#
This episode releases on August 15, 2022. It's been 75 years and thinking about the journey
#
we've made as a country makes me both sentimental and sad. It makes me sentimental because I love
#
India. I'm so happy that we survived as a nation and that we are still, fingers crossed, this
#
delightful khichri of people and languages and foods and cultural practices. This is a unique
#
land to grow up in. It contains multitudes. At the same time, I'm sad because so much of our
#
potential has not been realized and in many ways we are still backward. We are still the worst
#
version of ourselves. If you're a regular listener of this podcast, you would have heard me speaking
#
about three problems that we have today. The first is a proximate problem, the party in power today,
#
and you can disagree with me on that. That's cool. But the other two problems are deeper problems
#
that are older than our republic. One is the fault lines within our society, which leads to so much
#
hatred, bigotry, intolerance, and is threatening to tear our country apart today. And the other
#
is the subject of this episode, the dysfunctional state. We borrowed this state from our colonial
#
masters and it was designed to rule us, not to serve us. And much that is wrong with our country
#
today has to do with the design of the state. Top down, oppressive, not doing the things that
#
it's supposed to do and doing a lot that it should not. Are we stuck in a bad equilibrium with no way
#
out? My guest today argues that we can solve this problem. First, we have to understand exactly
#
what's wrong with the Indian state and then we have to figure out what we need to do.
#
Kartik Muralidharan is the best kind of problem solver. He asks the right questions and then he
#
finds the answers. Welcome to The Scene and The Unseen, our weekly podcast on economics, politics,
#
and behavioral science. Please welcome your host, Amit Varma. Welcome to The Scene and The Unseen.
#
My guest today is Kartik Muralidharan, the superstar economist whose two episodes with me
#
on education and healthcare are master classes on the subject. In fact, he has become a bit of a
#
cult figure among regular listeners. I'll link those two episodes from the show notes. When
#
Kartik and I last recorded, we promised to follow up with an episode on federalism. Well, he's
#
finally done with a draft of a magisterial book on India's state capacity, which has chapters on
#
education and healthcare, which we've already discussed, and on federalism, which we decided
#
to discuss in this episode. But his book's introductory essay itself has some amazing
#
gyan about the nature of the state and about state capacity and we spent much of the time
#
discussing that before zooming into federalism. Still, it's a long and meaty episode and we cover
#
a lot. Kartik is that rare thinker who both grapples with big ideas and engages with the
#
real world on the ground. For that reason, his insights are deep and his solutions are practical.
#
This was one hell of a conversation, but before we get to it, let's take a quick commercial break.
#
Have you always wanted to be a writer but never quite gotten down to it? Well, I'd love to help
#
you. Since April 2020, I've taught 20 cohorts of my online course, The Art of Clear Writing. An
#
online community has now sprung up of all my past students. We have workshops, a newsletter to
#
showcase a work of students, and vibrant community interaction. In the course itself, through four
#
webinars spread over four weekends, I share all I know about the craft and practice of clear writing.
#
There are many exercises, much interaction, a lovely and lively community at the end of it.
#
The course costs rupees 10,000 plus GST or about 150 dollars and is a monthly thing. So if you're
#
interested, head on over to register at indiancut.com slash clear writing. That's indiancut.com slash
#
clear writing. Being a good writer doesn't require God-given talent, just the willingness to work
#
hard and a clear idea of what you need to do to refine your skills. I can help you. Karthik,
#
welcome to The Scene and the Unseen. It's a pleasure to be back, Amit. Yeah, I've got to
#
tell my listeners that unfortunately I have to break an older promise in the sense that I think
#
when we ended our last episode, I promised I'd start this one with Antakshari because your
#
mellifluous singing voice has been a huge hit across this country. However, you're just kind
#
of recovering from COVID. You are COVID negative now but throat problems are lingering on and all
#
of that. So I hope listeners will sort of understand and forgive you for that and one hopes that the
#
insights that you come up with therefore are enough on their own. Yeah, I didn't think the music was
#
a particular highlight but I enjoyed it. So hopefully we'll do that some other time. Yeah,
#
we'll get you to sing some other time. What I'm really excited about now is of course we are
#
talking about federalism today as we promised in our last episode. So people are just tuning in.
#
We've kind of done two episodes in the past on education and healthcare. Both of them have been
#
super hits. In fact, education was for a while it overtook Srinath Raghavan's episodes on Kashmir
#
and CAA to be number one downloaded episode on the show. But you know the Shah Rukh Khan of
#
economists was overtaken by the actual Shah Rukh Khan because my episode with Shriyana Bhattacharya
#
on the loneliness of the Indian woman is now number one. And maybe you can sometimes someday
#
you know talk about the loneliness of an Indian economist. But leaving that aside, you know I
#
don't just want to talk about federalism. I also sort of you very kindly send me the introductory
#
chapter to your book with a tantalizing table of contents and also the chapter on federalism. And
#
I have to say I don't want to flatter you but I can't wait for this book to come out number one
#
to one of the things that I felt a paucity of in recent years is books that explain fundamental
#
aspects about India to those who want to know like so many people do. You know in my view Vijay
#
Kelkar and Ajay Shah's In Service of the Republic is one such book where it lays out this beautiful
#
clear lucid way of thinking about public policy. And your book is a remarkable book but you know
#
just by looking at the contents and you know we've effectively done episodes on two of the chapters
#
and the introduction is magisterial. And you know just in terms of understanding the relationship
#
between state and society and all the ways in which we are bedevilled it is so clear sighted.
#
So I just want to get that out of the way and say that I cannot wait for this book to come out. I
#
think this will be one of the essential books for anyone interested in understanding India.
#
And on that note I think I've embarrassed you enough. So tell me about you know how was the
#
experience of sort of writing the book? Is all of it complete? How was this experience like for you?
#
What have the covid months been like and what was getting covid like? Yeah no I think you know so
#
thank you thank you so much. I think this feels like one of those one of those things that you
#
know I've been working on. I come on the episode I come on the show about once a year to give a
#
progress update. The good news is this is almost done. I think when I first when I first mentioned
#
the book I had just about started it. So I think you know the it's been a lot of fun. I mean of
#
course it's work. I mean the process of putting together stuff like this is never easy. I think
#
the challenge in writing the book and I think Pramit mentioned this nicely in his episode with
#
you in terms of you know what he aims for in a mint column right which is that it should be
#
accessible to somebody with a 10th grade education but the deepest expert in the subject should not
#
find anything wrong in it right like I mean. So he thinks so kind of combining that balance
#
whereby everything I say is kind of based to the extent possible in deep research but at the same
#
time accessible to a non-technical audience right is I think the hardest part of putting together
#
something like this but but it's been a lot of fun. It's been a lot of fun because you know the
#
the truth is that the core job of an academic economist the way the profession runs these days
#
is not to write books it is to write individual research papers and these papers take years of
#
work in depth and we'll talk if we have time about a couple of those papers today but I think you
#
know we don't typically write books right unless you're an economic historian and so the reason
#
the book has been fun is that there is so much lost I mean so much in the that we learn in the
#
field work in the process of engaging with these subjects that doesn't get captured in the individual
#
papers I mean the books have and the book has been a chance to kind of connect the dots right mean
#
across everything that I've done over the years and so you know people when you look at the stock
#
of my work will think of me first and foremost as an education economist and then the last episode
#
we're like wait you know like how come you're also talking writing about health and then when
#
you get to federalism and political economy as we'll talk about today it seems even more distant
#
from my core work but I think it's a good example of how in working on education right it's become
#
so obvious that the fundamental problems in India really have to do with state capacity and
#
governance and that these transcend all sectors right so whether it's education whether it's health
#
whether it's police whether it's courts and so so the case for writing this book was really kind of
#
you know to take both a 10 000 foot bird's eye view to kind of explain the Indian state and why
#
we are the way we are but also take a bit of a worm's eye view that reflects kind of a tangible
#
agenda of implementable ideas that reflects kind of both the time on the ground and the time
#
engaging with the policymakers with the people trying to do things so I think the so it's been
#
a lot of fun but of course you know it's me what's frustrating about it is I think the ideas have
#
been in my head for about two to three years and obviously they get no refined as you write them
#
but converting all of that into the written word that is linear and I think we talked about this
#
last time as well that everything is connected right so and that's I think the hardest part which
#
is how to hold the reader with me saying that I know you're thinking about these three things
#
right now but they're going to show up 100 pages later so I think my early drafts had too many
#
cross references right look at this look at this look at this but then that breaks the flow when
#
you're reading so it's those kind of mechanics of how do you take a complex set of system it's
#
really I think part of what I'm trying to do in the book is present systems level thinking of
#
understanding the Indian state and yeah so I think you know again I want to thank you and you know
#
and the and the platform for a very very important piece of positive feedback right because my biggest
#
fear in writing this is that is it just too complex and too kind of you know just too dense
#
with ideas right I mean for people to kind of be able to able to take in particularly if you're not
#
an academic and I think your journey with the podcast of kind of going with the same initial
#
view that people may not have the attention span to listen more than half an hour and finding that
#
you know now three four hours are pretty routine and the fact that the the education and health
#
podcasts have done well and people have been asking for transcripts kind of has helped to
#
give me the confidence that there is in fact a market for this kind of you know deep but
#
accessible writing which is which is what I'm hoping hoping the book will do. You know at one
#
level you mentioned those dual aspects of a bird's eye view and a worm's eye view and I want to ask
#
you about another sort of related sort of duality which is the duality between being one a sort of
#
a researcher who's constantly bringing out new papers and bringing out new ideas into the world
#
and two being a public intellectual you know who is broadcasting those ideas to the world and
#
enhancing understanding and in a sense that is a public service and I want to ask you about the
#
tension between these two because on the one hand as you just told me before we just started the
#
recording that you know as an academic there is pressure to have new things in every paper
#
but as a public intellectual you want to repeat the basics again and again and again
#
till people till it becomes part of the air and obviously your one can have possibly a much greater
#
impact as a public intellectual but the danger there is that you know your ideas become like air
#
like no one can you know they just become common knowledge and it doesn't seem remarkable in
#
hindsight but you move the needle a lot but at the same time by joining by being part of that
#
process of incremental progress within academia that also you know makes an you know enormous
#
difference in you know enhancing the progress of ideas and just going forward all the time step by
#
step by step being an example for other academics who then sort of continued their journey so how
#
do you think about this like my bias is obviously you know towards the public intellectual side of
#
it that you know people have like you said this hunger for knowledge this hunger for understanding
#
and feeding that is incredibly important and you never know where it's going to you know move the
#
needle somewhere and like you pointed out in our earlier episodes you know what drew you towards
#
working with policies was a tiny change 0.1 percent progress can impact millions of people
#
in a massive way right that that is the joy of engaging with this because the scale is enormous
#
so how do you deal with this conflict between new academic work and and the public intellectuals
#
work of simplifying these ideas without dumping them down i think the truth is that it really
#
isn't a conflict right i think the only conflict frankly is in the amount of time you have okay so
#
i think but substantively there is no conflict in doing these two things right i mean which is
#
you know even as an academic right the way you teach a phd student is very different from the
#
way you teach a master student is different from the way you teach an undergrad right i mean so
#
in that sense i see kind of and frankly i you know it feels presumptuous to think of myself
#
as a public intellectual maybe the closest i've gotten there is coming on your shows
#
but other than that like you know for the most part i've been living in the world of academia
#
but i don't think there is a fundamental tension there at all right i mean i think as professors
#
we are in fact you know there's something i like to tell students sometimes is that
#
going through going through the academic journey is a little bit like going through an hourglass
#
okay which is you start out as an undergrad as an eager beaver undergrad at the top of the hourglass
#
so maybe even a high school student these days right mean who's exposed to many many many many
#
things and then you get excited then you figure out things you want to do more deeply and then
#
you kind of start going into the narrow parts of the hourglass your life as a phd student is when
#
you're in that that neck of the hourglass when you're doing just one thing but doing it kind of
#
you know in great depth but then as you come out of the funnel of the phd student and become an
#
assistant professor you know associate professor full professor chaired professor then you're back
#
at kind of the of the hour the the wide side of the hourglass right i mean where you're kind of
#
then seeing connecting the small dots back to the big picture like i mean i'm making those connections
#
available so i don't think there's a conflict there at all i think the main conflict is one of
#
time and temperament right i mean uh and i think the so time yes there's no question that it takes
#
time to do the additional work i do whether it's engaging with policymakers whether it's you know
#
writing policy review papers and doing that kind of stuff and you know you could be writing two
#
more new papers in that time but i think you know we all have a pretty good sense of intuitive sense
#
of where is the highest marginal return on time invested right so uh that also has to map into
#
your own kind of intrinsic utility sorry it sounds so much like an economist what you enjoy doing
#
but also kind of sharpening the saw right the problem about kind of just becoming a public
#
intellectual who's not doing fundamental research is you very quickly lose touch with where the
#
cutting edge of the discipline is in terms of you know methods and just the conversations that
#
are happening but at the same time if you're just kind of playing in that very very narrow sphere
#
then i mean in some ways it's a it's a real shame in fact there's a nice you know given our history
#
of backstories so i have in fact while i do have a twitter account i've become much you know i've
#
really uh become much more silent these days because you know i i just don't find it that
#
productive in fact for the longest time i wasn't on twitter and because it almost felt like an
#
academic you were kind of you know defiling the ivory tower so to speak right like you know by
#
being out in uh out out in that space but i think it was 2013 i was giving a workshop on education
#
to at that time the cabinet minister minister of state shashi tarur who has also been on your show
#
and i think he was tweeting a couple of things during the show and his followers even in that
#
time over a million were asking for references asking for things right you know what where is
#
this coming from and he told me are you on twitter i said no i'm an academic i write papers i don't
#
i'm not on twitter and then he said something interesting he said listen you know you are
#
all of your work is directly or indirectly funded by the taxpayer right you mean either
#
through grants or through tax exemptions for research grants so you at least owe it to the
#
public dome you know to put it out in the public domain right you mean in a more accessible way
#
and that's something before that you know i mean that's partly what montague who also you've had
#
on your show and they've all you know been been mentors at various stages like you know but
#
but his invitation to come and spend time writing parts of the background paper to the 12th five
#
year plan was exactly the same thing right saying that it's not enough to just do the research you
#
really owe it to the broader kind of community to do your best to synthesize these things so i think
#
you know there is so i think the only tension is time there isn't a tension in terms of the substance
#
and one way to kind of manage that is even on twitter i usually just post three or four kinds
#
of things right i post new papers i post new updates i post you know any public lectures i'm
#
giving and i'll typically post some recruitments post docs you know that kind of stuff but
#
i will typically almost never get into a discussion or you know be be there for the
#
sake of kind of saying oh i haven't tweeted in two months that's completely fine if i have no new
#
paper or nothing new to say then i'm completely fine with that so you know the constraint of time
#
was a constraint i meant because that's what makes it a trade-off and a related you know digression
#
on that question on that is that you know i have noticed that you know getting into your 40s
#
especially when you pass your mid-40s in my case it sort of really for yours to it in my case it's
#
focus on mind in the sense that you realize that you know when you're young you can have all kinds
#
of diffused ambitions you think in broad abstract terms but as you get you know you reach a certain
#
point and you realize that a most of those things ain't gonna happen and b most of those it doesn't
#
matter your happiness doesn't kind of depend on that your intrinsic utility as you would describe
#
happiness doesn't necessarily depend on that so just in terms of your own trajectory you know how
#
has that changed your approach to the work in the sense that you know when you were 25 how would you
#
have kind of what is the kind of work you would have seen yourself doing at 45 and now that you've
#
actually you know you are getting to that stage of life as i as i am you know how has your thinking
#
changed is it more like what is the i'm guessing that you're at that phase where you only do the
#
kind of work which makes you happy which makes you satisfied and you know do you do it for just the
#
intrinsic importance of the work as it were or do you also think about think in terms of what can
#
maximize positive outcomes and so on and so forth what's your thinking towards this kind of work
#
like has it become easier or harder to play the long game because some might say the older you get
#
the harder it is to play the long game because there's not so much left but on the other hand
#
the way i see it is that you know you you can be equanimous about all the immediate gratifications
#
you're not going to get and therefore it's easier to play the long game because you can just enjoy
#
the process and do the things that you have to do so do you see your work a in that larger sense of
#
i'm playing the long game i want to make a difference and almost in a sense of it's my
#
dharma to do this and do you also and do you also do it because it makes you happy it puts
#
you in a good place yeah i think and absolutely i think you know the answer is both and i said
#
this i think i said this at the end of the first episode right i think that you know about why
#
being a you know being a tenured professor in a top research university truly is one of the best
#
jobs in the world right because you get to i think you know the most important i remember asking abhijit
#
banerjee a few years before he won the nobel prize right i said listen you've done all of this stuff
#
you know what is the objective function at this point right what are you maximizing so a variant
#
of the same question you asked me and he had a simple answer he said like my my goal is not to
#
be bored okay which is i just want to learn new things right so there is something about you know
#
and a good academic always has an inherent curiosity right i mean about learning new things
#
and you know that and that's the joy of the research right because you will often kind of
#
discover new things in the data new patterns in the data that will be you know some will validate
#
certain ideas you have some will raise new puzzles and and again you know i'm fundamentally an
#
empiricist and not you know and not a theoretical economist you know i'm aware of the theory read
#
the theory but as we'll see even when we talk about federalism in almost every aspect of economics
#
you can argue things theoretically on both sides okay so um so most things in the end come down to
#
what does the data say and the nice thing about being an empiricist is that you know the the data
#
always has an ability to surprise you right you you never you never stop learning okay so i think
#
that's the there is an intrinsic joy and a part that just keeps you current keeps you learning
#
keeps you you know just excited about about the academic enterprise but it is true that as you
#
get older like you know the the optimal role changes right so i feel there's a lot of these
#
arcs of careers i'm talking about particularly with academia and i do think i think last time
#
but part of my goal was to excite a bunch of young college goers to become health economists
#
and study health this time i'm hoping i'm going to do that about public finance and federalism
#
uh but you know but there's these side shows about life in academia right i mean and what this whole
#
enterprise means you know so one way to think about the arc of an academic career
#
is that your 20s are when you're getting trained and learning how to do stuff your 30s are when
#
you're established now this is true of empirical stuff i think in pure science or pure physics or
#
math you know people do their best work earlier but you know but your 30s are when you are really
#
establishing yourself you're typically starting out as an assistant professor these days you know
#
with phd's and postdocs people start out as assistant professors in the early 30s late 20s
#
so the 30s are when you're establishing yourself getting tenure and then hopefully getting promoted
#
to a full professor say by the end of your 30s early 40s and your 40s really are your peak or
#
you know maybe 35 to 55 right you know is your peak in the sense that you're established enough
#
to have access to kind of grants and students and phd students and postdocs who want to work with you
#
but you're young enough to have the energy to kind of really go after big things right i mean
#
build out major ambitious research programs and stuff like that and then you know in your 50s
#
and and the and this and this period in the 40s includes things like editing major journals
#
running major grant programs because you're also kind of shaping the field um in you know in in
#
that period and i think in the 50s a lot of people then do gravitate towards academic administration
#
right mean whether you're becoming department chairs or deans or whatever because that is it
#
is painful work but it is essential work and it is important for the person doing that job to
#
be somebody who's actually done you know the process and has lived in the shoes of what
#
younger faculty members are going through and then funnily enough in your 60s and 70s and this is
#
again why being an academic is such a great kind of privilege because you you get to stay relevant
#
and engaged even up to your 70s and it's like the best thing frankly to do in your 60s and 70s is
#
to do a lot more undergrad teaching okay and and that's because you've now come out at the end of
#
the hourglass on your side right and you're also catering to the young folks at the other side but
#
also with the width right and the breadth so at that time the the value of the perspective that
#
you acquired over the course of your life is kind of the value of that when transmitted to young
#
undergrads is just incredible right so when i think about my own time at harvard as an undergrad
#
my advisors or the people that you spend the most time with were all in the late 60s and 70s right
#
you know at least they were the ones who had the most time for me right i mean so people like jeff
#
williamson peter timmer dwight perkins you know so they used to teach this class in structural
#
transformation and the historical you know perspective the depth that they had for an
#
undergrad was amazing and they also had the time for me whereas in my phd my advisors were kind of
#
in their late 30s early 40s because that's when you were kind of at the peak of your research career
#
and those become you know the ideal so anyway so to come back and think about this in the context
#
of my own life i am in my mid-40s just turned 46 so in that sense and in a way you know this is
#
not an excuse for why the book is about six months late in fact you know my goal my goal was for the
#
book to be out around this time around the 75th year of independence and like i was joking you
#
know sometimes i feel instead of writing a book i should just do four episodes with you so i'm
#
glad we're recording and putting out this episode at least to coincide with that but the book will
#
be out in the first or second quarter next year but i think part of the reason the book has taken
#
a little longer is that it's not my main job to write the book my main job is still to do research
#
and write papers and these have also been among the most productive years research wise because
#
of the sheer number of papers and projects that are happening right so we've written this you know
#
paper we've been working on for about six years on studying the general equilibrium effects of
#
n rega which is probably india's most important welfare program in the past two decades and where
#
the research still continues to be you know inconclusive right where there are papers that
#
find x and minus x so long story short we can talk more about that but it's a paper that last summer
#
you know just to give you a life sense of a life inside an academics life is that you know we got
#
to revise and resubmit on that paper from econometrica which is one of the most prestigious
#
journals in in the profession but we spent the entire summer like basically two and a half months
#
right i mean we took 11 months doing that revision and with an 80 paid single space response to each
#
of the referees that's the amount of scrutiny that happens to publish in a top peer review journal
#
in economics right so we submit the paper we get very detailed referee reports from in this case
#
three referees and the editor sent another five page letter about all the additional things he
#
thought that we should do and then a response at a top journal requires you to hit every one of
#
those points and in many one of those things that required getting new data doing new analysis
#
you know having four additional appendices where we are writing theoretical models of rural labor
#
markets to then figure out you know and quantify the parameters of what we were finding so the point
#
is that we are still in that period where the core and most important thing in my life is doing
#
research and writing new papers right but coming back to the other part of what you said is i've
#
also been in this business for for 15 20 years now to feel that the value of a book that brings it
#
out of this kind of little hyper specialized world of nano academia and taking these ideas
#
more broadly i think is important and there i think i am you know probably just temperamentally
#
right i think well suited to do that because like i've said the motivation for the research has never
#
been just to write kind of the aer econometric paper right the motivation for the research has
#
always been are we kind of helping answer questions that will help make policy better
#
and and thereby improve lives and so there's no conflict again the only conflict in all of this
#
is time right we need and so my danny roderick has these impossible dilemmas in international
#
political economy my impossible dilemma in terms of the work is quantity quality and timeliness
#
okay so you can do two out of those three things and the one that usually suffers is timeliness
#
because sometimes you know because i'm doing a lot of stuff and you hope that the work is of a of a
#
of a very high standard and the problem sometimes in the academic enterprise is that i can block my
#
calendar to give myself time to do work but i can't guarantee that the output is going to be at my
#
that i'm going to be happy with it right i mean so and which means sometimes you just got to go you
#
can spend five hours and write something and not be happy with it and you have to go back and so yes
#
so that's kind of my long-winded way of saying like you know why is my book six or nine months
#
late relative to kind of the original plan but you know the good news is that it is mostly done you
#
ask that question i think there's 18 chapters there's a very it's expanded from 14 to 18 for
#
example the public finance chapter became so big i had to split it into two one in expenditure and
#
one in revenue but you know and then i think i had one in courts and cops which then expanded
#
into one separate one on courts and justice and and police and public safety but no so you know
#
at some level i beat myself up and saying oh yeah like if i only had been more disciplined like you
#
know i would have gotten this thing done on time but on the other hand i think hearing shreya saying
#
i think you know because she had a regular job too that took like 10 years of interviews and
#
notes to produce what has been i think a masterpiece so hopefully like you know that that extra time
#
is is fine and i shouldn't beat myself up too much given how much other stuff has been going on
#
you know one of the things i really enjoy about our conversations is i get to learn new frameworks
#
about sort of looking at the world and also your lovely metaphors like the hourglass metaphor is
#
great i think in the last episode you spoke about an aeroplane where you know the elites are in first
#
class and middle class and the poor are in you know in the elites are in first class in business
#
class and the poor are in the economy seats but it's one plane it's all going to crash and we'll
#
come back to that there's also a car from the 1950s metaphor in your book which is beautiful
#
but you know just to sort of take a mild digression which may or may not interest you
#
because i don't know if you're interested in the creator economy but that dilemma of quality
#
quantity and timeliness is really interesting because if you think of work as a series of
#
projects then i agree with you i can't possibly meet all three and sometimes
#
but the way the creator economy functions is that you take timeliness out of the equation by just
#
doing something every day so if you are a youtube creator like an ali abda or so many bloggers that
#
i follow you're bringing out videos every day or every second day and so timeliness is taken care
#
of and that quantity produces its own quality because just through constant iteration you get
#
better and better and better and it's so much better than just planning you know taking a month
#
planning a video and bringing it out and you know seeing quantity guess i quality call guess i but
#
that's just in the creator economy and in that particular concept that particular context but
#
you know if you take a sort of a more project oriented approach it would be different and it
#
would of course be different in different fields i want to sort of you know go back to you mentioned
#
peer review and what your paper is kind of going through and as someone who is inside academics i
#
you know i view academics with a lot of the field not individuals like you with a lot of suspicion
#
because there seems to me to be this giant academic circles are going on and some of our
#
best brains are being wasted there and the peer review system seems to me to be like i understand
#
the reasons for which it was set up but it seems a particular culprit because it does a couple of
#
things one is that it crowds out the conventional other unconventional rather that everybody thinks
#
in conventional ways and there is this incentive to conform so some people may not even try to
#
think outside those boxes because they'd just be rejected outright i mean we saw this for example
#
in the nutrition sciences for a bunch of decades where you know the sugar lobby funded studies
#
by academicians from harvard and elsewhere like ansel keys for example that demonized fat and
#
said sugar is completely fine and that in fact led to the obesity epidemic in america and now
#
we know the science says exactly the opposite but academia and peer review kept those great
#
ideas out and that's just one example that kind of comes to mind but i think one cost is that it
#
would keep unconventional ideas out and science needs those unconventional crazy ideas to get into
#
the discussion to be able to proceed and the other cost would be that your output would suffer
#
because if you spent an inordinate amount of time revising a paper and conforming to some expectations
