Ideas for India: Recent Episodes
Ideas for India
In a new edition of I4I conversations, Yamini Aiyar is joined by Shrayana Bhattacharya to discuss her new book, Lessons in State Capacity from Delhi Schools
In a new edition of I4I conversations, Maitreesh Ghatak (London School of Economics) is joined by Karthik Muralidharan (University of California, San Diego) to discuss his new book, Accelerating India's Development: A State-Led Roadmap for Effective Governance.
India’s population is expected to peak at about 1.7 billion in 2064, and while the current median age is only 28, the share of Indians aged 65 and above will go from 7% to 20% in the next 40 years or so. Has India been able to take advantage of its demographic dividend of a large working-age population, and is the country prepared for the upcoming transition from a young to an ageing population?In a new edition of I4I conversations, Farzana Afridi (Indian Statistical Institute, Delhi) and Sonalde Desai (University of Maryland & National Council of Applied Economic Research) discuss the challenges associated with India’s demographic dividend. They emphasise the need to tap into the full workforce, including women, as well as ensuring that workers are productive. They also analyse the issue of ageing both from the perspective of society and family. A larger population of elderly would be dependent on a shrinking base of workers, and with increasing life expectancy, the elderly would need care for longer. At the societal level, policy solutions could include raising the retirement age, and investing in social security – but these would have to be accompanied by cultural changes, such as rethinking inheritance laws to enable parents to monetise their assets and moving away from parents’ greater reliance on sons. Foraying into regional imbalances, the speakers note that future workers are going to come from states that are lagging behind in demographic transition and hence, these should be thought of as areas requiring investments in education and skills to achieve economic growth for the nation as a whole. They concede that migration is a fact, but society has not been able to adapt well to it. Policy can help facilite migrants’ integration in ‘destination’ locations through initiatives like portability of access to public services and creating more opportunities in their places of origin. They also note that women migrating for children’s education, and ‘commuter migration’ enabled by good public infrastructure, are emerging as key trends. Turning to female labour force participation, Prof Desai taps into her experience to recommend framing survey questions in a way that reduces reliance on interviewers, in order to enhance the quality of measurement. While educated women are now valued more by families, mainly from the angle of children’s human capital development, there is a need to expand this acceptance to working wives and mothers. The speakers deliberate upon measures that can increase women’s work participation – for instance, creating a critical mass of female workers in ‘non-conventional’ occupations like taxi-driving. The conversation closes with a discussion on data reliability more broadly, noting the importance of investing in robust statistical systems, while also figuring out how to work with people from whom data are collected to understand their contexts and frames of reference.
Over the last few decades, decentralisation has been rapidly spreading in developing countries across the world, with around 35 countries announcing new or deepening decentralisation reforms in recent years.In a new I4I Conversation, Lakshmi Iyer (University of Notre Dame) joins Sarmistha Pal (University of Surrey) and Jean-Paul Faguet (London School of Economics), the editors of ‘Decentralised Governance: Crafting Effective Democracies Around the World’, to discuss the current global state of decentralisation. Over the conversation, they draw on theoretical and empirical insights from different chapters of the book, each featuring diverse countries – Pakistan, China, Indonesia, Kenya, India, Ghana, Bangladesh, and Colombia.
With the onset of the Covid-19 pandemic and the associated lockdowns, schools quickly pivoted to online learning. However, there was limited information about whether children had access to learning materials, and what was actually taking place within households. In this edition of I4I Conversations, Rukmini Banerji and Wilima Wadhwa discuss the role that the Annual Status of Education Report (ASER) played in remedying this gap in the data. They discuss a few major findings from the survey on learning outcomes during the pandemic. Although the proportion of children not enrolled in schools went up, the proportion of children enrolled in government schools increased, and most of them had access to digital learning materials due to an increase in smartphone coverage. They discuss the challenges they faced while conducting ASER during the pandemic, including being limited to phone surveys and rallying volunteers amidst uncertainty. However, after the lack of data during the first year of the pandemic, the state-level ASERs carried out in three states in 2021 – Chhattisgarh, West Bengal and Uttarakhand – were critical to gaining clarity on the extent of learning losses among children. They acknowledge that while learning levels were low even pre-Covid, an unanticipated consequence of the pandemic was a heightened awareness of the need to measure learning outcomes among policymakers. They additionally highlight several other surveys that assess learning levels carried out by the government and other organisations during the last two years. While their administration may differ, multiple efforts to measure learning outcomes all indicate a trend of stagnant learning outcomes in the previous decade, which have accelerated to a decline during the school closure years. It is hoped that policymakers make serious efforts to firm up school education to meet the NIPUN Bharat and Sustainable Development Goals, ahead of 2030
India, and many developing nations in other parts of the world take solace in the U-shaped Kuznets curve: a belief in this inverse relationship between income and environmental quality results in not enough efforts being made to tackle pollution and environmental degradation in these countries. There is an urgent need for policy which can protect societies and people from the adverse effects of climate change.
