
to 30% of our GDP and 50% of our exports
but while German companies are building
world-class products Indian companies
are struggling with Talent technology
and financing so we need to desperately
work on these aspects to empower our
exports lesson number three the Modi
government needs to work diligently to
fix our education system and the least
we can do is increase our budget
allocation from 2.9% of our GDP to 6% of
our GDP which is our education
commission's recommended level and
unless we fix our education system even
if we bring in billions of dollars in
FDI our students will not be able to
apply for those jobs even if those jobs
are available lesson number four while
we grow our economy unlike the Germans
who have industrial powerhouses all
across Germany our industrial capacity
is concentrated in these small pockets
of India so just like Germany we need to
empower our tier 2 tier three citizens
in such a way that we build an evenly
spread out industrial Powerhouse for
India and lastly just like Germany has
an unemployment insurance scheme India
needs to have a strategic economic
policy that can help the workers prevent
this risk of recession and unlike a
congress proposed freebie policy it has
to be a sustainable economic model
because always remember there is a thin
line between a freebie and a sustainable
economic model one will drain your
economy and the other will boost your
economy so high quality production
increasing the education budget
improving the education system expanding
Beyond agricultural exports better
financing for msmes and the development
of the tier 2 tier 3 cities of India
these are my humble suggestions to the
Modi government that we can learn from
the German economy that's all from my
side for today guys if you learned
something valuable please make sure to
hit the like button and not to make youa
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please subscribe to our Channel thank
you so much for watching I will see you
in the next one bye-bye no no
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