#
that's there's an opportunity cost so you could have spent that time doing another paper or
#
making youtube videos for you know lay viewers to explain important concepts to them but all
#
of that doesn't happen so as an insider but you know what do you think of this academic circle
#
jerk as it were and the whole peer review system no i think you know you're touching on many many
#
and again it's good that i've heard so many past episodes you know so i'll pick up on multiple
#
threads yes i think you know you've talked about the value of saying the creative economy
#
disintermediating the gatekeepers so to speak right like you know in in many areas but i think
#
so let's let's pass this down right so i think what you said about the there's this piece about
#
the youtuber creative economy that person's economics versus say my economics right in
#
terms of how i function right so i think the when you're in the creator economy right you are just
#
looking for the one viral hit right so you don't care about your failures you are kind of working
#
a little bit like an early stage venture capitalist right i mean who's taking hundreds of bets and you
#
just want one to kind of really take off right actually no no i'll i'll sorry to interrupt you
#
i normally don't but that's not my assumption in the sense that that's not how the creator economy
#
works the creator economy is you build an organic following over time and at the same time while
#
you're doing that you up your quality so you're not looking for the viral hit you're just looking
#
to gradually grow and also i didn't my question about the peer review system was completely
#
separate you know you cannot possibly compare these two no no no i agree i agree so i'm just
#
going to connect all of these dots so i'm just going to make a very very simple point right i
#
mean which is that see i think what happens is academics is that and this is again and maybe
#
some of this is unfortunate right but there's a certain amount of risk aversion that comes in
#
because you are judged by kind of whatever you put your name on so i could write three great papers
#
but if i put my name on something shoddy then that actually has a huge reputational risk right i mean
#
and so and there is definitely a certain additional amount of risk aversion that comes with that and
#
that kind of gets you to double check triple check quadruple check some of that is you know some of
#
that is good some of that is inefficient okay but now let's come back to the broader question you
#
asked about pre about peer review i think there are some parts of peer review that are definitely
#
broken okay and other parts that i think are actually you know quite important and necessary
#
and see i think for the most part the the peer review system is is very very important right so
#
if you look at these three sets of referees so let me say two things right one is does peer review
#
create more incentives for conformity okay rather than novelty funnily enough i think that is less
#
true at the level of peer reviewing a journal article and more true at the level of peer
#
reviewing grant proposals okay and that's because the people who are giving money tend to be risk
#
averse and so because they are all bureaucrats and this is true even in foundations right so i
#
think there are people now kind of starting to work on what's called meta science right i mean
#
and looking at how the scientific process itself is funded so i think the risk aversion in peer
#
review matters more at the level of grant proposal funding and that's because the bureaucrats are
#
because it's but it's not because of the peer review it's because of the bureaucratic incentives
#
of the of the funding okay but my assessment is that when you have provocative results that
#
show up that you submit to a journal it is not going to get rejected just for being provocative
#
it'll get probed more okay so and so that has happened in fact in this g and nr egs paper that
#
i'm talking about because you know and we'll hopefully have more time to talk about it even
#
in the context of federalism right but you know i consider this perhaps the most important paper
#
i've ever written and that's partly because it overturned my own priors right so a lot of
#
economists including myself in the early 2000s were very skeptical of enrega okay and we were
#
thinking that listen this is going to be make work you're digging holes refilling them up
#
and you're just going to be pushing up you know you're pulling productive labor out of
#
productive sectors and moving them into unproductive stuff this cannot be a good thing okay now
#
but what the what our results show with this very very large scale experiment was that
#
improving enrega implementation was not only good for the poor in terms of improving kind of you
#
know the the the direct income from enrega but it also had almost a 10x increase in their private
#
incomes because their wages went up and private employment also went up okay now this runs contra
#
to economic theory you don't demand curve slope downwards right you don't get higher wages and
#
higher employment and so that required but you know so essentially this is now too much in the
#
weeds right but we have this large scale experiment that found that result and then we thought okay
#
because this is an experiment this result you know will go through in the top journals but i
#
think the pushback we were getting was precisely because the result was provocative we were just
#
being asked to go back and question get other data sets and do a bunch of things and so i think that
#
paper has improved immeasurably in that process now it's taken four years okay but that's why
#
it's a completely different part of the ecosystem the reason you have academia the reason you have
#
so you know i think there's a whole continuum of kind of knowledge to practice right in society
#
and the reason you have the academic enterprise is precisely to kind of do the long-term work that
#
will you know because if i'm going to come and say something as provocative as saying that listen
#
this is a case where you could boost wages and employment that has dramatic implications for how
#
we think about certain classes of social welfare programs and so i'm happy that we got pushed back
#
a lot and i'm happy that we were forced to go look at other data sets because i feel much more robust
#
about those results right i think so that part of peer review i think is a good thing the part of
#
peer review that i think is broken and is a little frustrating where i think we could do well to look
#
a little bit more like the creator economy is the following right is that i think there are two
#
aspects of the peer review process one is are the results correct the second is are the results
#
important okay and and my view is that most of the peer review process should focus on the first
#
question and not the second okay but unfortunately what happens is because the prestige of publishing
#
in the top journals is so high okay that by the time you're submitting a paper to the american
#
economic review or science or nature or whatever chances are that the results are going to be
#
broadly correct okay so a lot of the efficiency loss in this enterprise okay comes from because
#
of the very very non-linear returns to publishing in the top journal that people are taking crap
#
shoots so the acceptance rates in the top journals is three percent which means for every one paper
#
submitted that's 30 every hundred you know every 33 32 are getting rejected okay so and so but why
#
do people do that because it's worth that moonshot of trying to get into the very top journal and out
#
of those i would say over half of those papers are probably correct okay and therefore deserve
#
to be published in a good peer review journal but a lot of the time in the process that's wasted
#
and that's inefficient and where sometimes cliques and others can form is in people's assessment of
#
is the work important okay and so that's where a lot of the judgment calls happen and and a lot of
#
the inefficiency happens right so so and in fact there are papers you know that will get rejected
#
in top journals and then will get published perfectly fine and then over time right those
#
papers will end up being sleeper hits but one of the ways i would like to reform peer review is to
#
kind of you know see if we can create platforms and the scientists are doing this right i mean so
#
archive is an attempt to do this right whereby it's less about journals and people just post
#
the papers and you get kind of crowd source commentary on the paper right i mean so i think
#
if we can separate the correctness from the importance i think that will really really help
#
a lot right and i think and it will particularly help scholars and i know vinay in his episode
#
like you know talked a little bit about the tension of academics living in the u.s. and catering to
#
kind of a global audience versus academics in india like you know whose work is often more
#
contextually grounded and kind of you know relevant but because global academia fetishizes
#
generalizable concepts if you write if you submit a paper on india to like a top journal
#
that you will only make it to a very top journal if you can place it in a broader conceptual
#
framework and sometimes that and when i in fact i met him i met him did delhi recently we were
#
talking about you know cases of very successful academics in the u.s. right i mean but whose work
#
may not necessarily be fully contextually correct with india but that's because it's not that they
#
have not you know and to be fair to them it's not like they've tried to brush it under the carpet
#
it's more like those nuances are not relevant to a global audience and therefore gets taken out
#
anyway so i think the reason i'm getting into that little detour is because i do get frustrated
#
about aspects of academia and if we could separate this whole so if you could have papers written by
#
indian scholars about india that are posted out there where kind of you get peer review that just
#
says okay is this methodologically correct and often there will be like a lot of methodological
#
issues that need to be called out but don't take that additional kind of judgment call of is this
#
general interest right i mean so you can have peer review at the correctness level and then let the
#
marketplace kind of decide the importance right i mean so that's kind of how i would so the part
#
that's broken in peer review is the confounding of those two whereas i do think peer review for
#
correctness is actually very very important and you know what you point out about the top heavy
#
nature of the peer review system that you want to get into these top journals and it's a winner take
#
all you know one out of 33 makes it the other 32 don't and obviously the difference between the one
#
who made it and the five ten of the five or ten below him immediately that didn't make it will
#
be negligible but the difference in outcome is vast and that would lead me to thinking that it
#
is an incentive problem you know so my question therefore is is what are the rewards like what
#
are the rewards for publishing in a top journal as opposed to say just uploading your paper on your
#
blog for example you know what are the rewards and why are they that way yeah so i think the
#
problem with uploading the paper on the blog is because then you have you know people can say
#
anything okay and there's no assessment of whether something is correct or not and the
#
problem is as work gets more technical you really do need peer review right i mean you know so which
#
is why in top conferences what you will have is top conferences when a paper gets accepted you
#
will also have a discussant okay and the entire job of the discussant is to provide the public good
#
for the community of scholars of having been the person who has dived into the paper in great
#
detail and then presenting kind of a 10 minute or 15 minute discussion which is almost like a public
#
referee report of the paper okay like i mean that here is what is good here is what kind of is is
#
weak right so so and i think that's why just posting on the on the on the website doesn't
#
quite do it so now the returns to publication i think when you publish in the very very very
#
top places like you know so tenure in the top departments is all because again the reason you
#
fetishize the general interest journal is even in an economics department like mine you got people
#
and every discipline and this is even true in the sciences where you've gotten so super specialized
#
right the people don't even understand their own colleagues work okay so you know i don't understand
#
half of what my econometrics colleagues are doing right so there's theorists there's econometricians
#
there is macroeconomists there is development economists there's public finance people so even
#
in economics department while there are certain kind of common tools of how we think about the
#
world kind of evaluating the intricacies of work is often something that not everybody can do right
#
so then when it comes to decisions for tenure and promotion and stuff like that you tend to
#
rely partly on the publication process for a validation of you know is this work perceived as
#
truly general interest but again this is at ucsd for example one of the things we pride ourselves
#
on is because we're not a big private school that can throw money at everybody we want we actually
#
spend a lot of time reading papers and trying to identify so we are a bit like the oakland days
#
in academia right like you know if you remember moneyball right of identifying the underpriced
#
assets whose work is better than kind of what they're getting credit for and kind of you know
#
make those bets early and that's been a key to kind of how we have i think conditional on budget
#
we're probably the best department in the world because it's a poor public university relative to
#
but you know there's always this thing about needing to read the papers and form your own
#
judgments so to go to your question the the returns to publishing in the top places are a certain
#
amount of additional validation in the profession as this is general interest and a lot of the
#
downstream benefits of tenure and stuff and top departments flow from that now to be fair and
#
this is why i think it's not as broken as we think it is right because if you publish in a series of
#
top field journals okay you will still get tenure i mean it just won't be like in a top 10 or top
#
15 department but you will still have a respectable academic career be able to do research be able to
#
you know be a very productive contributing member of the research community but yes because a lot
#
of academia is status obsessed and you know and i say this you know i took an 80 to 90 percent
#
cut in lifetime income from my going from my corporate consulting job to academia right but
#
it's not like you know in in the private sector if you look at say investment bankers right beyond
#
the point the bonuses are not about what they do with the money it's just a measure of self-validation
#
right because it's a metric on which you validate yourself and therefore you feel good about yourself
#
even if you have no idea what you're going to do with the money right and so and academics in some
#
ways right i mean you've just replaced that that currency with kind of a currency of prestige right
#
i mean so you're still kind of playing that same game but in in a different sphere and which is
#
quite suboptimal right and i think which is why in a way what i'm enjoying about writing the book
#
and all of this kind of stuff is just i mean and overall in my career i feel incredibly fortunate
#
to have kind of you know found mentors found colleagues and people who've kind of
#
valued the long-term nature of what i do and given me that kind of you know long-term runway
#
and so i feel it's all kind of come together quite nicely and i have no regrets about anything and so
#
this is just a way of opening up the black box of the academic enterprise a little bit to you
#
and it's interesting that you talked about frameworks i think one thing i noticed in later
#
episodes is you talk about let me double click on that and i that may have been something i had
#
mentioned about you know in in a conversation with preparing candidates for their job market
#
interviews saying that have a front page and when your listener double clicks you need to go like
#
five pages in so yes maybe these frameworks you know are translating subliminally yeah yeah yeah
#
who knows i mean floating around in sort of interesting ways so we should talk about the
#
we really should talk about the book now and i'll get to that but before that something struck me
#
from what you said about your paper and of course we'll talk about your paper at the end because
#
when you say something like it's the most important paper i've done hello you know i want to talk
#
about it for five hours but after we sort of do the groundwork and talk about federalism that's
#
perhaps the best time to kind of talk about it but one of the things that you said when you spoke
#
about the paper is how it made you re-examine your priors and that brought to mind something
#
that you said in the opening chapter of your book somewhere near the very beginning where
#
you speak about how you were sort of both a scientist and an engineer when you went into
#
this book a scientist in the sense that you're understanding theory formulating theories figuring
#
out first principles of how things work and an engineer in the sense that you're actually
#
growing out there in the ground examining the machine trying to build the machine trying to
#
tinker with it which is such a beautiful combination and obviously you know the engineering you would
#
often update the priors of the scientist trio which is how it goes and which is sort of the
#
healthy interaction now that's something i want to ask about because what happens is that when
#
you put your scientist hat on the theories that we use to look at the world to explain the world to
#
ourselves and to others we can sometimes get attached to them and you know and that might
#
affect how we do our empirical work no matter how much we tell ourselves that hey i'm being objective
#
and all somewhere your reptile brain is saying don't mess with me this is who i am you know these
#
are my sort of priors as it were and in your work you know the only ideology i find in your work and
#
i mean this is a compliment is the ideology of how the hell do i make things work right figure out
#
what's wrong figure out ways to make them work but how do you deal with this sort of tension
#
between a scientist and an engineer within yourself and do you feel that this actually
#
bedevils the field because most people would fall on one side or the other you know they'd
#
either be the theoretician who would not be able to you know move away from whatever their priors
#
are for example and then there would be the empiricists who might lack the big picture who
#
might look at something not working figure out a way to you know fix it at that particular granular
#
level at which they see it but not be able to shift from the worm's eye view to the bird's eye view
#
so you know what's your sense of that process within yourself do you think you went wrong in
#
the past in one extreme or the other you know how have you reconciled both of these yes i think i
#
mean so to be honest the tension there is i think less about scientists versus engineer and i think
#
it's there in it's there within both frames right because i think the issue you raise is more about
#
you go in with priors you go in with beliefs and then how do you deal when the data kind of you
#
know is not is not supporting that and so i think going back to you know my own ideology i would say
#
you know the ideology really is that of an empiricist right i mean which is kind of really
#
let the data you know so and like i said having an open mind i have an open mind but having an
#
open mind is not the same as having an empty mind right i mean and so you know so you do want to go in
#
and i think somebody i think somebody at stanford right famously said that you know really the way
#
you want to approach the world is strong beliefs weakly held right i mean so you know you go in
#
with a certain set of frameworks but you're not so wedded to them that you don't change your mind
#
when the facts kind of suggest otherwise right and so but i think that's the the that's the right
#
approach to any kind of enterprise particularly academia and that is true whether you're a
#
scientist or whether you're an engineer right i think the scientist engineer dichotomy i meant
#
was slightly different in the sense that the science it's not about theory and empirics right
#
because even within science or theory and empirics and even within engineering you have theory and
#
empirics so the distinction is not that the distinction is that the scientist is focused
#
on understanding the world not changing it right i mean whereas the engineer is focused on how do
#
i take these principles that i'm learning from the science and kind of build a better mousetrap right
#
so it's that it's not the theory empirics as much as kind of the learning versus doing kind of you
#
know that's the dichotomy which i think is more relevant and and yeah and i think you know that
#
that framework actually comes from you know i think last time i had this mancu quote on profoundly
#
and naively confused and this actually also comes from a greg mancu piece and i think it's a jp
#
piece in 2006 called macroeconomist a scientist and engineer and so yeah like you know i think
#
that's and i and i cite that in the footnote that's kind of where the terminology comes from
#
but yeah in a way what i'm trying to do with the book is because you know again so my assessment of
#
books and governance and and and stuff in india and again maybe this is i'm this is a little too
#
self-congratulatory or at least you know you need a little delusion as to say what am i adding to
#
this marketplace in terms of why am i taking this effort to write the book so my sense of what i'm
#
hopefully trying to do here is there are excellent descriptive accounts of kind of the failures of
#
the indian state right so for example i love shankar aya's book of the gated republic if you
#
haven't haven't seen that so yeah it's this wonderful book that just says how the collapse
#
of kind of public service delivery is kind of caused mostly leads to seek private solutions
#
and how that's kind of a bit of a vicious cycle the journalist raj shekhar has a nice recent book
#
called despite the state where he's kind of again having a very nice descriptive account of the
#
dysfunction of the state right on the ground right so so the journalistic accounts are excellent in
#
kind of providing a thick description of what's going on but i mean they themselves will admit
#
that they don't necessarily know what the solutions are right i mean as much as just kind of bringing
#
to light what the nature of the problem is right then i think you've got very good thoughtful books
#
by retired bureaucrats people who've been in the system you know and who kind of will will both kind
#
of write about their personal experiences right and certain you know reform ideas that's coming
#
experientially but the the limitation there is it's typically not grounded in research right it's
#
very very much kind of experiential which is very valuable right it's a part of the conversation but
#
it's one part of that of that so to speak and then you might have kind of books by academics
#
that are a little bit more conceptual but are not kind of as grounded in terms of how difficult it
#
is that you know what are the political economy constraints what is kind of the life of a frontline
#
bureaucrat like when you're trying to do something and so what i'm hoping to do here is kind of thread
#
those needles by kind of having a book on state capacity and the one thing in fact that is still
#
to be determined is kind of the title of the book itself i can tell you like you know what the book
#
is but i'm i've still not landed on a title that i'm fully happy with right because then we can
#
come back and talk about that as we talk about the outline of the book but what i'm hoping to do here
#
is have an analytical narrative of the indian state that both informs in terms of describing
#
key facts but also presents frameworks to make sense of why we are the way we are and then once
#
we understand that why and then you say okay why are we ready to make the change then you get into
#
the granularity of now what should you actually do that's kind of based in theory and practice
#
anyway so that's kind of my hope of what i'm doing but the challenge is it has become i think of five
#
to maybe even 600 page book right so it is it is you know and again i'm yeah i'm trying to not beat
#
myself up on the delays like a colleague of mine at chicago just wrote this very nice book on conflict
#
called why we fight and i think you know it took him about three years and that book is about 300
#
pages so you know the fact that at three years i'm close to done with a 500 plus page book means i
#
feel good but the book is mainly done it should be out in the q1 q2 2023 but but the draft is
#
essentially done yeah i can't wait to read it and one small request i will make and i'm sure all my
#
listeners will also share this is please do not cut any words just because the publisher asks you
#
to if you feel something needs to be cut and you need to make it more concise go ahead as long as
#
it's coming from you but please you know if if a publisher says no please don't do that like
#
one of the one of my great sort of one of the great tragedies of literature is a wonderful book
#
by robert caro called the power broker which is it's a masterpiece right it's it's what 900 000
#
words but the tragedy is that it was more than a million words and a hundred thousand word section
#
that got cut out of the book was on jane jacobs who is you know who is one of my heroes and who
#
kind of fought with robert moses who was the subject of his great book and to me that is such
#
a tragedy and i keep thinking that we are now in the age of the internet everything is digital
#
do a freaking data dump please put those 100 000 words back on man it's such it's such a treasure
#
and they don't do that so anyway so that's a digression and a pet peeve that in this day and
#
age your book which will be so invaluable as a repository of wisdom please don't cut any words
#
from it but you know a final sort of broader question about the book before we you know dive
#
into the first chapter which is that why the subject of the indian state as a whole like what
#
you did what you've done with this book is you've taken on this very ambitious remit that of course
#
we have this functional state but let's look deeper and look at all it's a separate constituent
#
you know fault lines and dig deep into that and it could have been so tempting for you i guess
#
to write the definitive book on education which you know so well or health care which you know
#
so well or take any of these areas the danger in doing a vast book like that is you might feel
#
that inevitably there will be some subjects you know an incredible amount on uh you know having
#
done both the science and the engineering as it were but other subjects perhaps not so much so
#
what was that process in which that book took shape in your head give me a little insight into
#
that i think you know the see over the years obviously so my work in education itself started
#
not in education but started as part of this iconic world development report in 2003 called
#
making public services work for the poor okay so the context of my first studies on all india
#
studies on teacher absenteeism and doctor absenteeism in the public sector was very much
#
motivated by this question of making services work right i mean so and so while i went deeper
#
into education and like i mentioned last time jeshnu and jeff and others went into health i
#
came back to health and then i started working on design and delivery of welfare programs
#
you know the the threads were just so obvious right i mean that you know so one way to say this
#
is that and i'll come back when i talk about seizures at the end right is if i was a trade
#
economist okay i could have a lot of impact by just changing certain policy frameworks with regard
#
to how we think about openness of the economy right and then once you do that at the policy level
#
the change pretty much happens because you're changing a tariff you're changing enforcement
#
and then the private market will respond okay but if you're talking about reforming
#
really complex subjects like education the issue there is not just changing a policy framework or
#
passing a law or even increasing the budget right the issues there really have to do with
#
frontline state capacity and how does this beast that's the state actually deliver on these core
#
services and given the time i've spent on the ground across sectors it is just so obvious that
#
the issues are the same across that intellectually i was almost more excited about writing a book on
#
the state than about education and that's because an education book would be you know it would have
#
a lot in it right but the core challenge like i said i mean you know 2012 the 12th five-year
#
plan already had the language about you know needing to prioritize basic foundational literacy
#
numeracy skills but seven years later we still hadn't made any headway and then new education
#
policy you know it says all the right things and we're doing things but you know when i look at
#
when i look at what's happening on the ground and we can talk about education a lot of good work is
#
happening but it is still very much supply side in the sense that here is a program here is a policy
#
here is some content and we're going to push this down and hope that outcomes are going to happen
#
okay whereas the the i'm not in any way you know assured that those outcomes are going to happen
#
without putting in some of the governance reforms right mean which i'm talking about in the books
#
anyway so i think i don't think again there was a tension there at all that so it's true that i
#
started writing when i started writing there was a narrower focus perhaps on a few sectors and
#
service delivery but because i've been teaching a course in the indian economy for the past six
#
years and there's an interesting actually intellectual aside over here right which is
#
for about eight years 2008 2016 i used to teach a development economics class right and then 2016
#
i said okay let me go create a new class in the indian economy and i thought the demand would be
#
much lower my mother was very surprised that california may why are you teaching an indian
#
economy class but the class was not only as popular but my kind of student evaluations in
#
the indian economy class were even higher okay that in the development economy class even though
#
only 20 percent of the students had any connection to india and part of the reason was that when i
#
when you teach development economics you end up taking some examples from latin america some from
#
africa some from south asia some from southeast asia and just illustrating a bunch of concepts
#
what is here i was teaching it not as kind of here's a bunch of facts on india i was teaching
#
it as an applied development economics class taught through the lens of the indian experience
#
and so then what happens is you have a certain amount of institutional cultural historical
#
continuity within which to locate all of this stuff right so i think in teaching that class
#
i had also started seeing patterns across everything about you know the indian state
#
and so often many books by academics kind of are a product of their teaching right because it's when
#
you teach that you kind of put together a bunch of thoughts and frameworks so there's been no
#
tension that way again you know i think the the tension i think the main tension has just been
#
the fact that everything is interconnected and so there was a moment when people were reading the
#
chapters you know i have a small circle of kind of colleagues and others like you know who are
#
reading the chapters and giving me feedback and you know some people have said why don't you
#
consider splitting it into two volumes because there is just so much content in each like each
#
of these 30 page chapters could be a book right i mean we've done episodes just on each chapter
#
but breaking it into two i think would not work because the the strength of this guy is again the
#
interconnections right so if you think about in a network the number of nodes the number of pairwise
#
connections is increasing quadratically right as the number of things so cutting half the book
#
would actually cut 75 percent of the value because you would not make the linkages across two volumes
#
right so anyway so i am doing what you've said it is you know channeling seen in the unseen kind
#
of long episodes right like you know and it'll hopefully hopefully hopefully be worth it
#
it yeah so glad to hear that and it's interesting that you know even you're
#
kind of getting into the field and deciding to write this book has an hourglass structure
#
where you write with a broad article about services and you go into the you know the
#
stem of the hourglass and you into education and health care and then you come out and there's this
#
kind of grand book and i completely agree i mean i i think you know one should think of a book and
#
perhaps even a big podcast episode or a series or whatever as an insight machine and in this
#
particular case i wouldn't want a machine broken into three parts and where i have to do the job of
#
you know bringing them together myself you know i mean it's a very bad metaphor i'm not as good
#
as you but in the sense of you know you know i think having one book like that nothing edited
#
everything as you mean it to be is really a public service and again i can't wait let's now you know
#
what i sort of really enjoyed about the book and enjoyed about your wonderful first chapter which i
#
think is not just two chapters right i haven't sent you the book because i knew if i sent you
#
everything we will be talking about everything i sent you the intro yeah yeah no the intro is
#
fantastic and i will eventually read everything and hopefully we will do many more episodes
#
together some in person but what i kind of loved about it is that the way you know the opening
#
chapter sort of you unpeel the layers of this onion of the indian state like first we talk about
#
what is it good at what what is it bad at what are the problem areas you know you get a great
#
metaphor which we'll go back into but you talk about the what the why the how you know what can
#
we do all of that which is great let's start by talking about what the indian state is good at
#
and what it is not good at and you briefly mention you you mention at great length i am briefly sort
#
of restating that you say that the indian state is great at mission mode but terrible at when it
#
comes to essential services so unpack that for us yeah and you know i think again as the timing of
#
this is wonderful as we look at 75 years of independence and just take stock of you know
#
where we are as a country you know what have we done well where can we do better and i think even
#
before i get into that specific question in the indian state it is worth kind of and this is not