In this edition of I4I Conversations, Anant Sudarshan and Michael Greenstone discuss their work as environmental economists, and the many ways in which they have been able to use research to help guide policy. This includes their work on emissions trading in Surat, the cap-and-trade market in Gujarat, and clean cookstoves in Orissa. In that context, they list some of the difficulties with environmental regulation, such as the reluctance to install emissions monitors and falsification of the readings. They also delve into the trade-off between finding energy sources that are inexpensive and environmentally friendly – for instance, biomass, although a renewable energy source, is responsible for a large share of air pollution.
They touch upon India’s ranking on the recent Yale Environmental Performance Index and go on to emphasise the role of state capacity in ensuring low pollution levels – specifically, the importance of clearly defining and implementing government intervention. They conclude with the political economy and geopolitical challenges of adapting to climate change, including barriers to migration, and the need for countries to collaborate in order to deal with climate change.
With the outset of the Covid-19 pandemic, work from home became the norm in 2020. However, even though mobility restrictions have been lifted, many workplaces all over the world continue to follow a model of remote or hybrid working. This has raised questions about worker productivity, work-life balance, and the future of commuting and cities.
In this edition of I4I Conversations, Prof. Nirvikar Singh (University of California, Santa Cruz) and Prof. Nicholas Bloom (Stanford University) talk about the future of work. They delve into Prof Bloom's seminal work on management practices and work from home prior to the pandemic. They discuss the effects of flexibility on productivity, happiness and building managerial capital. They go on to speak about trends in remote work over the last few years, and how that has differed across countries. This leads to further discussion about the impact on cities and the environment, as more people move to suburbs and commute to work. They also touch upon the differences in preferences around work from home of people in non-professional roles, women with young children, and older workers who are looking to transition out of the workforce.
The conversation centers around how, despite some potential pitfalls, work from home has proven to be beneficial for both employers and employees, and is likely here to stay. With that in mind, the speakers go over the technological and managerial advances that have been made – and can be made going forward – to accommodate remote workers. They finally highlight the implications of this major shift on countries like India and Mexico, which are likely to benefit from outsourcing, and the policy measures and changes in infrastructure that need to be made to accommodate this new future of work.
India’s relatively young population, the pace of adoption of smartphones and digital technology, and rapid urbanisation has contributed to the growth of digital labour markets. In recent years, we have seen the proliferation of gig work and labour market platforms like Uber, Urban Company, Swiggy and others. This growth has accelerated in the wake of the Covid-19 pandemic with India currently accounting for 8% of the world’s digital labour platforms.
In this edition of I4I Conversations, Prof. Farzana Afridi (Indian Statistical Institute) speaks with Dr. K Rajeswara Rao and Dr. Sakshi Khurana (NITI Aayog) to examine how job-matching technology platforms could be harnessed to increase employment opportunities, through skill-matching and technology-based job allocation.
In reference to the NITI Aayog report ‘India's Booming Gig and Platform Economy: Perspectives and Recommendations for the Future of Work’, released on 27 June 2022, they discuss how the flexibility and low entry barriers offered by the gig economy transcend the limitations of work time and workspace. This enables a range of workers – including women, young workers, and people with disabilities – with varying skill sets and vulnerabilities to harness these platforms. The speakers outline the importance of the transferability of skills, and how digital platforms in collaboration with the government can enable the creation of skill certificates for workers. Moreover, they highlight the need for small businesses and entrepreneurs to maintain linkages with bigger platforms in order to be sustainable. Additionally, this link is necessary for gig and platform workers to have access to benefits such as health insurance and minimum wages to ensure job security, well-being, and decent working conditions.
Public discourse around automation has seen some take a fairly alarmist view – with concerns around its impact on employment, wages, the labour share of national income, and inequality. Others take a more optimistic view – that short-run turbulence and long-run increases in welfare are the typical outcomes of any technological change. In this context, Dilip Mookherjee (Boston University) speaks with Pascual Restrepo (Boston University) to discuss the evidence around the developed and developing country experience with automation, and whether the optimistic or alarmist view is bearing out in reality.