#
just a homily right i mean that i'm doing the first two paragraphs kind of talking about the
#
positives you know it is so easy to kind of get pessimistic and beat down about all of the
#
challenges we face right but you know i think in any sense hence a historical perspective india
#
is a spectacular success is a spectacular success right so the political project that's modern india
#
and we'll come back to this when we talk about federalism right mean and you know multiple
#
people talk about how when the british left the the the betting was that india is not going to
#
survive you know as as a unified country so the political project of modern india has been an
#
astounding success right so there's obviously watts it's incomplete we've got you know your
#
wonderful episode with joey joseph and the security state like you know so there's many many many
#
areas right like you know where we have a long way to go right but given where we started i think so
#
my assessment of india is if we were to grade ourselves we would be a very solid b plus okay
#
a very solid b plus and in some areas even an a minus okay like you know but we're in the b plus
#
a minus range and in fact in chapter 10 when i talk about accelerating india's development one
#
of the really important things i do there is to say let's look at every development outcome in
#
both across countries and across states and kind of just plot this with gdp per capita right and
#
how are you doing relative to what you would expect at your gdp per capita and india does
#
exactly as predicted okay and and in some cases slightly better okay so i think the the important
#
point to keep in mind is the the political project that india has been an astounding success
#
and similarly the economy right i mean we have been the fastest growing large democracy in the
#
world for a very very long time right so there are a few countries that have grown faster and
#
we can talk about india and china and stuff like that later but you know the only democracy that's
#
grown faster than india is botswana that has a population that's one five hundredth that of
#
india okay like you know or costa rica which is you know smaller than some average indian city right
#
so the the scale of the economic growth that's been delivered at the scale poverty reduction
#
from 70 percent at independence to 20 percent like you know in 2011 you know these are these are
#
astounding achievements okay and we should be really really proud of where we are as a country
#
but again i wouldn't be writing this book if it was just about clapping and praising ourselves
#
you know the the overall story is if i was a professor grading india would say can do better
#
so you know and hence hence the b plus so and then coming to the indian state itself right the
#
indian state is again in many ways i mean it is amazing what it does at the level of resourcing
#
it has right it runs the world's largest elections you know if you look at kind of i mean us elections
#
are frankly like i mean it's an embarrassment right i mean compared to you know how well indian
#
elections are run india does disaster relief incredibly well so when when when katrina
#
happened and folks from the us i think came to india to see you know there were some discussions
#
about sharing best practices i think the indian disaster relief operations are so good that you
#
know what took the us guys close to 48 to 72 hours to do in india we managed to put in place
#
in four hours okay and that's because you know whether it's earthquakes whether it's tsunamis
#
whether it's other natural disasters right i mean the indian system is just really really good at
#
kind of you know cracking those things you know we do the kummela which is the world's largest kind
#
of collection of human beings in one place right i mean i manage all of that we do the world's
#
largest vaccination campaigns right so the so the indian state is remarkably impressive in some ways
#
right but at the same time you know we're obviously not delivering on core core core services right so
#
where there's education where and again the the scale of these challenges is just monumental
#
right so you know we have the world's largest number of children at age 10 who can't read we
#
have the world's largest number of malnourished children so you know in education you've spent
#
kind of hundreds of thousands of crores and still have 50 percent of your rural population not even
#
able to read at the end of fifth class of education and that's kind of both a moral
#
and an economic tragedy health you've got like i said the largest number of malnourished children
#
you've got 70 percent of kind of health care is fee charging private and 70 percent of them are
#
quacks okay as we've talked about so about 50 percent of health care in this country is delivered
#
by completely unqualified quacks you've got 13 of the 15 most polluted cities in the world right
#
the police and public safety is kind of again you know it's it's it's again a mixed bag in the sense
#
that you know core law and order has been maintained right so we have not had a general
#
breakdown in law and order right means again the glass is always half full right mean and then
#
you know and even in nutrition and and think right we have seen significant reductions in infant
#
mortality significant reductions in maternal mortality significant improvements in stunting
#
it's just that we've not done it as fast as we could right and hence they can do better
#
okay so and i'll come back to what the core of that is okay and then you know you talk about
#
police right i think less than you know in many cases the police can't even reach the crime scene
#
let alone solve it right so again hindi movies are ahead of you know they capture reality well
#
there's a reason why the police always shows up in the last scene right like you know because
#
that is reality okay and i think estimates are that less than only about 10 percent of crimes
#
actually get reported right means so so again and one metric of kind of policing is that does the
#
average citizen feel more reassured or feel more nervous when you see a policeman okay like i mean
#
and we have data to show that you're actually more scared of seeing a policeman than feeling
#
the stick which again suggests going back to joey's you know lovely book and episode is that we
#
haven't made that transition from a security state that's trying to rule the people to kind
#
of a modern democratic state that's designed to serve people right i mean so that's in quotes
#
you know we all know about the backlogs we all know about you know 30 million plus cases a million
#
cases getting added every year but you know again and i'll come back to why i'm picking these
#
sectors right in terms of instrumental and and and intrinsic importance but i think one fact that
#
people don't fully appreciate is almost two-thirds of people in prison in india are under trial okay
#
so these are not convicted folks but are being held there because of this slowness of the judicial
#
system right so it gives you again a sense of the magnitude of the problem we have okay then you
#
know there's similar challenges with regard to the the design and delivery of welfare programs with
#
jobs so you know the core challenge of the indian state therefore there are so how do you make sense
#
of this so davish kapoor has a nice piece on in the journal of economic perspectives
#
um on why does the indian state both succeed and fail at the same time right i mean and you know
#
so he's got a bunch of arguments and you know the core of my argument is very very very simple right
#
is that we have dramatically under invested in the capacity of the indian state to meet the
#
expectations of its people okay and that's kind of what and i'll tell you and this is true at every
#
level right it's true the level of data and systems it's true the level of people public
#
sector personnel it's true how we spend our money but the core challenge when we make sense of you
#
know where india is and i talked a little bit about this in the health episode but this is what
#
chapter 2 is about is that what democracy before development has meant is that we are it's a
#
wonderful moral achievement right because it's given people a voice in the state well before
#
say the u.s or uk or other countries that we call democracies i mean these were all really kind of
#
you know almost fake partial democracies right that had votes for 20 of the population so indian
#
democracy is the signature achievement right that we should all be proud of but the it has created
#
two fundamental tensions right so the first is a public finance challenge which is that because
#
the demand for welfare and the voter demand and political supply of welfare has happened at a much
#
lower level of per capita income that has meant that you haven't had the resources to invest in
#
the core capacity of the state itself okay so and and this is not you know it's not a question of
#
good or bad it is a question of trade-offs right i mean that there is there is a fixed pie okay and
#
as a country we have to make a choice about how are we investing our resources and ideally and
#
i talk a lot about this in the social protection chapter is you want to invest in ways that promote
#
both equity and efficiency okay so the problem is not welfare spending the problem is that we
#
are doing welfare spending on such a weak administrative structure that the quality of
#
that spending is so poor okay that the translation of the spending and outcomes is really weak okay
#
so and i mean there's a reason i'm writing this entire book but the core point therefore is the
#
indian state can succeed in mission mode because all of its resources are allocated to one problem
#
in a time-bound way and then you can get it done because you know you have the resources you get
#
it done and you're focused on that outcome but when it comes to the day-to-day functioning of
#
the state it is just fundamentally under-resourced relative to the expectations on the state now
#
it's not just a question of saying let's hire more people let's increase the budgets for health and
#
education it's because the efficiency of that is also really really poor okay so and i think so one
#
way of characterizing you know the big picture argument of the book is that see in study after
#
study after study and this is where when i talk about tying the threads across multiple rcts
#
right so whether it's education whether it's health whether it's now you know there's a
#
postdoc working with me who has this lovely paper on quotes is that you be estimate that the returns
#
to investing in governance and state capacity the public returns are often 10 to 20 times higher
#
then spending more on the program itself correct so most of our policy discourse happens at the
#
level of budget allocation which sector should get more which sector should get less but we are not
#
spending any time thinking about how does that spending translate into outcomes correct so if
#
what you care about as a policy maker is how do i deliver outcomes for citizens you can do that
#
two ways right you can say i can spend more money or you can say i can improve the effectiveness of
#
the delivery system and the capacity to do that and what study after study is showing is that
#
the returns to kind of investing in that capacity is going to be 10 times higher right so and in a
#
way the core intellectual argument i'm making for the country right is to say that so here's a
#
different way of saying this right is that we care about development we care about health we care
#
about education we care about safety and if you look at any like i said cross country across state
#
relationship there's always a positive relationship between income and human development okay and so
#
the way in that correlation what has happened is you get the the two the great debate in development
#
has kind of been you know the bhagwati sen debate right so you got the jagdish bhagwati arvind
#
panagari a view that says listen in the long term growth is the most important thing right means so
#
you get two percent higher growth rates for 20 years and you will automatically do better on a
#
whole range of these development outcomes and the contrast with kind of the amartya sen genre's view
#
is that you know you don't have to get wait to get rich okay before you can deliver better human
#
development outcomes okay so and and you know and they focus on that right and so now at some level
#
both arguments are true because in the long term better human development helps growth and better
#
growth helps human development okay so in practice what this debate has translated to is at the time
#
of budget allocation do you allocate more money for say roads and railways and physical infrastructure
#
that may promote growth or do you allocate more for the social sector and traditionally what has
#
happened is that center left governments have tended to do more on the social sector center right
#
governments have tended to do more on capex okay but but the truth in a country like india is that
#
that swing is not wide okay it's a relatively narrow swing here and there right so i think my
#
biggest intellectual point of departure in this book is to say that that great bhagwati sen debate
#
made sense in the 70s and 80s but it may be distracting us from the fact that the regardless
#
of what you spend on you're spending so badly right i mean so your capex is incredibly inefficient
#
your social sector spending is also incredibly inefficient and so if you focus instead on kind
#
of improving the quality of the pipes and service delivery and state capacity that you can do more
#
of everything okay so that way there is no conflict because you're so far inside this
#
production possibilities curve that when you add the ppf then there's a trade-off right but when
#
you're so far inside you can do more of everything and therefore and which is kind of you know one
#
of the other things i talk about in the book is to hopefully kind of find an ideological middle
#
ground that can unify both the left and the right right i mean around this kind of what we're trying
#
to do so i think yogendra yadav has this very nice quote about india where he says you know that
#
the left does not have a viable economics and the right does not have a viable politics okay which
#
is because the left would like to redistribute more but we're a poor country and the government
#
doesn't have the money to redistribute as much as the left would like the right would like to kind
#
of do more capex and growth but that doesn't work with the democratic constraint right that politically
#
you need to do welfare right i mean and so that's the fundamental ideological loggerhead we're caught
#
at and part of what i'm trying to do is not just kind of be technocratic about what we can do but
#
also kind of you know build a broader set of inclusion and kind of identify an agenda that
#
we can all agree on right i mean so that we kind of move away from the zero-sum nature of our public
#
discourse to kind of saying what are the investments that can allow all of us to do better as a country
#
so that's broadly why i'm writing the book and then most of it is then about the how
#
that's wonderful and and you know what i particularly like is the core point of what
#
you just said and correct me if i you know in my effort to be concise i don't state it so well
#
but is that you know the argument about the trade-offs between growth and redistribution
#
are moot because at the bottom of it lies the problem of state capacity that the pipelines
#
aren't good and what you are saying is that listen let's fix the state if we fix the state
#
we can do growth we can do redistribution as well we can satisfy all sides of the sort of so
#
really fixing the state is not something that anyone of any ideology should have any problem
#
with and aside as a lament that you know when when you speak of mission mode versus essential
#
services one that is so so true but two what it also strikes me is that the the title of the show
#
is especially sort of valid here the scene and the unseen because it's really a distinction
#
between seen and unseen missions that covet 19 comes or a hurricane strikes that's a scene
#
mission we can see the damage but you know there is an unseen mission an unseen disaster
#
which is a failure of the indian state throughout all this time like in your book you point out
#
among many other incredible statistics that 30 percent of indian children today are malnourished
#
30 percent you know and to me 75 years after we've become independent and all that is
#
unconscionable that is a massive failure in fact even earlier what you said about
#
you know where you know when you compare our metrics whatever they are to countries of a
#
similar gdp per capita we are doing as well or better but my fundamental point there is that our
#
gdp per capita should have risen much faster and what what we've really had is a long slow period
#
until maybe you know the middle of the 80s and the 90s of course what liberalization did
#
and then you have that shooting up and hundreds of millions coming out of poverty you know and
#
and you know which was then the opportunity cost of all the bad policies of the past
#
hundreds of millions of people remained in poverty and therefore that is something i'd
#
classify as a humanitarian disaster and you know and to be fair again to the founding fathers
#
and everybody i mean i really think india's you know the big lost decade of 15 years was really
#
those indira gandhi years right like you know exactly it was really 65 to 80 right i mean that
#
was the truly lost decade i think most of the decisions that were taken post independence i
#
think were completely in line with global thinking at that time so you can't even fault anybody for
#
those decisions right i mean and if anything they were vigorously debated vigorously talked about
#
where we really missed the boat was though you know was those 15 years right i mean and then i think
#
i think you've had puja mehra also on the show right i mean and then you know we've had the
#
last decade and then you've had the conversations recently with montaigne with ajay and i think the
#
important thing there is to just repeat and reinforce that we can't take growth for granted
#
right i mean it takes kind of both seeding the world of ideas and seeding the world of policy
#
with kind of the repeating certain basic fundamentals right about how these things matter
#
but again you know i think i'm not the the the whole goal of the book i mean in some ways is to
#
kind of be cautiously optimistic right i mean by kind of saying that it's very very easy to get down
#
on kind of the scale of the problems right so and that's why i end with that david landis quote
#
but yes i think you know the point is well taken that both growth matters but you by improving the
#
functioning of the indian state at any given level of gdp per capita you can deliver much much better
#
outcomes right i mean and so that's why there's no conflict if you can actually improve the
#
functioning of the state yeah and i completely agree agree with you about how our founders pretty
#
much had no choice in the sense that knowing what they did then and they hadn't of course read your
#
book if nehru and ambedkar read your book it could have been different but knowing what they knew
#
then you know they made a good faith effort to do the best that they could for the country
#
and that is of course not true of indira gandhi and her that would be incredible hubris to think
#
that you know they should read my book in fact my sophomore paper in college when i was taking a
#
class in indian economy was actually an intellectual history of the policy choices that was made at
#
that time and you know so this is stuff i actually studied as a sophomore in college and no it was
#
actually really incredible not just in terms of the choices that were made but more importantly
#
the amount of debate and discussion there was it wasn't nearly like i mean as monolithic as like
#
you know as it may seem there was in fact a lot of healthy discussion about a lot of these things
#
so yeah let's sort of but before we move on you know i think of the state through a number of
#
frameworks which you would know because you seem to have heard all my episodes i feel like you're
#
yeah you're like a creepy stalker who's you know seen all the pictures on my phone and you know i
#
have nowhere to hide right now that's how i feel but you know and so one of the frameworks i look
#
at the state is of course francis fukuyama's you know framework of scope versus strength and
#
and you know a way to sum up india there is that we do too many things badly instead of doing a
#
few things really well and obviously being classical liberal as i am i would want the state to just
#
focus on a few things and do them really really well instead we focus on many things and do them
#
really badly and perhaps your point is that there isn't so much of a dichotomy if you just improve
#
state capacity in all the various ways that you outline in this book that we could do those few
#
things well and then we could do a few other things as well at least it wouldn't be a disaster and
#
you know money down the drain with all the sort of implications of that but i want to now sort of
#
talk about your wonderful metaphor of what kind of car you know we are in so tell me a little bit
#
about that yeah and you know i think so maybe given that you know you are talking about the
#
intro chapter having read it but you can't post it right i mean maybe what i will do is take maybe
#
10 minutes to just lay out the broader arc of the book and then you know and put that metaphor you
#
know put that metaphor in there and yeah this is also partly reassuring your reader your listeners
#
are holding me accountable over the course of this time that the book is actually happening it's there
#
the ideas are there it's not just like one of these it's like you know not one of these things
#
you will get it one day but i think the metaphor see the metaphor i use is that just like the
#
ambassador car right was a metaphor for pre-liberalization india right i mean you
#
could think about a similar metaphor for the indian state right that the indian state itself
#
is like a 1950s car okay because the 50s is when we made the last set of institutional investments
#
in what the state was going to be right that was part of what the founders did now over the years
#
what has happened is you have added more and more and more expectations onto the state and onto the
#
car without commensurately investing in the capacity of the car to carry that load okay so
#
what politicians are doing is competing in which direction to steer the car okay like i mean but
#
the car itself is barely moving okay so hence you know land flailing state kind of analogy also
#
you know partly comes from there but the other reason the car analogy works so well is that
#
today when you want to move the car in a certain way you still put some fuel right so additional
#
budgets will make the car move a little bit but the translation of the budget into distance travel
#
is very poor because the car is a 1950s car right i mean and then you know and so and so what does
#
a politician who wants to deliver in certain areas do you increase the budget and you put the you know
#
you put a lot of pressure on those officers in that department to deliver saying ye karna hai
#
and that's like pressing the accelerator in a 1950s car right so it will sputter sputter and
#
move along a little bit right like i mean but the what is needed and again to be fair to politicians
#
right i mean it's one set of skills to win an election it's another set of skills to run the
#
government which is already a big and then it's a completely different set of skills to actually
#
architect the state right i mean which is even different from driving the state right i mean
#
and so you can't even blame them given the time horizons and given you know the different
#
incentive structures and so because you're trying to both drive the car as fast as you can
#
you never invest in the maintenance and in kind of the redesign and so i think one of the reasons
#
we are at this place for the returns to investing in state capacity that the data shows is 10 times
#
20 times higher is because you've under invested so much so marginal cost marginal benefit if
#
you equate because you've done so little of that those returns get very high so i think you know
#
taking a big picture this thing about the book itself right so it's 18 chapters right so there's
#
this intro chapter that's laying out kind of india's crisis of state capacity right which is
#
what i've sent you now the core of the book is technocratic in terms of what we need to do about
#
this but it is bookended both at the beginning and the end by a deeper discussion of politics
#
right because in the end the incentives have to align right so so and so we've got chapter two and
#
three which are really about the building blocks of the indian state so chapter two is called the
#
politician's predicament and chapter three is called the bureaucracy's burden right which is
#
you know so we the taxpaying class often just have such a derisive kind of attitude towards both the
#
politicians and the bureaucrats right things politicians at worst are corrupt at best are
#
taking taxpayer money to give out freebies and get re-elected right like kipchane so that is
#
certainly the trope of politicians and then for bureaucrats the trope is that you know they're
#
generally lazy officious risk-averse whatever and you know i think my point is that both of these
#
are actually really really unfair right i mean that once you kind of get into the constraints
#
that these actors are functioning under what you realize is that that there are an incredible
#
number of good people who are stuck in a really bad system okay and so and that's why the core
#
point of the book is to take a systems level view of the indian state to both diagnose and then
#
hopefully cure right so so so chapter two and three then get into kind of yeah so and we can
#
talk a little bit more about that but the core point of the politician's predicament is again
#
that the pressure to deliver welfare right i mean at a low level of GDP per capita means that the
#
political incentives have always veered towards you know doing things that are visible right i
#
mean again it's seen and unseen everywhere right i mean it needs to be visible it needs to be seen
#
it needs to be attributable and that has sharply limited kind of the investments in the state
#
itself right now but there's another subtle point and this is again we could take an entire episode
#
there which is that the nature of the constrained state has also affected the nature of our politics
#
right which is that because voters and politicians rationally know that the state cannot cater to
#
everybody the nature of the politics becomes one of how do i grab my share of the state resources
#
right so the entire nature of vote bank politics is then comes from the fact that i can't deliver
#
everybody right i mean so it is i deliver to my dedicated base voters who show up to vote and
#
that creates another vicious cycle because the vicious cycle that creates is that if the political
#
incentives are to direct the resources of the state towards preferred groups then you don't want
#
a competent and independent bureaucracy you want a pliable bureaucracy right like you mean that will
#
do your bidding so over the years we have emasculated the bureaucracy right in both in
#
terms of its independence and competence and also structurally by under investing in different
#
aspects whether it's staffing whether it's training whether it's performance measurement
#
whether it's data so we've under invested in bureaucratic effectiveness across the board
#
and so then you are now in this kind of place and the case for optimism what i argue is
#
the case for optimism is that the nature of politics i genuinely think is changing okay in
#
india where the so there's the old politics of vote bank politics which is cleavages of various
#
kinds right i mean caste region religion language whatever there's the cleavage based old politics
#
and there is a newer politics of governance and service delivery right i mean and essentially
#
my contention is that i'm not saying that the old politics is over but that the old politics is no
#
longer enough right i mean that you need to kind of at least have so that can be a base of your
#
votes but you need to also show that you're able to deliver okay so the good news is that the
#
political incentives are changing and this is partly a result of education partly a result of
#
technology partly a result of you know a bunch of things we can talk about but i'm less interested
#
in why the change is happening and the consequences of the change and the opportunity it gives us
#
okay so but the challenge today is that there are so many political leaders i've talked to
#
who are incredibly frustrated by their own bureaucracies right i mean inability to deliver
#
and but it's unfair to blame this bureaucracy because you've under invested them in 30 years
#
okay so you're now at this place where there are politicians who really want to deliver
#
okay and i've had now multiple conversations in the context of sieges which i'll come back to
#
that the demand from the political class about ways of improving governance is actually
#
remarkably large okay the problem is that you know the bureaucracy has been so under invested
#
in like i mean that that's not able to deliver now it's not like it can't deliver the way you
#
delivered is you find your best officers you put them in the few departments that matter to you
#
and then you try to drive good stuff in those departments but you know there's a shortage of
#
good officers there's a shortage of good people and i remember working in a state where there was
#
a chief minister who actually was pretty reformist but there was a department that had gotten a
#
secretary who wasn't very good and i remember talking to the secretary to chief minister saying
#
like you know how do we make progress he said listen you know i i i have only a few good people
#
okay like i mean and there's only so much i can do so i think that so there is a genuine opportunity
#
that politically i think there's a desire to do this and therefore i think the state capacity
#
agenda has a politically feasible window of kind of happening but that only gives you kind of the
#
political opportunity and again going back to the 91 reforms it's not enough to have a crisis to
#
say that like you know we'll do good things you need an intellectual blueprint of what are we
#
going to do right i mean and so the hope here is that there is the like in any policy situation
#
right luck is when preparation meets opportunity okay so you need both and if the opportunity
#
shows up but you haven't prepared then you don't quite know how to you know do stuff conversely you
#
can do all the prep but you know there's no opportunity so my hope is that we are at an
#
inflection point as a country where there is political demand to kind of deliver better
#
governance but that's going to require actually strengthening the state which then is like i said
#
is a job of re-architecting the state so it's not just a question of increasing budgets it's then a
#
question of really getting into the innards of the dysfunction and saying what constitutes effective
#
state capacity and how do we build that so then that is then the next six chapters of the book
#
right which is the conceptual core of the book which is saying you know what are the building
#
blocks of effective states right and those six chapters are we start with data and measurement
#
so it's again wonderful you've had my so in a way i feel like this thing is an ode to all of your
#
episodes over the years like you know i mean and your constant rants about saying that we are
#
dealing with a dysfunctional state though you know i feel like in my yeah so you are like this voice
#
in my head over the years like you know but you know but but we start with data and outcome
#
measurement and you know you've had episodes with pramit and rukmini on that right i think
#
something you've not had an episode on which is a much more complex subject right is actually
#
public sector personnel management right mean the innards of the personnel economics of the state
#
right and so and that's chapter five right about how we are kind of messing up everything from
#
recruitment to training to posting to performance measurement promotions every aspect of public
#
sector human resource management right mean is kind of dysfunction is too strong a word but is
#
really at rock bottom okay so one simple way of saying this is that the department of personnel
#
and training which is supposed to do all of this stuff is informally known as department of postings
#
and transfers right because the only thing that they focus on is how are you transferring people
#
as opposed to kind of the deeper aspects of building an effective kind of human resource
#
base and strategy for the state right so so people really are the sinews of the state and
#
that's chapter five okay and then chapter six is on public finance and expenditure because again
#
what is what is the state what is the government it is trying to express some notion of the
#
collective good through taxation and spending right and so effective states spend their money
#
effectively and part of that chapter is just documenting how incredibly badly we spend our
#
public money right i mean and so again it's not like we have no accountability but the
#
accountability is very much on process and compliance and not outcomes okay so um so it's
#
not like we don't have a cag that we have other measures of account of accountability but and
#
there's this wonderful example you know which again the the references to pop culture are quite
#
nice here right so when in the i don't know if i talked about this in education okay but think
#
about education technology okay so we think that technology can be transformative and but what does
#
national ed tech policy look like it looks like what is the budget for computer labs how many
#
computers am i going to procure and how many labs are we going to bet but then when i go to the
#
schools you'll see that in the majority of these labs the labs are locked and then chavi is sitting
#
with the principal okay now what why is that because his incentives are not about is the
#
computer being used it is it should not get stolen right yeah like i mean i'm in deep trouble right
#
and again you can see all of this in pop culture so in the show panchayat which i love right there's
#
this entire episode called computer nahi monitor right what computer choreo a monitor choreo the
#
guy was in deep trouble whereas even if the computer had never been used nobody was going
#
to ask him any questions right so it's not we don't have accountability but the accountability
#
is completely on compliance right mean as opposed to outcomes and then there's many many other
#
aspects of kind of the architecture of public expenditure that is you know dysfunctional is
#
too strong a word but really really rock bottom okay in terms of both how we allocate the money
#
and how we spend them right so then there's that chapter then there's this seven chapters revenue
#
which is again the core of the state the issue here is not just in terms of quantity of revenue
#
but also the quality of revenue which is something ajay and vijay talk about like you know they almost
#
sound like amitabh bachchan twins in some movie is fine but ajay vijay sounds like you know okay
#
this is amitabh and his twin like you know in some movie but anyway so i think you know they talk
#
about marginal cost of public funds right i mean and then i do a deeper dive into kind of the
#
landscape of revenue instruments and how the you know we there is actually a lot of low-hanging
#
fruit if we start thinking also about the quality of revenue and i'll talk about this in the federalism
#
chapter as well then the eighth chapter is federalism which is ostensibly what we're talking
#
about today okay which is you know reflecting on the fact that india has one-fifth of humanity
#
right we have more people in india than all of africa right i mean which is 54 countries we have
#
more people in india than the entire western hemisphere put together north america central
#
america south america put together we have about 50 more people than all of that right so how do
#
you possibly govern like in such a large country without effective kind of decentralization and
#
just one stunning fact here is that see people think about china as being very very strong and
#
centralized and shijin ping controlled everything but while it's true that the party is omnipresent
#
if you look at one key measure of decentralization which is at what level of government are your
#
budget spent and at what level of government are your staff allocated in china over 50 percent five
#
zero percent of public expenditure happens at the local government level in india that is three
#
percent okay so china is 17 times more decentralized than india when it comes to kind of local
#
expenditure okay so and we'll dive a lot more into that when we talk about federalism but
#
really kind of understanding federalism and understanding the optimal architecture of
#
functions and funds and functionaries at different levels of the government is again a cross-cutting
#
theme that affects all so what's sitting in the themes part of the book are cross-cutting that
#
apply across all sectors right and then there's chapter nine and state in the market right which
#
is given that the market accounts for 70 percent of health care 50 percent of education like you
#
know in security the private sector employs five times more than all of the public government put
#
together how should we kind of optimize the interface of the state in the market and again
#
we talked a little bit about this in the education episode and you can see the cross-connections
#
right how so many of these themes will then show up in the sectors but i think one very useful
#
high-level way of thinking about the about the state and market chapter is that the government
#
plays three very distinct roles in the ecosystem right you are a policy maker you are a regulator
#
and you are a provider okay and the way you think about the private sector needs to be very different
#
in those three roles right so as a policy maker the private sector is your ally because you care
#
about delivering outcomes regardless of whether it's delivered by public or private as a regulator
#
the private is your equal as a provider the private is your competition okay now the problem is 95
#
percent of government budgets and staff are allocated to government as providers which means
#
intrinsically in the dna of the government is a deep distrust of the private sector
#
that's because of where the government's kind of own staffing and resources and mindset are
#
right so having some conceptual clarity there about and again this is not just to say blindly
#
privatized there are huge challenges right so but that's a chapter that tries to provide
#
conceptual clarity about how to optimize right mean the role of the private sector to deliver
#
outcomes in the public interest okay so and this is where some people were like there's enough for
#
a book right here right i mean why don't you stop here at nine chapters but the second half of the
#
book is then recognizing that listen these concepts are still very abstract and in the end for a
#
government to take action on it for people to get galvanized around it people tend governments
#
are organized around sectors around departments right so you need to then take these ideas and
#
saying okay what where do we want to kind of deploy this and there's actually very subtle
#
and interesting kind of aside right and which we can talk a little bit about which is even though
#
i believe that the state capacity agenda is something that the left and the right and everybody
#
should go list around there is a notable group of skeptics who think that if you have a malevolent
#
state then a weak state is actually better okay and i think now shard discussed this in his episode
#
with you when he talked about germany italy and spain right like you mean that under world war
#
two under fascist governments the one with the highest capacity actually did the worst outcome
#
so if you believe the state is malevolent like i mean people may actually want to kind of have
#
a weak state but i think that's very very very short-sighted right because if you were to
#
integrate over 200 years of say you know germany versus greece you would much rather be germany
#
than greece okay in terms of what a well-functioning state is delivered for its people okay so what
#
you want is to build an effective state but also then build safeguards and systems that that
#
capacity is used to serve people rather than rule them okay so but that's again a chicken and egg
#
it's a chicken and egg and i talk about this specifically in the context of say cops and
#
police right which is you know at one level you got incredible kind of problems of police violence
#
overuse and encounter killings are probably the most extreme version of that okay but but the
#
fact is on in practice the senior officers will say they don't like it but they have to condone it
#
because the alternative is that you're in court for 25 years and no action is taken and so even
#
the extrajudicial aspects of kind of how our police function reflect the weak state capacity
#
that you don't have the resources for the investigations you don't have the resources
#
for you know the judicial system to deal with this in a rule in a rule of law way okay so it
#
is one thing to have the aspirations of a modern democratic state in on in the constitution but if
#
you haven't invested in the capacity of the state to meet those aspirations then again it's relatively
#
hot so a lot of the disquiet that we feel about india comes not i think from a lot of people think
#
this is lack of intention my own view is that in most of the case it's not intention but it's lack
#
of capacity right so anyway so i think the but the reason i'm giving you that aside is then that the
#
second half of the book is then saying if these are the ways you improve the effectiveness of the
#
state by kind of you know and each of these it's not just saying improve data right each chapter
#
has very very concrete ideas so then that's kind of the worm's eye part of this right which is saying
#
there are six things that you can actually do under each of these things that are now possible
#
that we just kind of need to get our act together and get it done right so each of those chapters
#
has very concrete ideas and then there's this transition chapter chapter 10 which is accelerating
#
india's development right i mean where i talk about all of these cross-country cross-state
#
comparisons by income and then making the case that listen both the growth wallahs see if you
#
listen to the growth wallahs they'll say let's go from six to eight percent and then everything
#
will be great okay but part of my point is if you look at how growth has translated into better
#
outcomes in the past 20 years and extrapolate that that even going to eight percent growth
#
is not going to get you to a good enough place in india to at 2047 okay the rate at which the
#
income is translating into outcomes is unacceptably slow conversely the development wallahs will say
#
increase the budgets okay like your mean of health education whatever and i show that even if you do
#
that you're not going to do that much better whereas if you improve the effectiveness of
#
the state and in the translation of the income into the outcomes that's what's going to allow
#
you to accelerate india's development across all of these parameters right that means so yes you
#
want the growth but you also want to go to the north of that okay so that's that transition chapter
#
and then the policy core of the book is then six chapters six sector chapters right which is
#
education and skills health and nutrition police and public safety courts and justice social
#
protection and welfare and jobs productively and economic growth okay so and why these six sectors
#
is basically it's because going back to the amartya and and bhagavati discussion right is that
#
what is nice about these six sectors is they are both intrinsically important to kind of human
#
welfare and instrumentally important for aggregate economic growth okay so the like i said in the
#
last episode we're talking about health and education see the chicago view of human capital
#
is that you get educated because it makes you more productive you get healthier because it
#
makes you more productive okay but the intrinsic view of this is independent of my productivity
#
being more educated makes gives me a more empowered life being healthier gives me a better
#
quality life right and so each of these six sectors picks both of those boxes that better
#
education gives you a more meaningful individual life and accelerates economic growth better health
#
nutrition environment is going to help both individuals and aggregate productivity police
#
and public safety i think basic safety is the most essential component of you know of a good life
#
but then the better safety is also going to have massive productivity implications right so whether
#
it's kind of security property rights and investment or just improving female labor force
#
participation so you've talked many times about kind of you know gender issues and you know safety
#
is a huge tax and a huge constraint that constrains you know our ability to kind of not just provide
#
safety intrinsically but to increase instrumental goals like labor force participation okay same
#
with courts and justice right so obviously there's the human rights tragedy of two-thirds of our
#
kind of incarcerated population not even having been found guilty so that's at an intrinsic level
#
that this is a moral failing but instrumentally right there's this paper by manaswani rao you
#
know who's uh who got a phd at berkeley and is now at ucst as a postdoc and she's got this lovely
#
paper looking at district judge vacancies right and showing that every extra district judge that's
#
appointed clears about 200 cases a year but more importantly because 70 percent of the cases that
#
are kind of handled in district courts are either land or credit okay so these are factors of
#
production that are being locked from productive use because they're under dispute right so
#
therefore unlocking those factors of production actually leads to a significant increase in
#
total economic activity and the estimate is that the increased tax revenue from that activity will
#
more than pay for this so you get a return of infinite if you make those investments okay so
#
so that's then an example of why kind of strengthening courts and justice is both
#
intrinsically and instrumentally important right and then there's you know chapter 15 on social
#
protection and welfare where again you know i think our public discourse has i think a very
#
coarse dichotomy of freebies versus investment right and i again i argue that that's a little
#
misguided that what you really want to think about is on the axis of equity and efficiency and you'll
#
see that there are some welfare programs that are bad for both like say free electricity for farmers
#
and there are some that are good for both okay so it's not this kind of broad brush welfare is bad
#
or welfare is good that the details really really matter okay and this is where it's not just about
#
intrinsic welfare that it's good for people to be protected from the vagaries of the market
#
but it's also instrumentally good for the economy why is that because how does growth happen right
#
growth happens from the process of individuals undertaking investments that are going to give
#
you positive returns but any investment is risky okay and so if you look at all the studies of say
#
agriculture crop diversification the first time you grow a new crop you will lose money because
#
you're learning okay and so having a well-functioning social protection system actually gives you the
#
cushion to undertake the risk that gets you to a higher growth path at every individual level so
#
again the question is architecting it and getting into the details the details really really really
#
matter okay it's kind of one of the messages that comes out of that chapter and then finally the
#
the jobs productivity and economic growth and that goes without saying it's the most important
#
intrinsic source of both empowerment and income but also sense of kind of meaningful contribution
#
is a job and then that's obviously about economic growth right so then those six chapters therefore
#
become kind of the policy code of the book right which is how do you but it's not so in a way i'm
#
having both right you said why didn't i write a book on education so this is my way of trying to
#
do both right i mean there's both the sectoral piece and the thematic piece and then the last
#
two chapters are then going back to kind of the politics and the institutions and it's kind of
#
on making it happen so chapter 17 is about reimagining institutions which is to say it's
#
not enough to just have a bunch of these ideas for re-architecting the indian state you want
#
to institutionalize them in a way that it becomes daily practice without people even having to think
#
about it right so going back to say atul gawande checklist manifesto etc there's cognitive
#
constraints and you can't have to think about this think about it it just needs to become automatic
#
in terms of how you function so then and again so one thing i've not talked about so far which we'll
#
talk about maybe in federalism is that a key part of this entire book is focusing on ideas that can
#
be done at the state level okay so the early draft of the book had this working title of fixing the
#
indian state a roadmap for chief ministers that title is going to change but one of the key points
#
is i'm focusing at the state level okay and we'll talk more about that in the federal chapter
#
but even on the institutions chapter part of my point is that we have so far relied purely on the
#
government of india to make institutional investments for the country but there's no
#
reason why states cannot take the lead in reimagining some institutions right and then chapter 18 is
#
about state citizen and civil society which is then you know how do we all kind of play a role
#
right i'm here and trying to make this happen so anyway like you know now i feel like i'm done
#
we don't need a book episode but that is just kind of the outline of one section in chapter one no i
#
mean the first of all this is such a lovely summary of the book and it's very apt that this episode
#
is releasing on independence day because it's almost like you're taking stock from this bird's
#
eye view of the entire indian state so there are like 13 814 things i want to double click on
#
but first and aside that you know if i was forming a libertarian heavy metal band many of my album
#
titles would have come from phrases you just used for example innards of the dysfunction
#
sinews of the state return of infinite these are just remarkable titles so you know if you
#
get past antakshari into something maybe a little heavier you know there is a future for you i'd
#
love to see the kind of lyrics that you come up with now you know from this bird's eye view i'm
#
not going to dive in directly into some worm's eye view or the other because that would be a
#
little disorienting perhaps but it's almost like a bird is flying and it's got the bird's eye view
#
and then it notices in the distance what appears to be a large colony of worms and its gaze kind of
#
you know focuses onto that and and that's the kind of view i'm going to take in the sense that you
#
know all of us use state capacity in just this very general kind of way it's become one of those
#
phrases like people will use liberal or people will use freedom and people will use so many
#
words which have become so nebulous through overuse and because it means so much but you've got a
#
really nice section where you kind of begin with a sort of defining that that what do what does one
#
mean by state capacity and then what are the factors of state capacity so you know so take
#
us a bit through that because i feel when we start discussing state capacity it's it's important to
#
at least agree on the definition first and your explanation was so lucid that i will ask you to
#
you know for my benefit and my listeners benefit just go through that again that what are the
#
different ways in which we can define it and what are the various factors that you know go into
#
state capacity and from there we can go on to talk about okay where are our failures why are we weak
#
and so on yeah and i think you know so this is yeah this is just section two of that intro chapter
#
right in where i'm kind of defining these key things now i think the the academic literature has
#
you know there are different ways of thinking about state capacity some measures are just
#
your ability to protect your borders your ability to enforce the writ of the law right i mean within
#
your borders collecting revenue is an important measure there are meta definitions of state
#
capacity which has to do with your institutions of negotiating disagreement and conflict right so
#
you know even having effective political institutions is a measure of state capacity right
#
because the breakdown of law and order often reflects you know essentially a failure of a
#
political process okay to say that there is in fact a win-win equilibrium that we could move to
#
right if we got away from this conflict so there are meta definitions of state capacity which is
#
can you even strike this political bargain that people coexist without you know being at each
#
other's throats all the time and then i think you know there is in my from my perspective i'm
#
focusing on state capacity fundamentally in its executive in its executive sense correct which is
#
the ability of a state to implement its own policies and programs and to kind of just to
#
perform its core functions right so the core functions of a state whether it's law and order
#
whether it's justice now health and education you might argue are not core definitional functions
#
of a state but a modern democratic state expects that the state is going to do health and education
#
a certain amount of welfare right means so so i'm defining state capacity in the book fundamentally
#
as like i said about the car itself right i mean it's so i am not in the business of directing
#
the car okay that is something that comes from the political process but this is about how do you
#
re-architect and engineer the car so that it can deliver better for whatever the political process
#
kind of says that the state should do okay so then these six specifics which i then talk about what
#
determine state effectiveness right are then getting into the innards of state capacity and
#
those are then the six chapters which i've talked about but i can say a little bit more which is
#
kind of you know on data and outcome measurement right so the truth is that we did have one of the
#
best statistical systems in the world right means so Pramit's been writing a series of on this which
#
has been very nice but yes whether it was Mahalanubis whether it was others you know
#
india was the envy of the world in terms of the statistical systems we set up but
#
as with other areas of the state we have just not invested in this right so today we are so far
#
behind kind of the frontiers of what is possible and you know it's easy to blame this on politics
#
but i think politics is actually a relatively small part of it a bigger part of it is just the
#
institutional kind of under investment right i mean over the years so whether it's new technology
#
for data collection whether it's you know anyway so there's a data and outcome measurement kind of
#
chapter which is and there's a chief secretary who once told me you know is that that our systems
#
are built on house of cards because i went and presented evidence of how much fudging there is
#
in the official data you know so i have that one and again it connects back to the education
#
episode right with that wonderful quote of and so you see this in the official data there is no
#
learning crisis at all okay and then you go do this independent audit you just see that the true
#
levels of learning are way lower than what's in the official data even in a high functioning state
#
like tamil nadu the rate of malnutrition reported in the official icbs data um severe malnutrition
#
was about one percent whereas in the data it's about eight percent right so it's an under
#
you're understating by a factor of eight so and people know this right so so the and there's
#
another senior government advisor who said you know we're basically flying blind here okay so
#
and so there are and again this goes back to my point that there are incredibly thoughtful well
#
meaning public spirited outstanding officials within the system but none of them individually
#
has the capacity to kind of fix systemic issues right i mean and so part of what this is there's
#
nothing here that so one of the reality checks on the book is i've had multiple is officer friends
#
of mine read to just make sure that i'm characterizing things correctly and what they say is that yes
#
some of the intuitively but like you mean but up in the frameworks made not just us
#
some guy this is you know this is correct right so but the data and the outcome measurement is
#
the first kind of foundation the second is you know then just aspects of public sector personnel
#
management right so we think about the state as bloated but the truth is india has actually
#
the fewest number of public employees per capita relative to any major comparator country right so
#
it's five times less even than the us and that's because you know and ten times less than scandinavia
#
okay so there is a massive problem in terms of just staffing strength but there's also a problem
#
of accountability so you can't just say i will hire more people okay so the the personnel challenge
#
of the indian state is a bit like there's this famous quote of two people in a restaurant
#
going and looking at the food and the first guy says the food is the food is miserable
#
and the second one says yes and the portions are too small okay but the point is that that's a bit
#
like the nature of the indian state right it is both too small and too inefficient so you can't
#
just expand it in its current form you need to both re-architect and expand right so you need
#
both of those pieces coming together okay so that's personnel and then yeah we've got these other
#
pieces i've talked about you know expenditure revenue federalism state and market yeah so those
#
are then i mean there may be other pieces but these are i think six pillars that cross cut
#
across every sector and that's kind of why i focused on that brilliant and and you know just
#
to kind of sum it up for my readers you speak about how you know data personnel public expenditure
#
collecting revenue efficiently coordinating across multiple layers of a federal governance
#
structure there's a heavy metal title in there somewhere and you know and working with non-state
#
actors like the private sector and civil society all of these are sort of constituents of you know
#
how you would you know look at state capacity now you know another frame that i found really
#
interesting as a narrative frame you know when we talk about why the indian state is so weak
#
you know we talk about politics and earlier you were talking about the incentives of
#
politicians in fact a long time back i you know spoke about the interplay between money and power
#
and i wrote this limerick which is called politics and so politics a neta who loves currency notes
#
told me what his line of work denotes it is kind of funny we steal people's money and use some of
#
it to buy their votes and so you know that kind of indicates where i'm coming from but what you
#
have explained so well is you've explained it in terms of incentives and how that changed the system
#
and you've explained it really with this narrative of nation building to election winning right which
#
is sort of useful to see that transition and in a sense it is a transition that really happens
#
between nehru and indira gandhi in a sense so tell me a little bit about that and how that how
#
therefore politicians incentives get shaped into that particular thing and that particular
#
you know through that particular phase of time yes and i think the so like i said right these
#
investments in kind of the last time we made systematic investments in the state in the
#
capacity were in the 1950s when there was clearly a nation building mode right post independence
#
you've got a very broad coalition that represents kind of you know and when people talk about the
#
congress you know pre indira congress is a very different beast from post indira congress right
#
so you know pre indira congress this truly is kind of a broad dent that's the party of independence
#
and has kind of the legitimacy right mean to pursue because essentially they're practically
#
guaranteed to win elections right between the towering figure of nehru the broad kind of quality
#
of the cabinet so it's a time when you're truly able to make these investments correct and then
#
what happens of course is that as the that legitimacy of the broad tent of the congress
#
starts kind of you know breaking apart right you know whether it's the left and the right or whether
#
it's regions you know then the nature of politics very naturally starts becoming kind of more about
#
identifying your base voters right i mean and this is where it doesn't help that the sheer amount of
#
underlying diversity and heterogeneity in india means that it is easy to construct kind of
#
narrower group-based identities and kind of mobilize political activity around that right i
#
mean and so and so then you get in and again i think rahul i think rahul varma talked about
#
you know the four phases of kind of indian politics democracy so there's nothing new i'm
#
saying in any of this stuff right i think political scientists have analyzed a lot of this with regard
#
to kind of the nature of the democracy what i have not seen as much in the political science
#
literature is kind of the downstream consequences of the nature of the politics for the nature of
#
kind of the economics in the state right so again it happens there is discussion often about the
#
implications for economic policy what i've not seen enough is kind of the implications for the
#
state itself i think so the closest so pratap's classic on burden of democracy in 2003 i think
#
has some kind of elements of this pranam bardhan like you know who is a very famous
#
development economist but probably in development economics was the one who used to think about
#
these political issues the most right he wrote about this even in the 80s okay when he talked
#
about how the fragmented nature of indian politics just make made it really really hard to build the
#
uh political consensus for investing in broad purpose public goods okay so so and one of the
#
things i talk about in chapter two and now i'm tempted you know i yeah you can see why i didn't
#
send you the chapters but even without that i'm talking about it right but see here is some basic
#
electoral math okay which i think is very very powerful okay so what has happened is that in the
#
combination of first past the post and kind so you have first past the post you have many many
#
many parties fighting every election and you have turnouts of about 60 percent okay so what that
#
means is it is often enough to have 20 to 25 percent of the electorate to actually win an
#
election okay now but it has dramatic implications for political incentive so just imagine the
#
following hypothetical okay that you are a politician you have hundred dollars of thousand
#
dollars of tax money you have hundred voters okay now i can you can invest this in a public good
#
right let's call it state capacity that benefits everybody okay so the return on investment is
#
say 20 percent so the thousand becomes 1200 so everybody gets 12 okay so that's kind of
#
model number one model number two is you can say that instead of investing thousand in a public
#
good i am going to redistribute this to 25 voters as opposed to 100 and i'm going to give all of
#
them 36 there will be 10 that goes away as administrative cost other leakage it might be
#
even worse okay but in this model 25 voters get 36 the other 75 get zero okay now in a simple
#
median voter theorem this breaks down because your median voter will prefer the alternative that
#
everybody gets 12 okay but in a model where you are also mobilizing the vote and only 40 percent
#
are showing up and you have this fracturing the concentrated vote support base of those 25 voters
#
is more important to win the election than the diffuse support across the 100 okay so and that
#
gives you then very very strong incentives to kind of focus on your base voters right so then we get
#
into this kind of broad era of vote bank politics right which is each party is associated with a
#
particular group and then the nature of the politics becomes that am i delivering the benefits
#
of the state to that group okay now it's not as stark as the example i brought out but you can
#
then see why the incentives of the political class are not about broad-based state capacity in fact
#
there's a very nice recent paper by the Dilip Mukherjee and Pranab i think Pranab was also on
#
this they've done a lot of work on decentralized governance in bengal and when they actually do
#
this very nice study on kind of the electoral returns to patronage politics versus kind of
#
programmatic politics right where patronage and clientelism is the returns to directing the
#
resources of the state to specific voters and programmatic politics is when you're doing this
#
in a broader way and they seem to suggest that electorally that the patronage politics does pay
#
off okay and that's partly because the other way to say this is agar aap sabko deliver karne to
#
why i am you know what's in it for me right so people want that differentiated attention so
#
anyway it's a this is the problem of kind of jumping to other chapters right but there are
#
detailed examples that quantify the nature of this challenge that then show that from nation building
#
to election winning you then enter this era right where the entire nature of politics is about
#
clientelism vote bank politics as opposed to how do we build public goods that improve the common
#
welfare right so the social welfare in the first option is way higher because 1200 is greater than
#
900 but that benefit is diffused more right so again classic mans are also in concentrate
#
cause diffuse benefit same idea right that applies to this kind of political incentives
#
and so that's kind of again partly why we are in this low level equilibrium and then there's a
#
bunch of stories but then the reason for optimism is to say like i said that and you're seeing this
#
in the election data you're seeing this in the exit polls you're seeing this in actual results
#
is that some elements of delivery and performance increasingly do seem to matter okay so i think
#
both arvind subramanian and arvind panagari have done different kinds of analysis on state level
#
elections and i think pre 2004 there was not much correlation between state economic growth and the
#
probability being re-elected but after that i think that that does seem to matter and there are other
#
measures that you know that try to show this so anyway so i think the the point about why we are
#
where we are in a way reflects the nature of the political incentives and which is why before i
#
get into the technocratic aspects of how do you build a more effective state i first kind of have
#
to make the case that it is now politically incentive compatible right to do this so then
#
and one of the things i say and again connecting to your episodes i think this was the one which
#
shivam shankar is saying right on you know that politicians are already using data to win elections
#
okay like it means so but they're not yet using data for governance right means so they know they
#
have shown that they care about data when it matters to them okay so can we make that next
#
logical step of starting to use the data for better governance as well so part of the point here is to
#
say that listen there is political demand now for delivering governance but the challenge is that you
#
don't know how to do it and so can we create a roadmap on how do you build a more effective
#
state but that can also deliver results in a visible time frame of say five years because i
#
can't go to a chief minister and saying that doesn't work with our electoral cycles so these
#
ideas have to be ideas that demonstrate kind of you know tangible results in a four to five year
#
window and the good news in topics like education or nutrition or something like that and i can say
#
this in chapter 10 is that the future of these cohorts is yet to be written okay so this is
#
completely in our hands that every cohort that is born this year is a future so the marginal impact
#
of getting these things right in these first two to five years of life is so enormous that we don't
#
have to sit and moan okay how do we fix all of this stuff you know there is an enormous amount
#
of good you can do if you kind of focus your attention on the things that matter brilliant
#
i mean and so what i'm going to do is that you know this bird is hoping through the worm colony
#
down there in fact it's such a you know i'm so struck by the idea of the worm colony that i'm
#
just going to name it after myself we'll call it burma and there's a pj i need to tell you in
#
this context which is very kindly kindly like this but my throat is too bad to sing but this
#
is a very bad pj but it's quite funny so and you will like this right so there's this old thing
#
about the early bird gets the worm right i mean as to why you need to be early wake up early
#
but knowing you you're probably a nocturnal person who likes to wake up late right like you know so
#
so but you can justify being kind of sleeping in from the worm's perspective by saying that the
#
early worm gets eaten okay
#
that's absolutely brilliant on the other hand like the sensible worm should do i i might be
#
waking up late but i'm not quite lying low once i do wake up but uh so i'll sort of continue your
#
your sort of beautiful narrative from political incentives you know you talk about incentives
#
of politicians so lucidly and how you know given their incentives that one time frame here so they
#
can't do deeper reforms uh which will take time and to manifest where the causality may not be
#
clear uh you know palliatives like loan waivers are therefore you know much more appealing appeals