Prof Restrepo outlines the definition of automation technology – differentiating it from ‘augmenting’ technologies – and contends, that like most things in economics, the answer lies somewhere in the middle of the alarmist and optimist views. They foray into discussing evidence on automation and technological change for developed countries: decline in the labour share of national income is likely driven by technology; exogeneous and endogenous factors contributing to the emphasis on automation in the 1980s; productivity gains from automation; role of human capital accumulation and stationary college completion rates in the US since the 1980s; and the role of existing and potential policy, particularly labour market regulations and wage subsidies, on the extent of automation.
They then discuss automation and its impact in context of developing countries with respect to the concerns around premature de-industrialisation and importation of inappropriate technologies; slowing down of convergence gains from globalisation; and reduced incentive for developed country multinationals to offshore in the form of direct foreign investment. Finally, they also highlight the impact of automation in the context of trade and the general equilibrium effects of automation on imports and exports of countries; how workers in developing and developed countries are differentially affected by existing automation technologies; and the labour market and political implications of automation for developing countries.
Policy responses to Covid-19 have been a mix of fiscal and monetary policy – with the latter doing the heavy-lifting in both developed and developing countries. Against this backdrop, in this edition of I4I Conversations, Viral Acharya (NYU Stern School of Business) and Amartya Lahiri (University of British Columbia) discuss the potential distortions of using ‘band-aids’ instead of structural reforms for a prolonged period, in the context of international financial architecture, particularly with reference to India.
Prof Acharya explains that as the lever of public support through central banks – by using their balance sheets during large shocks for palliative quick fixes, albeit without forward guidance in terms of an exit plan – is getting larger and larger, potential mispricing of risk, inefficiencies in capital and credit allocation, and high levels of public debt resulting in the crowding out of the private sector, loom large – particularly in emerging markets. Further, using the fiscal toolkit when multipliers are questionable and showing forbearance to the banking sector during financial crises may result in evergreening in the private sector, and zombie lending may in turn result in low growth. Acharya and Lahiri also deliberate upon the disproportionate benefit of rate cuts and the liquidity glut to the consumption of the very wealthy, calibrating capital controls with macroeconomic stability, and the importance of foreign direct investment for stable outcomes in the external sector. They then focus on the Indian context, foraying into the disconnect between burgeoning start-ups and a grim job market, factors inhibiting the growth of brick-and-mortar industries, the move towards formalisation in the post-pandemic period, education and vocational training not supporting the transition from farming to non-farming sectors, the perception of India being ‘sui generis’ and the danger of remaining in the middle pack of emerging economies, and deviating from macroeconomic and financial stability targets with ease.
Several commentators have lauded the recently presented Budget 2022-23 as a ‘growth budget’, on account of the large allocations made for capital expenditure on public infrastructure. On the other hand, concerns have been expressed about the Budget’s potential to create jobs for the masses, allay inflation worries, and strengthen social sectors such as health and education. Should we be optimistic or cautious? In this edition of I4I Conversations, Ashok Kotwal (Editor-in-Chief, Ideas for India) speaks with Pronab Sen (IGC India) to dissect the various policies and proposals in the Budget, and deliberate on the outlook for the Indian Economy. Dr Sen explains that the rhetoric around the Budget is mixing up accounting and economic classifications in the context of the announcement of 35% increase in public capex, why we cannot think of infrastructure as a homogenous activity in terms of the intensity of employment generation, how the support for MSMEs may be cherry-picking the units that have survived and the need for measures such as Mudra loans that can revive activity in the sector, the performance-linked incentive scheme mainly being for the corporate sector and any ‘trickle-down’ depending on backward linkages with the MSMEs where the bulk of jobs are actually created, the government’s protectionism stance and possible impact on foreign investment, shifting responsibilities from the Centre to the states for not just public service delivery but also financing of ‘state subjects’ such as agriculture, health and education, India’s K-shaped recovery and the corporate and informal sector relationship becoming more unbalanced, why the latest decision of the Monetary Policy Committee of the Reserve Bank of India is surprising, and the unstated roll-back of both fiscal and monetary policies.
As India is now completing 75 years of Independence, two big questions loom over the conversation around India’s economic development: How successful was the Indian economy before and during colonial rule, as compared to the postcolonial period? What is the role of history – historical events, actors, and institutions – in shaping India’s development trajectory? This is the focus of the sixth edition of I4I Conversations, with Bishnupriya Gupta and Lakshmi Iyer.