#
to the vote bank immediately they want visible benefits rather than sort of unseen benefits and
#
you've given an excellent example of this where you write quote put simply it is easier to build
#
new schools and distribute pictures of opening ceremonies than it is to ensure that teachers
#
are attending regularly or that children are learning stop code which just sort of illustrates
#
and this is why state capacity therefore suffers and then you you know move on to your second
#
point about how this creates a systemic overload on the state because for all these short-term
#
incentives politicians are committing committing committing committing this committing that and
#
therefore the you know the bureaucracy doesn't have the capacity to deliver on all of this and
#
you use a sort of great phrase for this which comes from andrew sprichet and woolcock premature
#
load bearing so let's you know since you take a segue to weightlifting for a moment and just
#
kind of explain this to me and you know i found it very revelatory about the indian state and i
#
didn't expect to read about weightlifting in your book but well done karthik no and i'm glad you
#
know so but you can see that the effort that's gone into kind of taking concepts and finding
#
metaphors to simplify and make it accessible right i mean but the weightlifting analogy
#
and i'll also you know give away like one of my favorite paragraphs in the whole book which is in
#
chapter three and so but the but the weightlifting analogy is very simple right which is see if you're
#
a weightlifter and bodybuilder and you're trying to build muscle mass okay the way you're supposed
#
to do this is by lifting about two to five percent above your current capacity okay like in so and
#
that is what just stretches you so there will be some tear muscle tissue because you are going
#
beyond capacity but then when that muscle rebuilds it builds stronger okay so you kind of increase
#
your strength by kind of progressively increasing the amount of load that you're taking on right
#
but if you try to lift 100 kilos more than you can you will just collapse and die okay because
#
that bar will fall on your head and it's over right so and again the premature load bearing term is
#
not mine it comes from Richard Andrews and wilcox but i think the i'm pretty sure the weightlifting
#
analogy is mine i didn't see that there okay but the but the but the basic point is that and goes
#
back to your Fukuyama point of scope and strength is that by trying to do too much right mean that
#
you further weaken the state so as it is the capacity is low and you further weaken it by
#
putting too much and that's because of and there are multiple reasons i explained that in more
#
detail in chapter three in the bureaucracy's burden right which is that when you are trying to do more
#
than you have capacity for then a lot of your time goes on rationing access as opposed to delivering
#
okay because the claims are more than my capacity right so i have to then sit and the amount of time
#
i spend adjudicating as to who gets it and then that creates another problem that once i've
#
educated in a certain way the guy who didn't get it goes to the courts right need to then say
#
why am i not getting it so there are education secretaries who tell me that they spend 30 to 40
#
percent of their time in court cases i mean of various sorts because they're just kind of in
#
dispute and so but here's the point so what i say in chapter three is that one of the sources of
#
the knots we have tied ourselves in so one way to think about this is that because our aspirations
#
are ahead of our ability to deliver okay and i say government as legislature passes rights and
#
entitlements that are beyond the capacity of government as executive to deliver and then
#
government as judiciary holds government as executive in contempt of government as
#
legislature saying that you have not fulfilled what you have said you will do in the law and in
#
doing that it further weakens the capacity of government as executive because that limited
#
capacity is now going to answer the courts okay now this is not to say that the courts don't have
#
a legitimate role in kind of protecting the rights of the poor right often you will pass rights and
#
not implement them and where the courts come in is trying to make sure that those rights are in
#
fact implemented but that approach is again like rearranging the deck chairs on a titanic right like
#
you mean okay you know i am coming therefore you will do this but and you might get individual
#
relief for the particular plaintiff who's brought the case saying that the state has not fulfilled
#
its obligation to me but because the constraint is not one of intention but the constraint is one
#
of capacity so what is happening is even when that process goes through the courts you might
#
get redress in that individual case but you're not seeing the fallout of the other parts of the
#
system that are not getting it because your particular case has been taken care of right and
#
so this problem of kind of over commitment kind of is so all pervasive right so i'll give you
#
just two days ago i was talking to a very very senior scientist right i mean who was talking
#
about that one of the biggest sources of frustration for the scientific community in india is how much
#
kind of you know budgets so you go through a competitive grant process and coming back and
#
connecting this to connecting this to research right so you apply for grants you go through this
#
thing the review board actually sanctions you the grant you've gotten your grant but then the money
#
will not come for years okay and so they'll say finance the pacer really snake yeah okay but how
#
are you in this place where you have a scientific review process that evaluates proposals and saying
#
this has to be funded and then the end there's no money and the answer is again not malice okay the
#
answer is that most state budgets actually have commitments that are well above their revenue
#
so eventually like i mean everybody is just playing musical chairs okay to say like i mean
#
who is going to get this money so which is why it's not enough to get the money allocated
#
you then have to do the additional jugard to kind of make sure that your claim so the entire nature
#
of our politics the nature of our governance is essentially a politics of scarcity a governance
#
of scarcity and hence kind of who you know who you're connected who you can do to kind of unblock
#
the state and the nature of how we interact with the state is we don't think about it a level of
#
systems we think about it and how does my job get done okay like i mean and so this is all pervasive
#
so if you then think about jobs like one of the biggest crises for medium and small and micro
#
enterprises today in india so we do all kinds of things in terms of credit accesses but the biggest
#
crisis is frankly like how many of them just don't get paid on time like for services they've
#
delivered and the biggest defaulter is the government right i mean because the government
#
itself doesn't have the money to meet its own commitments and then what happens is that the
#
bigger guy is able to kind of lubricate the wheels and get his payment released the smaller guy can't
#
do that right so and then and this again you know is something i talk about in that intro chapter
#
right which is the the cost of this overload is not only that you are you know further reducing
#
state capacity by kind of making them adjudicate acts you know with allocation and adjudication so
#
every time you spend deciding who to give something to is time you're spending not actually
#
delivering the service okay so that's how it is further cutting into state capacity okay but the
#
other way in which it cuts state capacity is much deeper and longer term which is it creates chronic
#
trust deficits okay and that's something again i talk about in the intro chapter because when a
#
state is over committed by definition it cannot serve everybody right which means promises are
#
going to be broken and over time the indian state has broken promises to the rich to the middle
#
class to the poor right so and i give you examples there of say retrospective taxation or even
#
abolishing the privy purses are all kind of you know basically states going and breaking commitments
#
made to the rich to the middle classes it's things like the procurement delays right mean that because
#
most of these msms are that way and for the poor it is you pass rights and entitlements and never
#
actually fund them okay so but then what that does is think about how does this further weaken
#
state capacity it weaken the trust deficit weaken state capacity because when it comes to negotiating
#
very very complex reforms like say the farm farm laws and again you have that episode with ajay
#
on that right i mean so the policy per se is fine but where it breaks down is the trust deficit
#
right because see the way we need to reform our agriculture subsidies is not to say we are not
#
going to support farmers because you do want to support farmers but you want to support them
#
through income transfers as opposed to these complex subsidies but the problem with income
#
transfers is that people don't trust that this is going to continue coming because then you're
#
again in the queue but subsidy is sure because i'm never paying it out of my pocket right like
#
it means so i know i have that benefit here for sure so this is then again how complex the system
#
is right because you've got over commitment that over commitment both reduces your capacity to
#
deliver today and hurts your capacity to kind of create these Pareto improving win-win reforms
#
because of the erosion of trust right i mean over time and i think kaushik basu has this lovely quote
#
from republic of beliefs right i mean which is that in the end most of the power of a state comes
#
not actually from the coercive power of the state but really comes from a set of self-fulfilling
#
expectations about what will happen if you deviate from an equilibrium path okay so anyway so this is
#
again like a 10 000 foot view but hopefully this kind of highlights some of how deep these challenges
#
are right it's not just a question of saying these are deep deep systemifications
#
yeah so deviate from the equilibrium path is also a great title for a metal song and i can imagine
#
you know the refrain can be deviate deviate deviate and in the background full of hate full of hate
#
also coming up you know a couple of a couple of digressive questions and what is this that you
#
know in terms of work that people do i often say that the form will determine the content
#
and the content shapes a character i wrote an essay on this standard example is five hour podcast
#
means i can't be shallow i have to listen a lot uh the act of listening is an act of humility you
#
take the ego out of it you learn a lot more and therefore you become a different kind of person
#
so because of the form of what i am doing i had to act in a particular way change my character
#
similarly if you just do a five minute show you don't even have to read the book you just ask
#
some stock questions you keep interrupting all of that and across various domains this can really
#
apply and i'm now thinking of how the form of this estate with just by you know changing shaping
#
incentives can change what the people in it are like i know plenty of politicians and bureaucrats
#
and so on and i completely agree with you pretty much all of the people i know in both these fields
#
are wonderful people at least obviously my the politicians i know are kind of self-selected so
#
that's it's bound to be the case but they're great people the people are not the problem
#
but what really happens is that all the way down the line the form of the state determines a kind
#
of actions that get taken and then that determines the kind of person that you are like a friend of
#
mine siwa shri once spoke about how politics corrodes character right which i totally believe
#
in because of incentives but here i'm thinking wait a minute let's go one step further back
#
it's a state that corrodes politics and then that corrodes character so you have this all-powerful
#
crazy state you know and eventually the best way to flourish within the state if you're a part of
#
it is to become a rent seeker it's just logical it doesn't mean that you know that you are a bad
#
person per se you're responding to incentives if you're a businessman in the 1980s you know you
#
got to be a crony capitalist to get ahead you know people condemn dhirubhai yambani and all
#
of that but give me a break the system was what it was he had to do what he had to do then right
#
and and i won't mention possible current cronyism or whatever but the point is there is a system we
#
make a mistake in often blaming people and as you pointed out that's pointless there is a system
#
and the form kind of shapes everything downstream from the politics to the bureaucracy to the notion
#
of public service to the notion of what a citizen is or should be you know and leads to the apathy
#
and the hostility that we see among the people towards the state which you also elaborated upon
#
so what would sort of be your take on this that a question of a dysfunctional state goes way beyond
#
just the functioning of the state and the services it provides it changes society no and i think see
#
the the goal of this book i mean in some ways is it is actually very very sympathetic towards all
#
of the individuals involved while kind of taking a step back to illustrate to everybody right the
#
complexities of the system and why we are the way we are right now i think the good news is this
#
the good news is that there are so many public spirited people right i encounter at every stage
#
in the government outside the number of youngsters like yamin who kind of want to contribute and you
#
know i think there is just there's an incredible amount of energy right that wants to do good okay
#
uh and you know one of the reasons i have this chapter 18 about state citizen in civil society
#
right i mean is to then kind of think about what does the understanding that has been laid out in
#
the book imply for different sets of actors in society right i mean who want to kind of play
#
their own positive role in kind of moving us in this direction that we need to as a country
#
now of course this is not to say that like you know that doing this will solve all of our problems
#
i mean the nature of politics in every society is it is about contestation over public resources
#
it's about contestation over policy and that will never change okay i think the key point in the
#
indian context is that because so much of our public discourse is zero sum okay so it is you
#
know whether it's our talking shows on tv it's like all big fight you know that that culture is
#
essentially fighting and even at a more sophisticated level of discourse when we're talking about
#
budgets okay so budget discussion will happen and most of the discussion will be around
#
this sector ko kyuni allocate kiya right i mean but the all i'm hoping to do here is to kind of
#
say that so much of this reflects the basic problem and it's econ 101 right we start as
#
economics 101 to saying that our desires are greater than our resources and there are trade
#
offs okay so that same logic applies at the level of a country right means so but my point is not
#
that we will ever move away from this world that the desires are exceeding the resources but at
#
given where we are as a country that we will do so a simple way of saying this is that our discourse
#
focuses in the top line of budget allocations whereas if we focus in the bottom line of what
#
actually reaches people you will find that there are low hanging fruit and things that can be done
#
that are just win win win win win for everyone okay that convenience so then the and going back
#
to kind of our ajay and vijay right i mean it's a great book and that's why i love that they call
#
it the art and the science of policy right because i mean in some ways the science of policy is kind
#
of illustrating what the principles and trade-offs are the art is how do you craft politically viable
#
win-win kind of you know arrangements that everybody can be better off with and i think i
#
mentioned that even in the first episode right so when you talked about politics corrodes character
#
so there is an element of politics that i have zero interest in right i mean which is the pursuit
#
of power and that's the part that is corrosive but there's an element of politics which i think
#
anybody working in policy it's almost like a moral obligation that you think about which is the part
#
of politics which i actually enjoy is thinking about how do you craft a win-win arrangement
#
right how do you expand the size of the pie right i mean and that also requires a lot of creative
#
thinking but it requires kind of being you know politically aware right even if not politically
#
aligned right so yeah so i want to sort of recap that sort of narrative up to now because i find
#
it so lucidly explanatory and then ask a question about the trust deficit as it were and you point
#
out how incentives changed after independence where your initial incentive is nation-building
#
the congress is dominating it you know and everyone's moving in one direction and then
#
gradually the big tent kind of collapses opposition comes up political incentives get in the way
#
and those incentives lead politicians to act for reasons other than just necessarily the public
#
good because they do have to win elections that's their imperative they're you know so etc etc that
#
leads to a systemic overload they promise too much they can't all deliver that further weakens the
#
state weight lifters are dropping weights on their head all over the place this brilliant metaphor
#
and this leads to a trust deficit because then inevitably the state is over promising and
#
under delivering and eventually they can deliver on nothing and the people get apathetic and they
#
learn to live without the state as it were and they do their own jugars to get by now my question
#
here is this that when you you know raised the the example of the farm laws what i kind of thought
#
to myself is that the problem here isn't just that there is a deficit of trust in the state the state
#
might well have taken a different kind of procedure you know set up committees gone out and spoken to
#
all stakeholders spoken to farmers groups done all of that a lot of which again is episode with me
#
on the farm laws also talks about but the insurmountable problem here is politics and
#
the insurmountable problem is that our politics has become so incredibly polarized that you will
#
always demonize the other side every single thing they do is wrong and you cannot talk to each other
#
and this hasn't been the case throughout our 75 years it uh you know in past governments you had
#
people speaking to each other in 2014 when the jaitley ministry took over from the chidambaram
#
ministry there was a fair amount of continuity for a while back in the day when the vajpayee
#
government was there they would speak to the opposition regularly there was that mutual
#
respect especially when it came to matters of policy whatever public rhetoric may have been
#
outside that is simply not the case today that the discourse is so incredibly polarized that you
#
cannot be talking to the enemy you can only be shouting at them and dragging them through the
#
streets if you are in power you know on an aside i mean there was this visual there was this video
#
recently of you know cops dragging priyanka ganti dragging her through the street into a
#
police van and all that and it's just you know and that to me is a symbol of how the opposition
#
is being treated and it is of course also tactically stupid on the part of the bjp
#
because the ladies are nobody why make her a somebody in this manner but it's but that's
#
really a symbol of the way you're looking at the opposition that when we are in power we will mess
#
you over but and you know for those in the opposition everything modi does must be opposed
#
even if it's good you know a lot of the what the farm laws were setting out to do was you was in
#
the congress manifesto for god's sake right so but that doesn't matter anymore so on the one hand
#
there is a polarized politics where you cannot possibly talk to the enemy anymore quote unquote
#
enemy anymore and two there seems to be this realization and i hope it's overconfidence
#
that narratives matter more than governance that people out of rational ignorance a term you know
#
public choice people would recognize out of rational ignorance don't really know anymore know
#
that much about policy and long-term structural problems and they don't really care about those
#
things and they've given up hope of expecting anything from the government anyway so everything
#
therefore is about narratives so that meeting point which you talk about you know where you
#
say that you know in a case like the farm laws had they gone about it the correct way the trust
#
deficit could have been overcome i i'm not confident about it for that kind for that sort
#
of reason and just as an analog you mentioned the jose joseph episode you know and you mentioned
#
earlier that the worry some people have that if you have a more powerful state it will be used
#
against its enemies and i am actually sometimes really thankful that the indian state is so weak
#
and incompetent because at this moment in time the way our politics has become the indian state
#
is definitely it can be used for malicious purposes as jose shows in that excellent episode in his
#
really fine book and that also kind of you know bolsters this doubt that i sort of have so so what
#
are your thoughts yeah so i think you know there's a lot in there and let me let me save my remark
#
you know reactions to the broader point about the space for dialogue right mean across the
#
political spectrum across you know so for example in one thing i'll say is there is a reason why
#
some of the more contentious decisions like financial allocations are given to non-partisan
#
technical commissions like a finance commission now of course in the end there is still a political
#
process that has to accept or kind of you know reject parts of the of the recommendations but
#
there is at least you know in the institutional design of india there was a recognition that there
#
are some kind of truly contentious issues like you know that are best done away from the daily
#
limelight right i mean where you can have these discussions and that's true of international
#
relations it's true everywhere and so we can talk a little bit about that i think this question
#
about where are we right i mean with regard to you know with uh this can a miller is is a stronger
#
state a bad idea in the hands of malevolent actors okay i mean i think is really the core kind of
#
existential question okay and i think we have to have faith in the longer arc of indian democracy
#
i'm saying that this is you know that we have put in deep enough roots of what kind of democratic
#
and like ram gohar says at the end of his book right it's 50 50 everything in it is 50 50 right
#
like you know okay there are areas where we have done very well and there are areas where there is
#
still room to go but i think the the the germany greece you know example so is is a useful one
#
right which is yes at the peak of kind of a malevolent regime there was more damage done
#
like you know by a capable german state than by a less capable spanish or italian state right
#
but if you integrate over kind of a hundred years span right i mean would you then rather have be a
#
citizen in germany right i mean or so effectively what happened there was that the politic so there
#
was a strong state there was a political process of reflection of the things that had gone wrong
#
that then led to really important course corrections and guardrails around like you know what the state
#
could do and so this is where i think again trying to be slightly optimistic see my book
#
by focusing on state level actions my hope is to also strengthen in some ways indian democracy
#
itself because you see you can't beat something with nothing okay you can't just keep complaining
#
without showing a better alternative okay so the problem today is that any kind of
#
complaints about the vjp from the opposition just rings hollow because they are just as
#
dictatorial in their own states okay like you know so and that doesn't give you much of a moral locus
#
standi to have that conversation okay so but part of the point here is if you're in opposition
#
parties that is genuinely trying to raise some issues about saying that you know the intelligence
#
agencies or the police are being weaponized and this is bad okay so it's not enough to just say
#
that you say listen here is kind of a model bill like i mean of a police reform bill that we are
#
bringing in our state okay like i mean and we are walking the talk similarly data right so i think
#
ramit had this very nice thing at the end where he talked about you know his model kind of data bill
#
okay so today we might say that listen how come we don't have poverty measures we don't have this
#
data but there's nothing but the truth is every political leader is afraid of data and accountability
#
right i mean it's not just you know so that's across the system right so i think the point about
#
and i say this at the end of the of the section on state level action right is that however difficult
#
our problems are right you need to find a constructive pathway forward right i mean that
#
just doesn't wallow in despair and one of the ways and again in the federalism chapter you know
#
we'll and i end with an ashwin mahesh quote right i mean which is we need to increase the number of
#
problem solvers so and that's true at the level of local government but it's also true at the level
#
of states right i mean so and the reason the book is targeted at chief ministers and state level
#
actions and why i think we'll do an entire episode on on federalism hopefully after two hours we'll
#
kind of start that at some point is that is that by kind of increasing the number of actors who can
#
function in a positive way you just need one or two people to do it right i mean and then positive
#
examples then you know will hopefully will hopefully spread so yeah so you need to kind of be
#
cautiously optimistic and think about what are the instead of despairing you say what are what are
#
the entry points to move us closer towards the kind of you know modern citizen centered democratic
#
indian republic that we would like to be and one of the core contentions in the book and which is
#
why again in federalism we'll talk about this is that indian states are bigger than most countries
#
right i mean and so there is no reason why they cannot take the lead in terms of doing some of
#
these things and it's not like i have rosy tinted glasses to say that all of these things will
#
happen every place but the logic of working at the state level is even if the book has a menu of 50
#
ideas right and i think i said this in the earlier podcast as well is that trying to make these
#
changes at an all-india level is really really hard both because of kind of the number of larger
#
number of veto players as well as the sheer complexity but if you can kind of show that some
#
ideas work right so different states will have different political priorities right so people
#
will take up things here and there and i'll give you like you know something i say in the in the
#
in the politics chapter right so we tend to think about all politicians again as veenal and corrupt
#
and whatever and there's a very senior is officer who actually gave me this nice perspective he said
#
now neta neta the cares about vote note and deal okay like you know so yes they care about votes
#
they care about raising money but each of them also has a heart they're in public service to
#
try to do something good okay and so and because different politicians will have their deal in some
#
places okay so imagine there is somebody who's seen like child mortality or maternal mortality
#
in his or her household therefore cares about doing something and there have been politicians
#
who personally care about things imagine there is somebody you got beaten up in a lock up as a
#
student activist like i mean and therefore cares more about police reforms right so you you kind
#
of have to find these windows so the opportunity will be the luck will be when there is somebody
#
in a particular place who cares about a certain issue the preparation is that when there is a
#
well thought out set of reform roadmaps that that person can do and by working at the state level
#
you're just kind of dramatically increasing the number of bites we have at the apple of kind of
#
making the reforms needed to move the country in a positive direction no no i mean i i totally
#
agree with all of that even though it may not seem like it from the question that came before you
#
know i had this discussion with akar patel on pessimism versus optimism and he was an optimist
#
of course he is an optimist despite everything that goes on with him and i'm a bit of a pessimist
#
but the way i see it is that even if i'm a pessimist and even if i think the world is going
#
to hell my dharma is to behave as if i'm an optimist so you know that's kind of uh what i
#
do i think somebody once said this right pessimism the intellect optimism of the spirit right like
#
you know i mean or that's a beautiful phrase that that describes me well thank you thank you that's
#
uh that's a worm's eye view of amit varma i guess uh which i hadn't thought of before the one point
#
where i will kind of push back before kind of moving on is when you you know made the comparison
#
between germany and greece who would i rather be now the thing is would i rather be germany in the
#
20th century through the 20th century or greece through the 20th century and i love prosperity
#
and germany is much more prosperous but i would rather be greece and the reason for that is that
#
where you stand depends on how you say it if i'm a jew in 1940 germany that's not where i want to be
#
you cannot ignore that you cannot get to the later prosperity by you know first suffering through
#
the holocaust and all that similarly you know if you're a muslim in india today do you want a
#
stronger state or a weaker state do you just want the state to kind of leave you alone and we'll
#
get by as we are but that's a tangential question i mean i totally agree with your larger point
#
exactly and no i mean and listen you know this is not in any ways to trivialize like you know and
#
this is not to say that you know german prosperity trumped everything i think the larger point i was
#
making was that there was also this political moment of reflection about like you know and
#
learning so you can't undo the past what you can do is kind of you know take the right lessons and
#
build the institutional kind of structures so i think you know the other nice thing about doing
#
this on the 75th you know day of independence literally is as we take stock about both the
#
successes and the failures i do think it's a time for reimagining right i mean you know what the
#
constituent assembly did there was this kind of it was a work of magic right i mean in terms of
#
what that represented the sheer ambition of what was there and i think and again you know i think
#
ram gohar says this very nicely right where he says that you know it takes visionaries to craft
#
to build a country and then you know over time you the roots have gone deep enough that
#
mediocrities can run it okay like you know so right like you know but that's true just as much
#
of the u.s and he says like you know going from jefferson to george w bush like you know would
#
feel pretty similar right so it's not just about you know it's there in all societies but i do
#
think as we take stock about where we are as a country there is kind of a genuine need for a
#
reimagination of kind of possibilities and you know public conversations about what we want to
#
be as a country but not just in this kind of kneejerk criticizing everything that the government
#
is doing or supporting everything that they're doing right i mean it is kind of just being
#
very very grounded and empirical and just saying this is where we've done well this is where we're
#
not doing well and so how do we kind of get to the next level of what we need to do as a country
#
and like i think i think dr keelkar said this nicely right they see their book as kind of
#
essentially a contribution into this yagna of building a better india right and he then so
#
you know we all make our little contributions and then there is a larger ecosystem that has to act
#
yeah so i love the way you know we are using words like yagna and dharma in our conversation
#
this is like turning out to have very indig feel to it now you know i want to talk about federalism
#
which we can talk about for seven or eight hours but i don't know how much time you have
#
but before we get there and we'll do that after the break but before we get to the break i you
#
know want to ask a final question about sort of state capacity but first i'll briefly sum up the
#
rest of your narrative that number one we've seen how political incentives uh in incentives
#
did i say incentives uh deteriorate we see the systemic overload we see uh you know weightlifters
#
dying all over the place and in different government departments we see trust deficits
#
happening so nobody trusts politician anymore you've also spoken about the ineffective
#
bureaucracy and i love the way of your chapter titles are alliterative bureaucrats burden
#
politicians predicament but you talk about the structural weaknesses within our bureaucracy all
#
the paperwork all of that what does that lead what does this breakdown of the state leads to
#
it leads to what you call an elite exit because elites are you know doing their private jogar and
#
uh you know they have in your words court mostly seceded from being recipients of public services
#
stop quote and because they're not receiving public services they don't give a damn if they
#
are crap and they're not raising their voice and so on and so forth you give examples of
#
services are better when elites are recipients and all of that you talk about the institutional
#
status uh yeah as you can reduce and how fair enough and how fixing the problem is so hard
#
is so hard you also talk you know talk in detail about why we should reform state capacity how the
#
roi is high how it's key to india's development how the benefits would be broad-based you know
#
where you come up with that aeroplane analogy that even if india's elites today are in first
#
class or business class and the poor are an economy class no matter what the condition of the class
#
is if the if the plane is going to crash is going to crash everybody is gone so uh the the final
#
question before the break that i want to sort of end end with before we talk about federalism
#
and that's like a natural segue because that is one of the solutions is so how do we reform the
#
indian state like what gives you hope that it can be reformed given that everyone's
#
interests will be to protect their own interests there'll be the status quo bias there'll be this
#
big beast that you're kind of fighting against so what gives you hope that it can be reformed and
#
then what are the broad areas in which you would say okay this is how we must reform it yeah and
#
you know i think i'll give you a very short answer and then on the how maybe we can come to the very
#
end right i mean because the reason is uh the other thing so let me give you a quick reason why
#
i'm optimistic okay so and that is related to the work we've been doing and this is also something i
#
first publicly alluded to in our education podcast right i mean which is i've been setting up and
#
building this new non-profit called sieges right which is the center for effective governance of
#
indian states uh this is something you know we started in 2019 and in fact i had written a
#
concept note for this as early as 2018 early 2018 and i talked to multiple states you know and the
#
idea at that time i had even called it an institute for public performance management right i mean
#
because that we had a lot of discussion there's a lot of policy think tanks that says but there
#
was really nobody working at the space of building a more effective state right i mean and so that
#
was kind of my thinking behind you know a concept note for that kind of center or institute and then
#
you know my well-wishers in government i mean i presented to multiple chief secretaries finance
#
secretaries and they all said listen this is great but why don't you first write a book write a book
#
that lays out an intellectual roadmap for what we kind of need to do and then we can think about
#
finding ways you know there are existing centers of good governance in talangana you know different
#
states have you know their own kind of structures maybe we could do something around those
#
institutes right so and that's how the idea of the book was born but it was always in my mind
#
is that i didn't just want to be an armchair ivory tower academic and saying you know you really
#
have to kind of put your money where your mouth is and walk the talk in terms of trying to make
#
these things happen and so in around late 2018 i think you know i've known ashish davan for a
#
long time and you should have him on the show at some point he's but you know he's kind of
#
just this wonderful kind of philanthropist who's kind of shifted from being a venture capitalist
#
in the world of companies to being kind of an early stage venture capitalist in the space of
#
institutions right i mean that india needs and so you know i discussed this he said listen this is
#
a great idea i'll fund it let's just get started right i mean so you know we started very very
#
slow the idea was because we ourselves i had some clarity on what we want to get done but very
#
little kind of understanding of how to get it done right i mean and so but the long story short like
#
i said i think in 20 in that education episode i didn't even want to talk much about it because
#
i was like listen i mean we haven't done anything so i mean at this stage it's still very nascent
#
okay but we are already in four states right mean and expanding rapidly and i think why i feel
#
optimistic is that the level of demand i'm seeing right i mean for the core offering of sieges right
#
which is an element of conceptual clarity on what are the reforms that we need plus kind of
#
of implementation support to make those things happen and that is the key right i mean so why am
#
i founding sieges is see over the years i have helped with planned documents i have lectured
#
in the is academy talked to many senior is officers i've even been on a chief minister's
#
advisory council the problem is that all of the advice and inputs doesn't translate into much
#
because the constraint is state capacity right like i mean to up gyan to sub desak there right
#
karna is what is the hard part so the logic then of sieges is to say that you the government and so
#
and this is why i think the case the simple value proposition of sieges is very simple right i mean
#
that whether it's the politicians or whether it's the bureaucrats you're focused on driving the car
#
okay like i mean we are your kind of system maintenance and strengthening people and just
#
like the race car driver gets the glory right but every formula one driver depends on a really
#
effective engineering team mechanical team like i mean that's designing maintaining and running the
#
car okay so as sieges like you know we are basically kind of working with state governments to start
#
helping improve again the core conceptual focus is these three things is outcomes personnel and
#
budgets right but and the and we'll talk about this in federalism as well that the effective
#
organizations are those that provide autonomy to frontline staff on process on how to deliver but
#
accountability on outcomes okay whereas in the government we do exactly the opposite which is
#
we micromanage on process with zero accountability for outcomes right so but to do this re-architecture
#
the foundation is again better data right so we are starting with very and i'll give you more
#
examples at the end right very very unglamorous but plumbing work of improving kind of frontline
#
state functioning and i can talk about this now the good news is that we have been very very very
#
understated because we really want the governments to say is this of any value or not right i mean so
#
the only reason i'm even talking about it is we do need to recruit you know as we grow okay so and
#
that's something that you know may be of interest to particularly your younger listeners but the good
#
news why am i optimistic is just the amount of demand i'm seeing right i mean and of course
#
because we're a non-profit and we don't take a paisa from the government right i mean so there's
#
an additional level of trust i mean that comes from that and also the years of my you know spending
#
time in the is academy kind of showing a long-term commitment to these issues so it's i'm not like
#
some fly-by consultant who's now you know trying to make money of the next you know of the next fad
#
right i mean there is yeah there is this is a 25 year vision and agenda of kind of you know the
#
book is hopefully trying to say are the things we need to get done and sieges is kind of a little
#
attempt to help accelerate make that happen so the reason i'm optimistic is the demand we are seeing
#
so just in the past you know and we've been very lucky that a wonderful i.s officer actually quit
#
and joined as president of sieges so that gives us and you know both credibility within the
#
government that we are not just ivory tower academics but people who really know how the
#
government works and because of kind of word of mouth suddenly we're getting demand from four
#
extra states that frankly this time the constraint is more kind of people and capacity and not
#
overextending but i really feel optimistic and see i think again the individuals that are you
#
know so there are people in senior people in government who when i talked about this vision
#
and i'll say you know sir am i being delusional okay in thinking that any of these things will
#
happen and they'll say no no this is actually one of the most inspiring things we've heard in a very
#
long time because we all know that we have to do this but none of us is able to do it because
#
you know we are see tomorrow if you're talking about personal reforms okay and education
#
secretary will say yes we have to do this but the reforms that are needed are beyond the
#
limit of just an education secretary right because if doing personal reforms requires
#
you know coordination with finance coordination with planning coordination with kind of with law
#
with the general administration department and and also the chief minister's office because
#
these are politically sensitive issues so even if you have an individual officer who really cares
#
about this there isn't kind of either the time or the locus standi because this guy is going
#
to get transferred in 18 months or two years so it's completely irrational to attempt a system
#
reform kind of thing whereas these things are going to take five years 10 years right means so
#
so the hope is that there is enough kind of buy-in but the hope is that we're also investing in the
#
kind of institution that can help make this transition happen but yeah you know like we
#
may fail but you have to be optimistic no and that is indeed so inspiring even for me you know
#
i i once wrote this piece on vishwanathan anand where i was comparing the really shoddy pedagogy
#
he got as a youngster where you know the pedagogy in india or you know the chess ecosystem was
#
nowhere near what the soviets had right they were taught fundas and like the second standard which
#
anand would have it to have to figure out as an adult while actually playing and the metaphor i
#
used was that for him winning the world championship was that it was like he took a maruti 800 car to
#
a formula 1 race and actually won with it and now i'm thinking of you and what you're trying to do
#
is while a maruti 800 car is somehow spluttering ahead you are trying to convert it by changing
#
little bits of it into an f1 car and the metaphor is inexact because you can't actually do that to
#
a maruti 800 but somehow i have at this moment in time perhaps i'm getting carried away and
#
irrational faith that this could actually work in the long run see in the long run i'm an optimist
#
but in the long run we are all dead you know so before we go in for a quick commercial break
#
and emerge to talk about federalism since you you know a question i'd save for the end but i might
#
as well ask it now since you mentioned that you're looking for bright young people who want to work
#
with you and so on and so forth where should they write to you is there a public website
#
yeah exactly so yeah we can share you know i think this is the the cgs website always has like a job
#
section that you know is constantly updated it'll probably grow yeah so that's that's the place i
#
think so people should not write to me about teachers because i don't get involved operationally
#
at all right i mean so there's a full-time team that does it you know i am kind of a co-founder
#
and scientific director so my role is to kind of set an intellectual roadmap and kind of get the
#
buy-in at the government side but then bj who's a pretty legendary officer from from tamil nadu in
#
terms of integrity is you know is the president and he runs the show right means so yeah both
#
vijay's name today are legendary therefore i'll link that from the show notes by the way and
#
let's take a quick commercial break and on the other side we will talk about federalism and
#
going more and more local hi my name is nishanth jain and besides creating episode art for amit
#
i also make the sneaky art podcast a show where i have deep insightful conversations with other
#
artists who just like me draw and paint their world from observation this show is for you if
#
you are trying to be an artist it is also for you if you just want to make more room for art
#
in your life this show is for you if you simply want to become a more mindful observer of your
#
fast-changing world conversations include a cross-country cyclist making a painting every day
#
of an incredible 4 000 mile journey an artist in malaysia who found inspiration in a reality
#
show about tattoo artists in la and a sketcher in mumbai who chronicled the lives of the city's
#
artisans through the first wave of covid it is a more beautiful world once you begin to see the
#
sneaky art of everyday life add sneaky art to your podcast feed use the link in the episode description
#
welcome back to the scene in the unseen i'm here again with kartik mullidharan who has taken a
#
break who has eaten some food his first meal of the day and who is still optimistic and who was
#
just telling me before we started recording that the treadmill in his office is a metaphor for his
#
life kindly explained no i think you know we were just talking about exercise and how i do walk a
#
lot and one of the reasons i have heard so many of your podcasts is i walk a lot but yeah so the
#
treadmill is a metaphor for my life because i walk a lot but stay in the same place with regard to
#
weight loss and that's because i also enjoy my food yeah as you two would say running to stand
#
still which is kind of you know in different ways maybe you know parts of the indian state are a
#
little bit like that let's let's sort of talk about federalism now in in a sense the indian
#
state was designed to be a federal state a union of states as raul gandhi put it in his book
#
states as raul gandhi put it in parliament recently and as our constitution begins so we were designed
#
to be federal yet we were designed to be incredibly centralized at the same time so i'd like you to
#
sort of disentangle this by first speaking about the aspect in which we were designed to be federal
#
like how how are we federal what does federalism mean and how you know you talk about the five
#
tiers of the indian state and all of that so again as you know you so helpfully defined the term
#
state capacity define federalism you know what does it mean and how does that meaning apply to
#
us right now yeah so and i think you know even before we get into that you know consistent with
#
my you know conceptual you know i like to take a step back to see you know what is the big pitch
#
of the concept so let's start with a very very basic question okay so imagine a thought experiment
#
that you are to be reborn and you can be a random person born in any country in any in any part of
#
the world you do not get to pick where in the country's income distribution you will be so this
#
is kind of a veil of ignorance exercise the only parameter you're allowed to pick is would you
#
rather be born in a big country defined as population say over 50 over 50 million a medium
#
country say population you know 20 to 50 million or a small country in a population under 20 million
#
okay so how do you think about what would be this optimal size of a country okay where you would
#
like to be born oh you're asking me uh so no i mean the answer is uh it depends and the reason
#
that is the case is like one as i have often expressed i think you know population is a great
#
thing people talk about you know population as being one reason india is so poor and blah blah
#
blah no i think that's the reason we are poor is a failure of governance i think more people mean
#
larger economic networks networks of scale people are brains not stomachs and by the way like in
#
the spirit of our healthy disagreement in the past like let me push back on that a little bit
#
right because i i fundamentally agree with the argument that people are brains and not stomachs
#
but for the brains to develop the stomachs have to be fed okay like i haven't finished my answer
#
i haven't finished my answer so just to just to go through but that's why i said it depends right
#
so your the initial answer from the notion that more people are good people are brains not stomachs
#
you know it's easy to say that india bangladesh so overpopulated but equally you look at bahrain
#
and monaco and you look at just the density of people i mean the whole movement of human beings
#
through human history is from a place of less population density to a place of more population
#
density that is towards cities that's what urbanization is all about because again economic
#
networks networks of scale however the flip side of that is that you also need a good governance
#
to actually you know sort of enable all these forces to express themselves and if you are
#
stuck in a large company with bad governance then it's a problem so that's imponderable and
#
that is why my answer has to be it depends because of veil of ignorance there's too much
#
ignorance you know if you tell me what the state is like i'll give you my answer correct no see
#
but in in a way i was even abstracting from the nature of the state and i guess you know i shouldn't
#
put you on the spot like that and you know just take a step back and just think about independent
#
of the nature of the state of the government right let's just think about the mechanics of size
#
okay and you know what are the so the way to conceptually think about this question about
#
the optimal size of nations is to say what are the benefits of size okay and what are the costs of
#
size right so and and as with everything right there are both costs and benefits right now the
#
thing is that actually many many many benefits of size okay so historically the biggest benefit of
#
size being in a big country is economies of scale in defense okay because the most important
#
existential threat was just being run over and invaded and so being large is the geometry of
#
defense is that if your population is uniformly distributed then the number of people increases
#
with the square of the radius but the circumference to be defended is increasing linearly with the
#
radius right so population per unit of border to be defended is actually higher the bigger you are
#
okay so and that is why historically like you know countries tried to expand partly to protect the
#
core right because you would have a periphery and then there would be the core that would be a
#
productive core so that was one of the biggest historical advantages of size okay now there is
#
a related advantage of size which is that along with the scale of investing in military comes
#
other spillovers to civilian life okay so you you build roads partly to mobilize troops from one
#
part to the other and that also has economic spillovers and that logic applies even today right
#
so the best kind of you know so the internet came from darpa's investments in defense communications
#
right boeing came from investments in military aviation okay so a lot of the technological
#
advances of society have also happened in the context of military innovation and that is also
#
benefited by scale it's fundamentally a scale game right that because the more people you have
#
the more tax revenue you have and that allows you to cover the fixed costs of these kind of big
#
expenses now there's a third advantage of size right which is the size of your domestic market
#
okay so in in worlds where you have trade barriers across countries the size of the market also helps
#
in terms of enabling high fixed cost industries okay so and just the larger markets are good in
#
in many ways there's a fourth advantage which is better spatial insurance okay so something goes
#
wrong in one part of the country you have an earthquake you have a flood you have something
#
and now you have two mechanisms of kind of providing insurance against these natural disasters
#
right the first is you have tax revenue from other parts of the country that can be used to kind of
#
compensate and rebuild the places that are hurt and the even more important channel is migration
#
okay that people can just move out of the afflicted area and kind of make their lives in other parts
#
of the country right so and then there's a fifth point which is fifth advantage of size which is
#
it becomes easier to kind of manage spillovers across jurisdictions okay so i think say rivers
#
are a great example that if rivers flow through multiple countries then figuring out the public
#
goods aspects of that is harder now it's not easy even within a country as we see in the interstate
#
river disputes but in principle you kind of have structures that allow you to negotiate these
#
areas of policy where there are spillovers okay so there's many many many advantages of being big
#
okay so but then the question is why are we not like infinitely sized and that's because there are
#
also enormous costs of being big okay so the two big costs of being big see the biggest cost of size
#
is that you have to accommodate greater diversity in people's preferences right so in the and as you
#
get bigger and bigger and bigger if you have again on a scale of zero to hundred right if you
#
increase your people then your policy has to be somewhere in the middle right i mean so the bigger
#
you are the more you have people whose policy preferences are really far away right i mean from
#
the policies that are being chosen and at some point like you know people want to secede because
#
they would rather have kind of the autonomy to craft their own policies as they see make sense
#
for them as opposed to being tied to this big core okay so the first big problem is how do you
#
accommodate diversity in policy preferences with like a single set of policies and the second
#
challenge of size is just how much more unwieldy governance becomes because the layers between the
#
people and the and the rulers right and so if if you have to go through six levels versus two
#
levels the government is just much less responsive right i mean when you become too big okay so
#
so those are the two fundamental costs of size right and so the over over time in history the
#
optimal size of nations so you know countries have expanded right i mean at times of strong
#
empires strong thing and then they've receded as you overextend and as kind of typically
#
populations on the fringe of the country like i mean would rather be on their own because you've
#
typically had a core and if you see say russia ukraine today it's exactly like i mean a manifestation
#
of that right i mean so you know historically saris russia would expand like i mean and kind
#
of bring more areas under kind of core russian control there was a certain element of coercion
#
a certain element of you know migration but you know there is also costs which the peripheral
#
republics were bearing by kind of you know having to put up with russian policies and when 91 happens
#
people you know prefer to break up okay so then that's kind of this basic tension that's playing
#
out so the question then is that so the the beauty of federalism right i mean is that the
#
when you want to then think about what is the optimal size of a country right federalism when
#
done well is a very very powerful kind of solution because what it does is if you abstract from the
#
politics and just focus on the efficiency aspects of government for a moment right that federalism
#
done right is basically saying let's put the functions of government that benefit from economies
#
of scale at the level of a national government that has a much larger scale and let's put the
#
functions that need to better accommodate diversity of preferences at say a state level
#
and let's put functions that require responsiveness right i mean and immediate acting on information
#
at the local level right i mean and so so the the core idea of federalism is that let's get the
#
benefit of the best of both worlds right get the benefit of size by kind of having size where it
#
really matters right so size matters for defense size matters for international relations size
#
matters you know for all kinds of actions that require economies of scale but let's kind of
#
move the governance much lower in areas where size is a disadvantage okay so that is kind of the
#
conceptual core of federalism right now i think so in the indian case the federalism i mean so
#
you know and the indian case is a particularly good example right of how these federal principles
#
have i think in my view and other experts really contributed to the preservation of the union
#
right because you know one of the big concerns at the time of independence was you know whether
#
it was the british the americans everybody was like listen you know the punjabi in east punjab
#
has more in common with punjabi in west punjab than with the tamilian and they couldn't stay
#
together right like i mean so having seen partition you know the sense was that this
#
is not a country that is going to be together it's just too unwieldy and too diverse okay like you
#
know so but i think and and again there was an old debate at the time where you know gandhi was
#
always in favor of more linguistic states but neru and ambedkar were concerned about the
#
balkanization and the risk of further linguistic regional balkanization but i think the 56
#
reorganization of states by language was a really important decision that has helped preserve the
#
indian union and that's because it has kind of allowed the area where people have kind of
#
diversity and preferences particularly cultural language right i mean that it's allowed that to
#
be preserved at the state level right like meanwhile delegating to the union government
#
right the functions where there are true economies of scale okay so i think though so federalism when
#
done well can really help by getting you the best of all of these worlds right now the problem of
#
course is it also comes with a whole bunch of additional challenges right so it comes with
#
basic challenges of who's in charge okay like you know who who has the final say on a particular
#
set of decisions okay it has additional complications in terms of coordination and kind of passing the
#
buck and getting credit so everybody at different levels wants credit when things go right they want
#
to pass the buck when things go wrong and there is also this generic kind of push towards over
#
centralization right i mean which is a constant risk in federal systems but i think you know just
#
taking a step back about how to think about federalism i think the key insight in what i'm
#
telling you is that we often think about kind of governments as hierarchies right i mean we say oh
#
there's a the central government is the highest and then there's the state government and then
#
there's the local government but thinking about governments as hierarchies is fundamentally i
#
think incorrect right rather you should be thinking about these governments in terms of functions and
#
not hierarchies there are some functions that naturally are best done at the central government
#
level some best done at the state and some best done at the local and frankly from the perspective
#
of the citizen you know the decisions and effectiveness of the local government matter
#
much much more right i mean are my lights are my streets is the drains are the drains being cleaned
#
is the garbage being collected are the street lights working are the teachers showing up
#
and these are all kind of local government functions because they depend on acting on
#
local information and kind of reducing the time lag between kind of an issue being identified and
#
it being solved right so and you know and we can talk a little bit more about this about now see
#
the constitution tries to kind of provide some clarity on what function should sit at what level
#
by segregating things at the sectoral level okay saying that some sectors are in the state list
#
some are in the central list or some are in the concurrent list but i think and we can talk more
#
about you know the covid example and other things that in some ways we are better off by thinking
#
in terms of function as opposed to sector right so functions that require economies of scale are
#
best done at the national level functions that require coordination and that need to kind of
#
accommodate migration and people moving across are better done at the national level functions that
#
need to respond to local variation are better done like you know at a lower level so anyway so
#
that's i think like you know a high level conceptual you know taxonomy of federalism so to speak
#
and then you know we can talk more about you know tensions as well as the indian experience
#
yeah no that's fascinating and what i also sort of liked about your chapter was a historical
#
perspective you bring through this like when you talk about europe and china in the 15th century
#
and you know looking at the start of the 15th century you'd imagine imagine that china will do
#
much better and you know they will all the technological progress will happen there and
#
the innovation will happen there and so on and so on so forth but it's actually europe because
#
china is too centralized information takes too long to kind of pass like those giant dinosaurs
#
which became extinct i don't know why i thought of that and by the way a velocity raptor i think
#
it's called you know spielberg created a whatsapp narrative about it actually it's the size of a
#
turkey so just a small aside you know you could have a pet velocity raptor if you lived in those
#
days if it if it allowed you i think in that particular case consent would be important
#
but again the example of europe and china in the 15th century and why europe did so well because
#
it's basically is perforce decentralized as different states but people are moving back
#
and forth innovation is moving back and forth ideas are moving back and forth they're competing for
#
labor they're competing for capital all of that is happening it's almost like a perfect environment
#
now you know when you think of both the benefits of many many people the economies of scale
#
and also the importance of local governance so you know you you don't have sort of sclerosis
#
setting in it makes complete sense that you know national defense that's best left to the center
#
and who's going to clean my outside that's best you know left at a local level and indeed india
#
was you know designed as you point out at a federal structure across five tiers you know you had
#
national government state governments district block and local body levels right and this is
#
in conception this sounds absolutely brilliant but the way our state was really designed by
#
our founders had a bias towards centralization and not enough power not enough money went
#
all the way down the line and and and we you know suffer with that today so tell me about the
#
reasons for this bias of centralization because you know in hindsight it's of course easy to pass
#
judgment but you know sitting there in delhi as a country is collapsing around you i can totally
#
understand that thing that let's keep it together you know the center must hold as it were you know
#
so you centralize power and all of that but the consequences of that you know you have 50 70
#
hundred years down the line for all you know so tell me a bit about how the state actually
#
evolved these are the good intentions federal state you know and again states organized by
#
language is also great where did it go wrong yes i think so let's first kind of get some facts
#
right to understand just how over centralized india is right i mean so see one measure of
#
just how over centralized india is is if you look at the number of times a state government
#
has been dismissed okay a democratically elected state government right i mean has just been
#
summarily dismissed by the central government or a weaker variant of that which is the chief
#
minister is just replaced okay like i mean because and that happens even today though
#
356 has gone down okay so i think i have a stat in the book that says that i think between 1960
#
and and 2000 or there's a there's a window there that you know there's we document over 80 cases
#
of either article 356 or chief ministers being replaced and so this was really 83 83 times right
#
like you know 83 i can't remember the exact dates i think it was 1960 to uh to 2010 50 to 90 50 to
#
90 oh just 90 okay not even i thought went to 2010 but anyway like you know i think regardless
#
there's a very very very large number of cases where local democratic kind of decision making
#
as represented in the elected government has completely been countermanded by the center
#
okay now article 356 was meant to be used in the most egregious cases of complete breakdown of law
#
and order like you know and and a lot of those powers in fact i can't remember which one of
#
you guys said this right but a lot of because the the initial constitution the laws in many
#
ways reflected that of a colonial state not just a colonial state but also a state designed for
#
wartime okay because a lot of these discussions are happening around the preparation for world
#
war two that those things stayed on to kind of give the government of india kind of extreme
#
powers to be used in emergencies but it got routinized right it got routinized to the point
#
where states almost become became subservient so that was one part of over centralization
#
at the political level right then at the financial level at the policy level one way to then think
#
about how much control the center keeps is that you know it's both at the level of say centrally
#
sponsored schemes okay so even though issues like health and education are supposed to be in the
#
state list right by kind of having a lot of financial power with the central government that
#
gets done through schemes you're also effectively forcing states to kind of toe the line with regard
#
to these central guidelines right so we can talk a lot more about that as well and get into details
#
of how over centralized things are and what the costs of those things are see but i think it's
#
important not just to blame the center right the bigger culprit in some ways are the state
#
governments right because they have not actually decentralized any authority to local governments
#
okay so the and raja chalaya had this kind of wonderful quote which says everybody wants
#
decentralization up to their level okay like you know so so nobody wants to give up power and that
#
this is true both politically and bureaucratically right you know nobody wants to climb the spend the
#
long climbing the greasy pole of power to get to the top and then give it away right like you know
#
so there's all these tendencies towards over centralization but i think if you take a step
#
back into why we are the way we are at the time of the constitution how we've evolved there's really
#
three reasons right there are political reasons there's economic reasons and frankly the most
#
important may well be social reasons which i think madhav kosla talks about in his book right i mean
#
and the see the political reason was obvious which is the single biggest concern of the framers was
#
that the country would fall apart okay so you needed this idea of a strong center and you know
#
it was a union of states partly reflecting how british india was organized but partly reflecting
#
the princely states and you know the fact that these were reasonably distinct kind of entities
#
but the political unity of india was paramount in the minds of the founders and so that's partly
#
why you give the union government so much power there's also the economic aspect of the thinking
#
that most of the development had to be state-led and the resources that were needed for these
#
investments were so large that it was felt that only the government of india could actually
#
mobilize those resources so there's an economic reason and i think the most important one was
#
actually the social reasons right which is that the the indian state was not just trying to create
#
a functioning order of you know just law and order and a functioning state but it was also trying to
#
do social reform in a big way okay and i think the biggest concern of decentralization of power
#
was the concern of local elite capture right and and this was not just a theoretical concern we'll
#
see this even now right i mean in empirical work on social welfare programs and other areas is that
#
you know given just the deeply ingrained inequalities in indian society the reformers who kind of you
#
know were architects of the constitution just did not trust right so ambedkar's famous quote about
#
the village kind of being a den of prejudice etc so very practically what does this mean
#
practically it means that think about something like education okay now in say the us or in most
#
other high-income countries education is purely a local government function okay it's done at the
#
local level and the logic is that you accommodate preferences there are certain curriculum but