Gupta and Iyer deliberate on how applying a historical lens may change our conclusions about India’s progress – particularly how demand-side estimates of GDP (gross domestic product) per capita date the beginning of India’s economic decline to a century before British colonial rule. Gupta also discusses the misperception that Indian industrialisation was stifled during colonial rule, how we should evaluate 20th century economic progress in light of the historical evidence, and the long-run effects of historical land-tenure institutions and education policies. Gupta then highlights new areas of research in India’s economic history, including the availability of detailed migration records of indentured workers, and the historical roots of India’s low female labour force participation.
In 2019, the Ministry of Jal Shakti set up a committee of independent experts – led by Dr Mihir Shah – to draft a new National Water Policy. To examine the recommendations made by the Committee, Ashwini Kulkarni speaks with Mihir Shah, beginning with a discussion of the key issues constituting the water crisis facing India today – in terms of dichotomies such as agriculture and industry use, rural and urban issues, quality and quantity of water, and so on. Dr Shah explains how the new Policy is a shift away from a supply-centric approach involving dam construction and groundwater extraction, to the management of the demand and distribution of water. He emphasises the importance of weaving our interventions into the contours of nature, rather than having a “command and control” relationship with nature – a lesson that is especially relevant in Covid times. Within the wider context of climate change, drying rivers and falling water tables, Shah noted that the past is no longer a reliable indicator of what is to come and there is a pressing need for agility, resilience, and flexibility in water management.
Published in February 2021 by the UK government, the ‘Dasgupta Review’ calls for changes in how we think, act and measure economic success to protect and enhance our prosperity and the natural world. Against the backdrop of the Review, in the fourth edition of I4I Conversations, E. Somanathan speaks with Partha Dasgupta, tracing the origins of his interest in environmental economics – a consistent theme of his academic work that spans several fields of economics – and how his thinking on the issue has evolved over the years. They foray into economic theorising of the ecology’s imprint on collective behaviours; fusing micro and macro perspectives on the embeddedness of the economy in nature; the complexities of accounting for natural wealth in economic terms and enhancing this wealth via small institutional changes; how average yields of primary producers such as algae are much higher than of virtually any other investment; how the millions of small errors we are making are adding up to the gigantic climate threats we are facing, which have already led to the collapse of several less privileged communities; charging container ships for access to oceans and using the money to pay for “ecosystem services” such as those provided by Brazil to the world by protecting the Amazon; going beyond pollution externalities in standard neoclassical economics, the interplay between government policy and academic publications, and integrating the study of ecology into mainstream economics; the implications that the finiteness of the biosphere has for the concept of unbounded economic growth, creating incentives for people and businesses to invest in natural capital rather than chainsaws, and the taboo around discussing the adverse impacts of large populations.
How did human society evolve from being organised predominantly around large kin-based networks, to one with strong notions of individualism? To examine this question, Joseph Henrich (Harvard University) and Patrick Francois (University of British Columbia) discuss the interactions between informal norms, formal institutions, and psychology, based on examples and evidence from around the world. With the realisation in the West that kin-based societies have limited scalability, and the Church facilitating the breakdown of these units, certain psychological traits emerged and solidified – the central premise of Henrich’s book "The WEIRDest people in the world: How the West became psychologically peculiar and particularly prosperous". As these societies gained an ascendant position, the new norms and institutions proliferated and affected the rest of the world, via pathways such as Industrial Revolution and exports. Finally, they deliberate on how the possibility of substantial psychological variation across societies ties with development and behavioural economics.
With the advent of globalisation, the struggle between the ‘left’ and ‘right’ – as defined in Marxian terms – rapidly evolved from one between economic ideologies, to cultural wars. In this context, I4I Editor-in-Chief Ashok Kotwal engages in a deep-dive with Prof. Pranab Bardhan (University of California, Berkeley) on issues ranging from growing resentment towards educated elite, shifts in the form of capital and employment patterns, role of communities, to emergence of illiberal political movements, and the different types of nationalism and populism.
This is the first edition of I4I’s new feature “Conversations”, which would present in-depth discussions with experts on ‘big picture’ or futuristic topics.
In June 2021, Nobel Laureate Abhijit Banerjee (Ford Foundation International Professor of Economics, MIT) delivered the inaugural Shaibal Gupta Memorial Lecture organised by Asian Development Research Institute, broadly discussing the role of history in development economics.In June 2021, Nobel Laureate Abhijit Banerjee (Ford Foundation International Professor of Economics, MIT) delivered the inaugural Shaibal Gupta Memorial Lecture organised by Asian Development Research Institute, broadly discussing the role of history in development economics.