#
local bodies have a lot of power okay but in an indian case where the history of caste in many
#
ways was about denying education right mean to the underprivileged or denying education to women
#
right there was just this very real concern that local control would mean that you would simply
#
not educate the underprivileged folks now it's a different story that it didn't happen for other
#
reasons but the concern was that you cannot trust local elites to kind of do the investments that
#
will disturb the social order but that which are really important for social progress okay so i
#
think that was probably the biggest reason for the over centralization i mean think about this right
#
so if you're a government teacher who is recruited by the government and sent there to do a job
#
right and again panchayat is this wonderful example right where you see these tensions
#
playing out even today so you see that episode of kind of you know yes so throughout the thing
#
you see that this is a reserve for women but it's the sarpanj pati who's doing the job but you you
#
see that the agent of the state is kind of meant to make sure that the laws of the state are being
#
followed against kind of the local pressures and as usual the end result will be somewhere in the
#
middle right so you don't fully the modernizing state is meeting the traditional society
#
tradition doesn't give up immediately and modernity also loses but they meet somewhere in
#
the middle right so you do get progress and so i think these are the historical reasons for why
#
we are so over centralized and so again it made sense at that time but i think part of the reason
#
we need to reimagine our possibilities today is that those kind of founding moments were times
#
of literacy rates of 120 percent at a time when you had you know no cell phones no way of getting
#
information no way of monitoring no way of really knowing what's going on and so you over centralized
#
partly because you didn't trust but you know we are at a place where the optimal amount of
#
decentralization is almost certainly much higher than you know what we've had so far
#
yeah and i'll read out at ambedkar quote because i love it so much where he said quote what is a
#
village but a sink of localism a den of ignorance narrow-mindedness and communalism just a beautiful
#
sentence flow so well and you know and that kind of gets me to thinking and of course uh you know
#
what ambedkar is implicitly also nodding to is that notion of people as a good thing of you know
#
no such thing as overpopulation that i pointed out that cities change incentives that you enter
#
those larger economic networks your incentives change and you can no longer afford to be ignorant
#
you can no longer afford to be so narrow-minded or prejudiced or whatever and they're not magic
#
bullets but it changes a little bit for the better now i you know it's easy to look back in
#
hindsight and say that oh that was wrong but at that moment sitting in his position it just seemed
#
the completely plausible thing to do the country is falling apart you gotta do something political
#
imperative centralized power you know there is so much to be done in terms of building new
#
industries building infrastructure centralized power that's economic reason and the social reason
#
is that look the country is a den of such you know casteism bigotry all of this shit happening
#
all over the place and we elites in delhi are not like that we'll figure it out we'll change it from
#
the top down centralized power right and and the thing is and i know it's possible to be too harsh
#
and be judgmental about this third instinct the way it worked out because you know you couldn't
#
change society from the top down this was of course a classic you know gandhi versus the other guy's
#
argument where gandhi singh was we got to change it from the bottom up the gandhi of course also
#
romanticized villages partly because he didn't spend too much time in them but gandhi singh was
#
and these guys were like no no top down and and top down has failed in in every sense all these
#
problems are still with us caste is still with us we are still a misogynist society and so on and so
#
forth and of course we don't know the counterfact so that's what i was going to say yes and no right
#
i think because see the careful research that looks at say the impact of women's reservation
#
and panchayat elections right like you know actually shows that despite all of these
#
limitations right i mean it has had not again worked is too strong the word right it has
#
moved things in the right direction right see in the end progress is only directional right means
#
so you can always look at this glass half empty and say why it has failed so i think again with
#
all of these things the binary of worked or not worked i don't think is that useful right i think
#
it's useful to kind of them just break apart the different components and go to first principles
#
and saying so what were we trying to achieve here okay and then to what extent has that succeeded
#
or failed and then look at the empirical evidence where possible and this is why you know i think as
#
we get into the and i'll spend a little bit more time talking about the research right and the
#
evidence which is again you know hopefully the comparative advantage i bring to the show right
#
the things i say are actually based on bringing together a bunch of academic papers you know but
#
this is a huge area of research right of looking at the impact of decentralization at the impact
#
of different kinds of reforms you know whether it's legislative reforms and representation
#
where you do find positive effects right so that is the modernizing state that is top down like
#
you know left to themselves villages are not going to elect women as as as pradhan's right so that is
#
a top down imposition but you know i think it was urvashi i think in the most recent episode like
#
you know i mean who was saying that these things are moving okay like i mean that these reservations
#
are others have moved things in the right direction so you know i think that's one thing but
#
another case for top down frankly and this is where the enrega paper comes in is that there is
#
now actually pretty strong evidence that let's think about the design and delivery of welfare
#
programs okay so there's an element of this that's about targeting about identifying who is the poor
#
and there's an element about this that is delivery okay and it's maybe you can argue both ways you
#
can argue that local communities have more information as to who is in fact the most
#
deprived and therefore needs the support right so one logic would be to say you should give the
#
local communities more control over a welfare budget that they can allocate to who actually
#
is the most needy but the flip side is to say that welfare for the poor usually affects the
#
power structures like you know of the current rich and and rega is a perfect example that was
#
massively resisted by landlords okay and so there is both the risk of elite capture that these
#
resources will be captured by them and the risk that you know they will simply not implement the
#
program and so here the evidence now from multiple studies does suggest right that the top down
#
approach has worked better okay in terms of so this is very nice paper in indonesia
#
that ben olken abhijit banerjee and others have done and i think that will soon be out in the
#
american economic review but you know they basically look at a reform that went from
#
distributing rice by taking whole bags of rice to the local communities and saying you distribute
#
it to one that kind of identifies the poor and sends the money directly to them and they basically
#
estimate that this reform dramatically improved the progressivity of the welfare by actually
#
finding more of the needy right so that's again a case where in the delivery of welfare programs
#
actually top down technology enabled interventions may in fact work better than the decentralized
#
version but there are other areas like say school governance and service delivery where i think a
#
decentralized model particularly with regard to accountability and things like attendance right
#
i mean may work better but again you can see the tension right the tension there are political
#
tensions and federalism but there's also administrative tensions and federalism right because
#
what the view towards a more centralized state for say teachers and doctors is to say that
#
a local village will never be able to attract a highly qualified teacher or doctor the only way
#
they will ever get a qualified staff member is if they are recruited through a civil service exam
#
and then you are posted to that village because otherwise the village is never going to get a
#
qualified staff member but that comes at the cost of the fact that two problems one is that this
#
highly qualified and highly paid person feels no social connection to the village and therefore
#
lives far away so a big part of the absence problem is that people are just not living
#
in the communities right like i mean they're traveling from in and out and second is that
#
they're not embedded in the community and so therefore there's very little kind of accountability
#
so again you see the tension right i mean do you want the more qualified person but who's not
#
accountable and embedded or are you better off with a slightly less qualified person but who's
#
from the community and held accountable there right so i think so in all of these cases theoretically
#
you can argue it both ways which is kind of why you then need the empirical evidence to say what
#
is happening and this is again a very interesting case in education where see for example there's
#
this nice rct that abhijit and esther and others did in up and that paper is called pitfalls of
#
participatory development where they tried to activate village education committees okay which
#
are supposed to do this oversight of the teachers and local and you know they have some local
#
control and what they found was most people who are on vcs didn't even know they were on the vcs
#
and you know and even those who knew they were on basically were completely ineffective because
#
they had very little authority okay on the on the teachers conversely there was a study
#
on school management in kenya that was also randomized and what they find is a bit more
#
nuanced which is that strengthening the school management committee has no effect on the
#
performance of the regular civil service teacher but it does have a significant effect on the
#
performance of the locally hired contract teacher and that's because the community controls the
#
renewal of the contract but the community has no say over the regular teacher so i think the point
#
again is just to highlight that conceptually you can argue these both ways but you know evidence
#
matters and details really really matter yeah and you've got plenty of nuance in your chapter and
#
you know when you write about the key tensions you've already mentioned a few of them like there
#
is a tension about who has a final say then there are conflicts over fundamental values where at the
#
local level you may have a different set of values and at a central level you could have a different
#
set of values a classic example being the u.s civil war which you give or ambedkar himself and
#
he's talking about the village correctly as a you know a den of ignorance is sort of talking about
#
a similar conflict which is there you speak about the administrative and political tensions risk of
#
elite capture at the local level you've spoken about that you know the trade-off between education
#
and the local embeddedness as you point out that you know locally there may not be enough trained
#
teachers so if at a central level you're sending to your teachers to government schools even if
#
they don't show up there but we discussed that in another episode and another tension that you
#
point out is the political tensions when different parties are in power at different levels and all
#
of that now i get all of this and i also like as an approach especially when we are getting
#
inquiry done into this we are getting empirical evidence rcts are being done all these insights
#
are coming up i understand that in theory we can just really modify it and figure out where you
#
need a top-down intervention and where it is best left locally but here's the thing in theory we
#
we both agree that we need to be federal federalism is good you need local governance
#
you need to design the areas and say okay the center does this local area local governments do
#
this but at the same time as you say the three concerns that our founders had when they were
#
effectively designing the state you know 75 years ago you know are completely valid that this the
#
center may not have held what the hell do you do you know and economically at that time the
#
thinking would just have been you know top down and all of that and and ambit kurz tensions were
#
of course valid that listen this whole country will descend into you know its worst values if we if we
#
just you know leave it to local forces so here's my thought experiment for you that let's say that
#
with the knowledge that you have now if you are sitting in ambit kurz place with context as it was
#
then how would you design it differently because it is not enough to say that let's design it in
#
at x equilibrium and then gradually we will tinker tinker tinker as we get data it's not enough to
#
say that because once you've set the equilibrium at x you've set the incentives kind of in stone
#
because nobody who has power is going to give it up to speak to your you know the earlier court of
#
yours about how everybody wants to devolve power but only up to tell them they don't want to you
#
know so a state so a state government will say no no we need more power local governance but they
#
won't give it to the districts and the districts won't give it to the blocks and so on and so forth
#
and therefore it just in terms of the political economy nobody is going to give the power away so
#
it is easier said than done that we will tinker things and we will smoothen the system as we go
#
along no once you've set it you've kind of set it in stone so what are you sort of going for
#
in in this horrible thought experiment i've inflicted upon you yeah it's too much pressure
#
right like you know i think the no so let me just say a couple of other things right i mean since
#
you're talking about the founding moments and i wanted to connect back to this episode you did
#
with madhavan like you know and i think the other nice thing i've seen in the arc of your own
#
episodes over the years is you know how some of your if i may say so more black and white
#
characterizations right mean have become more nuanced right so your early version would just
#
be they call like you know the u.s constitution was so small why do we have this huge thing and
#
it's a periodical that gets in so much but i still feel that but but i think what madhavan
#
rightly pointed out was that the u.s constitution is an incredibly conservative constitution that
#
is written in many ways codifying the power of a very narrow landed educated elite right i mean
#
that wrote that constitution so and there was no concept really of social justice or any of issues
#
of slavery or any of these things right i mean and so and so there are two things one that
#
constitution is small so for two reasons really see one is going back to first principles of
#
federalism right mean that the u.s is what we call them political science uh coming together
#
federalism right mean where the states were distinct units and any power that is not given
#
explicitly to the central government sits with the states okay so which is why that is what is
#
called coming together you come together and give up few powers and the modern european union is a
#
bit like that right i mean that you're coming together and saying i'm giving you powers and
#
currency i'm giving you powers and defense because there is economies of scale but anything i'm not
#
giving you sits with me okay so there is one part of that which reflects the fact the u.s
#
constitution is short simply because of that but the much bigger issue is that it is not trying to
#
do any social reform and you see the tension then 100 years later or 80 years later when they're
#
dealing with slavery right mean is that it does take a federal government to come in with military
#
force to actually kind of abolish slavery and that is still not enough right it takes you know many
#
many years after that you know you need the voting rights act in the 1960s to even make sure that
#
voting rights of minorities were respected right so and that gives you a sense of just how deeply
#
entrenched these local power structures are and how it takes kind of you know not just ideational
#
change at the level of constitutions and laws but the actual physical backing of force of that state
#
right i mean that comes and enforces the rights of the most marginalized okay so i think this
#
challenge that we are trying to both kind of govern with stability because think about it right any
#
attempt at social justice is fundamentally disruptive to a status quo okay like you know so you're
#
trying to and that is i think the magic of india right the magic of india is that and i think this
#
was also in your episode with urvashi right i mean which is how despite all of the conflicts and
#
fault lines we have that the society is still actually remarkably stable okay in terms of not
#
kind of you know exploding in configurations and it's a miracle right and so the challenge of kind
#
of the indian state is that governance and constitutions are fundamentally conservative
#
right because you want to preserve law and order you want to preserve certain things
#
but social reform is fundamentally disruptive right and so historically social reform has
#
happened with revolutions right whether it's the russian revolution or the present revolutions in
#
china so what is again magical about the indian experience is like how we have managed to kind of
#
push the arc of the state in progressive ways right i mean that improves social justice but
#
within an arc of kind of overall democratic constitutional systems and stability right so
#
you get you know so anyway so i think the so therefore coming back to how you would
#
re-architect or rewrite certain aspects of the constitution today based on what we know from the
#
last 70 see it's not just what we know right it is the fact that today education rates literacy
#
rates are 75 percent compared to 15 percent right you know smartphones and cell phones so why do
#
you not trust the local area so the two reasons you don't decentralize is one you think people
#
are not capable and second like you know you don't have visibility okay now you have both right so
#
essentially what i argue in terms of the kind of reform agenda that i think states should be doing
#
that deepen federalism while at the same deepen federalism and local control while at the same
#
time recognizing the importance of checks and balances right because the local communities left
#
themselves may very often kind of undo some of these goals of justice and progressive kind of
#
you know both programs and policies is so let's take a very concrete example of teachers okay so
#
the logic of federalism would suggest that education should be locally managed the problem
#
is that will the village guy appoint his crony as the teacher like you know and therefore you
#
get a poor teacher and who's not accountable whatever right so how do you therefore build
#
a modified architecture that builds both the strength of your current systems of quality
#
control with the additional accountability okay that comes from local control okay so
#
one of the things i talk about so i have this whole section of nuanced decentralization right
#
so it can't just be that i'm blindly going to send off everything but the flip side the argument of
#
the centralizer who says there will be a lot of corruption at the local level this will be captured
#
also needs to be treated with a grain of salt because there is a self-serving power preserving
#
element of that argument okay so so what a framework that i broadly talk about in the chapter
#
when i talk about nuanced decentralization is to imagine just in the case of teachers the following
#
okay that you can only be appointed as a teacher if you have been empaneled through a selection
#
process whereby you have to pass certain exams and show that you have certain qualifications
#
okay but being empaneled doesn't guarantee you a job okay so today you get into the government
#
system you're basically guaranteed a job okay so the job is still held at the pleasure of the
#
local community and so you know if you don't show up if you're not effectively catering to
#
the local community they can say no like we don't want you okay so they can just say i don't want
#
you i want somebody else but they are constrained in finding people who are also empaneled okay so
#
in a world where you have empaneled say more teachers than there are jobs okay you have got
#
both the quality control aspect of it and the local control aspect of it right so that's kind
#
of an example of how you might want to architect certain things that has both the benefits of a
#
slightly higher level of kind of administration and oversight but also the strengths of local
#
accountability and local control and then there are more radical versions of this you know which
#
i talk about which is a slightly more radical version is you could take the entire budget for
#
schools and say because see right now the government school salaries are so much higher
#
okay than the private schools right so and part of the problem in the why does the private school
#
kind of do well it's because they're paying one-fourth the salaries and hiring two times
#
or three times as many teachers and so you have lesser multi-grade teaching you have smaller
#
groups you have all of that right so there is nothing that prevents a public school from having
#
those same efficiencies if you were to say that i'm going to give the local body the entire budget
#
of the school right and the local body can choose to spend that money how they see fit now of course
#
you still have to worry about corruption you still have to worry about a bunch of things
#
and so you will need certain things that says you can still only hire an empaneled teacher
#
but you have some flexibility in the wage setting so here is the budget for the salary
#
maybe the salary is made to 50 percent and the remaining 50 percent is allocated on a
#
performance-based basis or allocated to say i want to attract a more qualified teacher
#
so there are ways of kind of taking the current budget and dramatically improving the efficiency
#
and accountability by increasing the stake of local communities but at the same time building
#
some checks and balances right and means to make sure that there is a trust but verify approach to
#
you know to how we do this and that's not an answer to how i would read out the constitution
#
but that's kind of a very specific example right i mean of saying how these principles can be tweaked
#
fair enough no you know i have changed my mind a lot you know over the course of all the great
#
conversations i've had with the people who've given me so much insight but this particular issue
#
about the u.s constitution is not one of them i maintain that we would have been incredibly
#
fortunate to have the u.s constitution because it enshrined and protected individual rights
#
you know and that's important it protected free speech you know umar khaled and siddiq
#
kappan would not be in prison today if we had that constitution muhammad zubair would not have been
#
arrested if we had that constitution so it is something i feel strongly about protecting
#
individual rights as far as slavery is concerned that's a social evil if the elites of that time
#
were to enshrine their values into the constitution abolishing slavery wouldn't have been there anyway
#
and over time as society changed thankfully it went away i would argue that our efforts
#
at social justice didn't really work in the top down way you know we still have many of those
#
problems that we had then in fact the whole quest for social justice in some ways became a bit of a
#
political farce and i don't necessarily mean that you leave it to the villages to reform themselves
#
as gandhiji might have hoped i don't think that would have worked either so i don't have an answer
#
for this but i do see where sort of the limitations are so on this particular issue i won't take a
#
stand because i don't have any answers but i see the problems of you know that where the elites
#
failed i do see that no but i think this connects us back all the way to state capacity right see
#
because in in a way the story of india right is that because we are crafting our ideals of what
#
we want to do right at a time when because see and this is i think partly in alex and shruti's
#
episode and you know i'm kind of the imitation right pretty much imitation right and see the
#
ideas of what kind of a modern democratic society should stand for even in 1947 and 50 are informed
#
by what people are seeing in the west right so the story of india is always one of aspirations
#
ahead of our capacity right means so the problem is not again what's in the aspirations right it
#
is that we haven't had the capacity to then actually follow up against that so so one view
#
is to say that listen you need to put the aspirations there even if you're not able to
#
deliver because that is a bit of a north pole and a guide star north star to where do we want to go
#
okay like you know okay at least the laws aspire to this so that we can get inspired to get there
#
okay so that is one framing the the converse framing of that is that when your aspirations
#
are so far ahead of your capacity to deliver it actually breeds cynicism like you know that we
#
just say all of these things and never do it and then that creates kind of the trust deficits and
#
everything that we talk about and so i think that is it is the core challenge and why you know when
#
i talk about state capacity i see these investments in state capacity as the central the core when i
#
think about india 75 right i think about you know we are a miracle in many many ways right there are
#
just so many things to be proud of right but if we want to focus our mind on what is it that we
#
really need to get our act together in the next 25 years it is essentially building a state that
#
is capable of meeting the aspirations right i mean in the constitution the law and coming back to
#
fukuyama scope scoping and strength i agree some of this will also require reducing the scope of
#
the state right i mean there's a basic mathematical truism that if i'm you know and in fact i find a
#
very useful analogy to be with my own time management right i mean so in a way i'm like
#
the over committed state in terms of my time commitment right i mean because i have committed
#
to more things than i have time for so i am always kind of juggling i am always kind of responding
#
to what is most urgent who's putting the most pressure on me and things that are important but
#
not urgent are getting neglected so to bring my life into kind of balance it requires a combination
#
of two things one is becoming more efficient and investing in capacity but the other is also cutting
#
down the things i say yes to okay so mechanically you need both right i mean and so that applies
#
even to the state i mean we are definitely overextended doing a bunch of things that we
#
have no business doing so some of that has to come down but i think where i want to push back not to
#
you but some kind of some of the naive kind of discussions that happen out there to say they hope
#
that where the markets have taken over the markets have done well so let's kind of unleash the markets
#
in these areas and that also do well and i think there in the core functions of the state right i
#
mean that that is not going to work so you are going to have to kind of invest in core state
#
capacity and apply that in these six areas that i've talked about right i mean so and the reason
#
the federalism chapter is kind of a theme rather than a sector is that the ideas in the federalism
#
chapter then apply across the sectors correct which is how do you then kind of optimally
#
re-architect our governance across multiple layers so that you really kind of give local communities
#
more of a stake and more of a control so and maybe there's a chicken and egg problem right
#
the chicken and egg problem of decentralization is that people say we will not decentralize because
#
there is no capacity to actually do the work locally conversely the capacity is not built
#
because you've never given them the money and the authority to kind of make it worth developing the
#
capacity okay so and in a way if you look at even the arc of indian independence the british in the
#
early 20th century were like they can't govern themselves right so which is why 1935 government
#
of india act kind of having the provincial governments showing that you can do some stuff
#
then kind of you know builds your muscles along the way to being able to govern yourself so
#
similarly at the local government level we are in this chicken and egg today where we say we won't
#
decentralize because there's no capacity and conversely people say why bother when there's
#
no capacity and that's where i think you know particularly in urban governance right i mean
#
where i agree with ashwin and others is that because you now have enough educated highly
#
competent people in many cases more competent who are in the government right if you can find ways
#
for greater civic engagement in urban governance right i mean then you're kind of both proving that
#
the community can handle its problems and by doing that you're also building a little bit more of a
#
political force right i mean to actually ask for more devolution i mean at the local level right so
#
and i think it's not an accident of course you know the jury is out on what amadmi party will do
#
in in in panjab right but it's not an accident that the chief minister who focuses the most on
#
service delivery issues is the most empowered mayor of india right like karnin is because he
#
is basically governing delhi and therefore like karnin talks about service delivery issues and
#
you know the more the more you start kind of seeing organic political formations that focus
#
exclusively on local service delivery and governance right i mean then you will kind of build a little
#
bit of a bottom-up aspect to that and you know power is never taken right power is all power is
#
never given away right power is taken okay and so just like so there are people in who are
#
decentralization advocates who think as who feel as strongly about this as democratization itself
#
let's say like you know democracy itself elites never give up power it happens when people kind
#
of demand the power that you know you you give away the vote and there are people who argue the
#
same thing for decentralization and going back to question nobody will willingly give up power but
#
it has to come up bottom up and saying you know we will step up and do what it takes to govern
#
ourselves right i mean and having done that that creates the space over time for more and more
#
decentralization and you know and sometimes the institutions will also help i think this time
#
the finance commission has explicitly kind of linked certain transfers to kind of the next level
#
now again you could argue that that's not democratic but you know it's it's one of the
#
ways in which things that we know are good but that are politically not incentive compatible get
#
done is through these non-partisan commissions that make recommendations that then get adopted
#
wonderful i'll i'll push back a little bit at your pushing back of allegedly non-me
#
uh you know in in in your book you have this little bit about how you know some market
#
proponents say that you know look at what markets have done in telecom and airlines uh that is not
#
you by the way i'm not pushing back on you that's not you know because you know that that is actually
#
the classic example i use whenever i talk about the power of the market that you know i remember
#
what phones were you know you had a 10 year waiting period for phones in the 1980s airlines
#
were so expensive i remember when you opened it up um how things changed because of market incentives
#
and so i use exactly those two sectors and and you kind of mention exactly those two sectors but
#
even if you're pushing back against someone who is allegedly non-me it is still to be noted that
#
you're pushing back against the straw man because i don't think anyone argues that the basic roles
#
of the government should be supplanted by the market instead the argument is and the kind of
#
argument i would make in essential services like education for example is that i am not saying that
#
you abolish government schools and only your private schools right not at all all i'm saying
#
is that you and we've discussed this at length in our episode is that while you do what you do
#
allow private schools the chance to exist instead of putting so many impediments in their way such
#
as you can't have a for-profit school so you know a lot of the budget private schools today for
#
due to which you know slum dwellers send their children instead of to a free government school
#
thereby voting with their feet a lot of those schools are illegal outside their law outside the
#
law can shut down any moment so on and so forth so all i'm saying is that allow society to solve
#
its own problems and the few things that a state should do well again going back to fukuyama sing
#
about scope and strength we need a strong state that does a few things well not a weak state that
#
does many things badly what i would say is that in the things that a strong state should do well
#
you know by all means the state should do that no one is making the you know argument that the
#
market should do everything but at least allow people to solve their own problems that's and i
#
agree completely and you know that's why i have this whole chapter in state and market right in
#
fact so you know this is the the temptation of going into other chapters but i am going to you
#
know read out one paragraph from chapter 10 right on kind of you know on basically this yes i say
#
this right in ideological terms my approach in the coming chapters is best characterized as being to
#
the center left in terms of goals and center right in terms of means right so my choice of sectors is
#
clearly influenced by the development and capabilities framework associated with those
#
who prioritize equity and justice right so whether it's education health all these things further my
#
focus on improving the capacity of public systems to deliver better will also resonate with the
#
center left yet the ideas and themes i focus on also reflect my views based on years of research
#
and practice that delivering these goals at scale especially with our limited resource base will
#
require us to sharply improve accountability efficiency and cost effectiveness within the
#
government pay careful attention to incentives and design systems that better align the incentives
#
of all stakeholders to deliver improved outcomes not simply assume that well-intentioned laws and
#
higher budgets will translate into better outcomes and treat markets in the private sector as an ally