An important body of recent work emphasises the idea of the ‘long arm of history’, that is, history cannot be escaped totally and has durable effects. For example, countries that were British colonies several years ago, continue to have British-style legal systems. However, Prof. Banerjee contends that there is no logical reason why persistence has to mean determinism – it could just be that things are slow to change due to inertia or coordination failures. Persistence does not necessarily guarantee that there will be no change; just that change takes place in unexpected ways, for instance, long-term consequences on a country’s economy on account of sudden death of the leader.
At some level, one can never answer the question of determinism – it is a big philosophical debate with no real resolution. Yet, there is not enough evidence on determinism for us to become pessimistic. There are many examples of positive change in welfare outcomes over the past 20-50 years. Hence, in Prof. Banerjee’s view, we should continue to take practical action – with humility – and account for any specific constraints of culture, politics and institutions.
The onset of the Covid-19 pandemic brought with it significant challenges for the education sector. On the one hand, closing schools meant imposing a heavy cost on a whole generation of students, and on the other hand, keeping schools open was a health hazard. So how was the schooling experience in 2020, and are there any lessons for the future? To explore these crucial questions, I4I Editor-in-Chief Ashok Kotwal speaks with Rukmini Banerji (CEO of Pratham; India’s largest education non-profit) and Wilima Wadhwa (Director, Annual Status of Education Report (ASER) Centre). Banerji and Wadhwa discuss the mechanics of the ASER 2020 phone survey; availability of educational materials and learning activities in rural homes; how families, communities, and schools came together to keep up children’s learning; sharing resources over WhatsApp and what this implies for equity and the existing learning deficit; expected enrolment and attendance trends when schools reopen, and ‘building back better’ in terms of foundational skills to catch-up on this lost year.
कोविड-19 के प्रसार को कम करने के लिए लागू किए गए लॉकडाउन के कारण अनेक प्रवासी मजदूरों ने अपना रोज़गार गँवाया और उनमें से करीब 30 लाख से ज्यादा प्रवासी दूसरे राज्यों से बिहार लौट चुके हैं। इस विषय पर प्रोफेसर फरजाना अफ़रीदी के साथ बातचीत करते हुए श्री अरविंद कुमार चौधरी (आई.ए.एस.) ने बिहार लौटे मजदूरों के हित में सरकार द्वारा उठाए गए कदमों पर प्रकाश डाला है। जिसमे उन्होने मनरेगा, गरीब कल्याण रोज़गार अभियान, जल जीवन योजना, आदि योजनाओं के बारे में विस्तृत जानकारी दी है।
In conversation with Ashok Kotwal on the ongoing economic crisis caused by lockdown to mitigate Covid-19 spread, Pronab Sen breaks down the problem into survival of individuals and livelihoods, and the survival of enterprises and the productive capacity of the economy. He contends that if enough is not done for the latter, the former will become very difficult to manage – once the pandemic begins to recede. This post was recorded on 15 April 2020.
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There is a view that upsurge in inequality due to globalisation is leading to rising appeal of political platforms that promote inward-looking policies. In this podcast, I4I Editor Parikshit Ghosh (Associate Professor, Delhi School of Economics) speaks with Karl Ove Moene (Professor, Centre for the Study of Equality, Social Organization, and Performance, Department of Economics, University of Oslo) on the benefits of the Scandinavian model of social protection rather than protectionism, and the challenges associated with financing a welfare State.
In this podcast, I4I Editor Parikshit Ghosh (Associate Professor, Delhi School of Economics) speaks with Debraj Ray (Julius Silver Professor, Faculty of Arts and Science, and Professor of Economics, New York University) on the rise of Trump and how it relates to the upsurge of inequality in the US and the ‘American dream’ narrative; implications of the process of automation for the relative shares of capital and labour as factors of production; the idea of committing a share of gross domestic product for the provision of a universal basic income; and the challenges involved in addressing inequality of wealth.
Music credit: Opsound/ "Februum" by Alexander Boyes/ licensed under CC BY-SA 2.5
In this podcast, I4I Editor Parikshit Ghosh (Associate Professor, Delhi School of Economics) speaks with Avinash Dixit (John J. F. Sherrerd '52 University Professor of Economics Emeritus, Princeton University) on launching a manufacturing boom in India; whether democracy is a handicap for India; tackling corruption through civil society movements led by realists; addressing the backlash by those who have lost out on account of international trade; investing resources to mitigate the negative consequences of climate change; bottoms-up approach to improving the state of higher education in India; and identity-based appeal for votes.
Music credit: Opsound/ "Februum" by Alexander Boyes/ licensed under CC BY-SA 2.5