#
in achieving social and development goals and these are views that are more commonly associated
#
with the economic right okay so that's kind of you know where i come in on this and so hopefully
#
there i think we would agree very very broadly no no i you know you don't have to agree to agree
#
with me to be brilliant you're brilliant anyway and i learn so much from you but i would again
#
push back at a little characterization here when you talk about these goals are center left goals
#
i think you should in good faith accept that they're everybody's goals and the only argument is
#
about means right that we want everyone to be educated we want everyone to be healthy how do
#
we get there and what the economic right would argue is that you know good intentions and the
#
coercive power of the state won't get you there we have all of history as testimony to that
#
and we have to unleash the power of markets and society to help itself and at the same time if
#
you believe that you know you good intentions alone and but you know the power of the state
#
will solve it go ahead good luck but don't stop us from solving our own problems that's kind of
#
what i would say you know let's let's let's uh get on to uh sort of let's continue talking
#
about federalism you know some of the stats that blew my mind and this is something i should have
#
known this is something in a sense i knew because i think when iceland was doing well in the last
#
football world cup i said are versova has more people than them you know so this is something i
#
should have known but i just want to read these statistics out because it you realize the scale
#
of the problem and how stupid this kind of our kind of centralization is where at one point you
#
right the 15 largest indian states by population would all rank in the top 42 countries in the
#
world by population or 20 of the most populous countries in the world and you've got a chart
#
also right so it's not just up the 15 largest indian states would be among the top 40 countries
#
in the world simply put governing an indian state is best sort of as an equivalent of running a
#
medium to large country stop quote and then you go on to say quote indian districts and sub
#
districts are also large india has over 700 districts average population under 2 million
#
per district around 7 000 sub districts slash blocks with an average population of 200 000 each
#
and so on and so forth and then at you end by saying for perspective the average district in
#
india has more people than 85 countries or 36 percent of the countries in the world so the
#
average district in india is bigger than 85 countries in the world like my god that's that's
#
sort of uh mind-blowing now if the one can't quantify this but what has been sort of like
#
first before before i ask you questions about what has been the sort of the cost of being
#
centralized all this time if i am to ask you to sort of lay out how deep is the dysfunction
#
between power and accountability in this kind of a system like i had an episode with shruti
#
rajgopalan on urban governance and she pointed out that listen the guy you're voting for has no
#
power to change your life and the guy who has power to change your life your votes don't matter
#
to him in a context of maharashtra as it were but i think it would be uh kind of true a lot so give
#
me a better sense of this structure overall how how powerful is a center how powerful are the
#
states how powerful are districts and so on and so forth like both of us agree that for example
#
you know reserving those panchayat head seats for women did have an impact over a period of time
#
right even if people can argue net positive net negative i tend to think net positive
#
but they did have an impact right at the very local level but at the same time it's true that
#
there's almost no power at the very local level that you know the center will stop anything going
#
to the state the state will stop anything going further down you point out that you know the the
#
percentage of money for example that the states get is i think two-thirds of all revenues are
#
spent by the all money is spent by the center right so expenditure is more in the states than
#
the center but see essentially first principle that's why you know some of this is overlaps with
#
chapter seven and revenue as well right so first principles of public finance say that a lot it
#
makes sense to collect revenue at a higher level okay because particularly because these economies
#
of scale and tax administration you don't want to raise to the bottom in certain aspects like
#
corporate taxes um customs and stuff are obviously kind of done so and in a way so essentially
#
revenue by first principles it does make more sense that the government of india collects more
#
but expenditure by first principles it makes more sense that more of it happens at the state level
#
because that's they are closer to the delivery and the gap between that is usually that's what
#
is fulfilled by the finance commission right because the finance commission takes kind of
#
the divisible pool of revenues and then through a formula that has components of horizontal and
#
vertical kind of you know the delegation basically allocates money to states and so the the gap comes
#
is fulfilled in two ways one is money that comes to the finance commission that is broadly untied
#
and second is money that comes through the centrally sponsored schemes which is also money
#
coming from the center but that is more tied right into specific things so anyway so overall
#
most of the expenditure close to 60 percent of spending happens at the state level but about 60
#
percent of the revenue is collected at the national level right and give me a give me sort of a
#
breakdown of the system in terms of what is a power breakdown and what should it be and also
#
what have sort of been some of the consequences of this and obviously those will be broader
#
brush because you can't really quantify anything yeah and i think to be honest the biggest source
#
of discrepancy frankly see if you look at the design by first principles the center and the
#
state are the levels where you're supposed to design policies and programs and the district
#
and lower level are where you're supposed to implement them okay so and that's broadly how
#
powers are allocated okay so when we say that there isn't much power at the local level
#
i think in practice it really translates into two things okay one is that there is very very little
#
or frankly zero discretionary budget okay that is there at the local level so if you're a local
#
principal or even a district education officer okay your discretionary budget in terms of funding
#
programs or interventions that may make sense are basically zero okay so that is one margin where
#
local levels have very little power the second margin in and this is more true kind of you know
#
at the village and at the facility level is you have basically no power over the government
#
employees right it means so because when we say that the bulk of the budget so when i talk about
#
the decentralization in china that why does china have so china has about 50 percent of total public
#
expenditure happens at the local government level in india that's only three percent okay so that
#
gives you a sense of how big this queue is okay but the biggest driver of that is that almost all
#
service delivery employees okay whether it's teachers or doctors or you know street cleaners
#
or anybody is employed at the local government okay and so that's where that delta comes in so
#
when we say so it is not that the indian villages do not get the resources but because the bulk of
#
the resources is tied to the salary cost of the employee right i mean on whom you have zero kind
#
of accountability that's where the fundamental mismatch happens correct so i think the tweaks
#
we would want to make are relatively simple okay which is to say if local governments have a lot
#
more authority on kind of the staffing okay and and that's where that nuanced decentralization
#
i talked about right mean matters which is saying you have an empaneled list of people who kind of
#
of satisfy a certain set of technical criteria for having this government job but that doesn't
#
guarantee you the actual employment that is still done at the local government level so that would
#
be one meaningful way of empowering them now a more radical way of empowering them would be to
#
transfer the entire budget okay to the local government and saying this is the budget per
#
child and you know you have the freedom to spend and there you you still want accountability in
#
terms of you know so what you want and this goes back to a principle i talk about a lot throughout
#
the book right of autonomy and process and accountability for outcomes okay which is to
#
say that you have the budget but we will kind of have independent measurement of certain outcomes
#
and then you know you can think about fiscal rules that say here is a certain amount that's
#
equal for every child so i talk about this in the expenditure chapter right where i talk about a
#
70 20 10 principle of allocation of public funds which is 70 based on an equality principle where
#
every child or every citizen gets the same amount about 20 based on an equity principle where you
#
say here are the places that are the kind of most underprivileged need gap kind of financing and
#
they're 10 based on an effectiveness principle that you know the places that are actually
#
delivering outcomes so you put a little bit of skin in the game like you know for people to be
#
oriented towards outcomes so i think these would be and this is why again the foundation of so many
#
of the reform ideas i have is better data right that's why the chapter four see these are ideas
#
about performance-based funding which i have shared in the past even with the finance commission
#
right indeed and in fact dr why we ready i remember talking to him about this back in the day he said
#
you know karthik all these ideas make a lot of sense but i don't have the data to implement them
#
okay so you need the data which is again why that's a foundational investment
#
in being able to do reforms along a whole bunch of these lines but yes so i think
#
mota moti when we say that the state has most of the power it reflects the fact that the employees
#
are state government employees okay and it reflects the fact that that's where the bulk of the cost is
#
going and because the local communities have very little oversight and accountability on the employees
#
that's kind of where the core lack of decentralization hits you and the second place where it hits you is
#
the complete lack of discretionary budgets okay so if you have some ideas and want to do something
#
you just don't have the resources to do it yeah i like the 70-20-10 formulation and just in terms
#
of local knowledge and local priorities i don't know if you seem to have heard every episode of
#
mine did you hear the one with abhinav and safety uh yes the one about the movie theater they wanted
#
the movie theater yeah i see i passed your pop quiz you pass my test you pass yeah i you know i
#
will not remember as many things from my episodes as you do but just for the benefit of listeners
#
who haven't heard that uh great episode the the funda is that you know abhinandan and his team
#
were at this northeast village and they asked the villagers you know where would you like to kind of
#
your money spend the most and they said we want a movie theater now this is completely counter
#
intuitive there are people in a village they could ask for a dispensary they could ask for a road
#
they could ask for whatever why do they want a movie theater and the answer was that because
#
there was no entertainment in the village all the kids would go go to you know near whatever the
#
nearby town was to watch movies and the roads were bad and unsafe and all of that and they would have
#
accidents and the death rate was high so it was you had to risk your life to uh watch a film and
#
if it was a bollywood film you probably deserve to risk your life for it but um uh and that was a
#
thing and and this is local knowledge this is not something a central planner could ever have worked
#
out and similarly in every sort of local area you might have different priorities which only
#
local people would know and you know my instinct here would be to figure out what is the most local
#
base of unit you can get to and give them as much money as possible and let them make the decisions
#
and then let these units whether they are blocks or districts or whatever compete with each other
#
much as we would say states should compete with each other like in the u.s to a certain extent
#
they do in terms of these are the taxation laws and you know these are all the different kind of
#
laws that we have available this is the ecosystem we are building you compete with each other and
#
then people vote with their feet which they can because you know they're moving across states not
#
across countries and i think that's a great way that's a healthy competition and i would have
#
thought that that's one of the fundamental principles of federalism that you allow people
#
to compete at that kind of policy level now so sorry i think you know so you're absolutely
#
right there's a slight additional nuance to that right i mean so what you're kind of so there is
#
an element of competition right i mean which happens say at the state level and kind of
#
attracting people investments and all of that stuff but there is also a very powerful element
#
here of accommodating divergence in people's preferences okay so the original idea of you
#
know what's called tibu sorting so uh charles uh t i e b o u t so some people actually pronounce
#
it to type out but my first teacher like you know pronounce him uh so caroline hawksby calls him
#
tibu but the core idea of tibu sorting is that that what is government okay if you take a step
#
back what is government is government is meant to be a vehicle for expressing our collective desires
#
on kind of taxation and a bundle of public goods correct so and different people will have different
#
preferences right some would say take i'm happy to pay a 40% tax if the government is going to
#
give me a whole bunch of these things others might say no i only want 10% tax you just provide law
#
and order and the rest will take care of okay now the logic of the tibu sorting is that by allowing
#
local jurisdictions to set their own bundles of taxation and and public goods you are also
#
it's not just competition but you're accommodating diversity and preferences right like you know by
#
giving people a chance to not saying this is better than that on average this is better for me
#
i want this and i want that right now but i think frankly in india we're very very very far from
#
that and see the the the problem is to make that model work you need a model of revenue collection
#
that is differentiated by space okay and because most of our revenue collection is not differentiated
#
by space right because whether it's income tax or whether it's gst these are all kind of doesn't
#
matter where you are right now but that kind of gets me to one i think very very important
#
area of reform which i think is key to strengthen local governments and that is strengthening
#
property taxes okay so this will show up again in chapter seven right when i talk about revenue
#
because the the reason property taxes are so important is it's important for multiple
#
reasons right see i think one of so one of the key problems in taxation in india is that the
#
fiscal compact between the taxpayer and the government is broken okay which is the fiscal
#
compact is i pay taxes and expect services in return but where we are today is i pay i pay taxes
#
the services are so bad i go to the private sector so therefore i'm double paying both the taxes and
#
paying out of my pocket and therefore tax evasion is almost kind of morally justified right i mean
#
that people kind of justify their mind why am i paying taxes okay so there is a lot of evidence
#
on what's called tax morale okay which is what kind of increases voluntary tax compliance and a
#
big part of tax morale is people kind of two things one is seeing a visible link between your
#
taxation and the services you're receiving and second is having a say in how those taxes are
#
spent okay and so therefore if you want to raise taxes in india like i get very nervous in fact
#
i say this very clearly there's a reason my revenue chapter comes after expenditure because
#
you know a government that spends money badly loses moral authority to collect taxes okay so
#
that's why i first want to improve efficiency of expenditure before you raise more taxes but that
#
being said you know there is no question we need better urban public infrastructure we need a whole
#
bunch we need the revenue for these things okay but the value of more property taxes it has many
#
many benefits right so the first is that actually if done well you can create a self-sustaining
#
virtuous cycle right whereby if the tax revenue is providing local public goods right of a certain
#
quality then that can actually improve the local housing prices to capitalize the quality of the
#
public goods which then increases that and increases the tax revenue right so you get
#
into a virtuous cycle of public good provision because again what is the core economics of
#
public finance the core economics is that if i take taxpayer money i should spend it on things
#
that have a higher roi right i mean than the money i'm spending and if it has a higher roi
#
say in the case of public goods that higher return on investment is capitalized in the property
#
prices so there's a lot of research in the u.s for example showing how if you invest in better
#
schools right mean through issuing school bonds then that kind of is reflected in the property
#
prices that then kind of more than pays for the bond okay so that's why it's a positive roi
#
investment now coming therefore to how do you so that's one reason for why i think property taxes
#
make more sense because you create a bit of a virtuous cycle between kind of local service
#
delivery and kind of the underlying value of the asset the second reason is politically it is kind
#
of there's a tighter link between the tax and the services because it's not going into very very far
#
away government of india or even the state government it's going to your local government
#
and therefore you see how it comes back to you in terms of services and the third is that it also
#
kind of helps with the federalism point which is that the key challenge today for local government
#
is local government has zero or very little revenue raising capacity right so they're dependent on the
#
goodwill and the transfers that come from higher levels of government but the and that's why at
#
least in urban areas right i mean if you're able to strengthen kind of property taxation that gives
#
you a virtuous cycle of also strengthening federalism because see one of the reasons state
#
governments have not bothered so much about property taxes is they see this as hanko kya
#
either right i actually talked to an advisor to chief minister said this is good but it doesn't
#
help the state government finances i'm like boss you know that's very very short-sighted because
#
a you are responsible for welfare of your people and if there are investments the state government
#
can make that increase the capacity of local governments to raise property taxes efficiently
#
that's good for welfare but it's also good for the state because you create this positive cycle
#
of increased economic activity that translates into higher gst and other revenue for the state
#
so you know overall it makes sense for states to invest purely from a fiscal perspective in the
#
revenue raising capacity of local government so just to give you a sense of perspective
#
india's total property tax to gdp is under point is around point one percent okay point one to
#
point one five i think in france it's about three percent okay so it's about 25x or 30x
#
so that gives you a sense of how far behind we are where the feasible frontier is and that's a
#
kind of investment again these are very concrete implementable reforms okay and these are some of
#
the things we're working on is that these are immediate things that will both increase fiscal
#
capacity and increase kind of effective federalism because the local government now has the revenue
#
on which to act so as an aside it's a very nice research paper again so i keep getting excited
#
about i see i make connections both to papers and broadcast right so there's a very nice study in
#
china okay that even though china is kind of centralized party rule and stuff like that
#
china did have a period of experimenting with village level elections okay and the logic was
#
that to have at least local representatives along with the party secretary having a say
#
in kind of what local projects were done and one of the most interesting results in the paper was
#
that the local elections led to an increase in people's willingness to pay taxes okay and
#
that's because you're more willing to pay tax if you have a say in how that tax is spent okay so
#
anyway so all i'm saying is that part of the chicken and egg of our decentralization discourse
#
in india is because of this chicken and egg of how do i decentralize when there's no capacity
#
and it all depends on kind of the higher level larges okay as opposed to building systems that
#
make it sustainable for there to be more effective local governance the property tax agenda becomes i
#
think a very very important part of that state capacity that also strengthens federalism
#
yeah the china experiment is fascinating i'm going to go on a mini tax rant here because
#
i think taxes are one of the things that we have normalized look here's the thing the thing is
#
that let's say that i pay 30 percent of my income every year through taxes actually i happen to pay
#
more because 18 percent gst plus which i can't offset against anything plus more than 30 percent
#
income tax so almost half my income goes in taxes a common rant but just take a common citizen and
#
let's say a common citizen is paying 30 percent one third of their income in taxes every year
#
direct plus indirect because after all everybody pays taxes not just income taxpayers let's say
#
your total is 33 percent very quickly see india's overall tax to gdp ratio is only 18 percent and
#
that's because only five percent pay income tax right so the bulk of people are paying the
#
indirect taxes and so exactly so the gst will end up being about 12 yeah anyway so yeah see
#
you're spoiling the rhythm of my rant you know if you were singing antakshari i would not cut in the
#
middle of a song and let me tell you where this mukhra came from so okay yeah so here's the deal
#
if you're paying 33 percent of your income as tax that basically means that for four months of the
#
year let's say january to april you are a slave of the government you're working for the government
#
without actually wanting to so taxation is effectively part-time slavery which is a correct
#
characterization that is what it is without wanting to you're working for the government all
#
your income goes there for those four months now this is fine right this is fine because we need
#
a state to survive we need a state to protect our rights etc etc we all agree upon this i think
#
ideologies really differ only on how much of this is justified but we all agree that a state is
#
justified now what happens in india often is that most people they look around and they don't see
#
bank for the buck like you pointed out and this is not by the way an excuse for evading taxes i pay
#
my taxes cruelously you know and in fact it's a matter of principle for me to do so because as
#
long as i'm a citizen here i want to you know i otherwise i can't raise my voice if i don't also
#
pay the taxes that gives me the right to do so however the point is that it has reached a stage
#
in the modern time where you earlier one would look around and see all this money being basically
#
wasted today one looks around and see that this money is being used for bulldozers and giant
#
statues and all of these things which i think are very toxic so it is actually you know a question
#
i'll throw to my listeners that in this day and age when you see what the state is doing with your
#
money is it moral to even pay taxes and to this my answer would not be to evade my taxes
#
evade your taxes rather why would you evade my taxes unless you're me but i think those who have
#
the means would probably then leave it would be logical you know why you don't want to fund so
#
many things that you actively disapprove of because some of it is not incompetent some of it is just
#
malice directed towards your fellow citizens so that's just one random rant i'll throw out but
#
i would say that you know like those people in china i would be far happier to pay my taxes if
#
i could actually see that they were being used properly if they were more local if i could see
#
that the police is actually active it is safe to walk around at night that women are not getting
#
eve teased and so on and so forth i would feel much more for it except that part of the reason
#
of the apathy of the indian citizen is that they don't see this connection at all and and luckily
#
for the state we've normalized taxes otherwise if people realize they are part-time slaves i think
#
they would be mass rebellion but we've normalized this shit but that is my little rant that aside
#
you know everything you said is illuminating i almost feel like i've read chapter seven on
#
revenue even though you haven't sent it to me yet but i'm just scratching the surface of ideas in
#
each of these chapters you're just getting yeah anyway so this this i'm hopefully explaining
#
providing some alibi for why this you know book is taking time but you know thank you so much
#
for having me on the show once a year because it's also kind of i think it was sneaky artist
#
right who said okay it's very out nishan see i remember people now by their hand handles
#
but i did the same with bhalo manish and anirban last time you know but this but this is but i
#
think he said right i mean that as a writer the hardest thing is like you know how long it takes
#
to get feedback and therefore the value of serializing things and stuff like that so you
#
know these episodes and stuff are very very useful for me as a source of intermediate validation
#
that hello there's something sensible going on here but you know hopefully we we're close
#
to the finish line and this guy should be out soon no no i i would be happy for you to stay
#
forever but maybe you're thinking like that but yeah so after sort of you know having given me
#
all these insights on federalism we've spoken about you know why it is desirable we've spoken
#
about what are the tensions that come in the way we've spoken about the indian context how that
#
affected the design the structure of our state in the sense that we are so centralized what we need
#
to do to change now let's sort of get to the brass tracks of it you have a section where you talk
#
about implementable reform ideas and i find that title itself extremely interesting because it's
#
not reform ideas it's implementable reform ideas so tell me a bit about these ideas firstly but
#
also perhaps before that how optimistic are you about them being implementable because you know
#
before this conversation i would have been fairly pessimistic and i would have said look at the
#
incentives why would those in power give up power so on and so forth but at the same time what you've
#
pointed out is that a lot of people within the system want the system to change not because of
#
their own individual considerations but because they just want uh to you know they see the benefit
#
that there would be for the people at large in the country at large from it changing and i totally buy
#
that because i know so many such people who are within the government who understand that things
#
need to change who would be grateful for a blueprint and therefore will be grateful to
#
read your book it will now you know circulate in brown paper packets in government departments
#
i sincerely hope so because who will be caught reading it openly so tell me about tell me about
#
tell me about why you're confident of how confident are you of these changes actually
#
being implemented and also tell me more about each of these changes because there's so much
#
to dive into over there yeah and again you know i think that there's a very very broad list here
#
but you know so one thing i talk about so is just so i break this into things that can happen at
#
the government of india level like you know and things that can happen at the state level right
#
so at the all india level i would say you know there are two or three things see one is i think
#
there is a case potentially over time without being very specific of considering the case for
#
smaller states okay and i think the data suggests that the the mp chattisgarh the bihar jharkhand
#
the up uttran khan and recently even ap talangana have all kind of you know benefited just by kind
#
of making the benefited governance and development outcomes by and this is not unambiguous they're
#
like jharkhand i think regressed a little bit because it had your classic resource curse kind
#
of problem okay um but over time i think the data suggests that that's been positive i think an even
#
stronger piece of research and evidence comes from so there's this ongoing study we have where
#
you know we're looking at this very important governance reform that happened in under nt
#
ramarau in andhra pradesh in the mid 80s where one of his big governance reforms was kind of
#
and ap and talangana are still very very unique on this was kind of going from blocks to bundles
#
okay so effectively a block in in india today the average district is about two million people and
#
then you have blocks of about 200 to 250 000 right but what they did was they went down to
#
mandals and thereby quadrupled the number of sub districts okay so that went down so the average
#
population in a mandal is about 60 to 75 000 as opposed to 200 to 250 000 so what that does
#
is it basically brings government closer to the people okay so there's an element both of
#
administrative decentralization and an element of political decentralization because your
#
jilla parish your your block parish now becomes your mandal parish which is therefore closer
#
to the people right so and there we've got kind of we've been working on this for some time put
#
together a whole bunch of data and development indicators and you can look at kind of the
#
distance to the border and distance to capital so you can have two places that are otherwise
#
identical where the distance to the block capital has now changed and what we're able to document
#
over time is that there is a significant acceleration in the development indicators
#
in places that became closer and therefore it kind of there is empirical evidence now broadly
#
pointing towards the value of bringing government closer to the people okay so and you can do that
#
two ways one is you can take the powers of an existing level of government and bring that level
#
itself closer which is what happened in blocks to mandals or you can say let's take an existing
#
disempowered level of local government and give it more power okay so i think in both of these
#
cases whether it's kind of smaller states or smaller districts right i mean there is a case
#
for thinking about it seriously because the population has been growing and the capacity
#
has not kept up okay so that's one simple thing i think the second thing is in terms of again at
#
the government of india level is kind of really you know modifying and rethinking centrally sponsored
#
schemes right i mean and it's not just a question it's not just a question of getting rid of them
#
and spending the budgets there are very good reasons for centrally sponsored schemes right
#
including kind of sometimes from an equity perspective the money that comes from the
#
centrally sponsored scheme becomes the most important way for a state to finance even its
#
basic kind of operations okay so like maharastra gdp per capita is five times higher than bihar
#
okay so left to its own resources bihar simply wouldn't be able to fund an education system
#
okay so that way the centrally sponsored scheme plays a very important role the problem is not
#
in terms of the resource allocation the problem is how rigid the guidelines are okay with regard to
#
how the money has to be spent and so that has again like three or four problems right so one is
#
the one size fit all nature of it right so kerala might need high schools and colleges bihar might
#
still need some elementary schools but your national program kind of now over time as ssa
#
became samagrashi shabhiyan there is a bit more flexibility but still like you know
#
mota moti like i mean there are tight kind of guidelines which restrict the flexibility across
#
states the second problem is that because the centrally sponsored schemes have a co-financing
#
model where the states have to put in say 50 in some cases is 50 50 is not only are you constraining
#
the use of government of india money you're also constraining the state's own budget by saying that
#
the matching funds have to be sent along these lines okay so that's another source of kind of
#
infringing on state level autonomy i think there is a third dimension of this which is just an
#
incredible amount of micromanaging going back to process level kind of you know micromanaging
#
and a senior advisor nitya yog once told me that you know in the health department under national
#
health mission that every year there's what is called a pip i think project implementation plan
#
or something under which there are 1500 permitted line items so every year every state has to submit
#
this pip that has to be reviewed and approved so if you just think about the paperwork of 1500 line
#
items times 25 28 states so in the end it just employs an army of consultants on one side to
#
make the reports an army of consultants on the other side to read them but nothing substantively
#
actually happens as a result of that right so it's just incredibly inefficient because you don't
#
trust him because you micromanage and sing yeh karna yeh karna yeh karna yeh apko report karna
#
right so that's the third cost and a fourth cost is frankly over time and i mentioned this i think
#
in the education episode it has led to a substantial weakening of policy making muscles and capacity
#
at the state level okay which is essentially if if because and remember what i said i said states
#
are bigger than most countries right so you really should have the policy making capacity to think
#
about your local problems and craft your local solutions the problem today is if you're a
#
principal secretary or commissioner who wants to do something innovative in the state you are much
#
more likely to do it if it is consistent with central government guidelines because then you
#
can use that money whereas if you have to do something outside the guidelines then you have
#
to argue with your finance department right you need to get the money and that is a much more
#
complex process okay so what has happened therefore is that while the centrally sponsored schemes have
#
created the budgetary space for the social sector they have also had come at severe costs so
#
so one of the very very concrete reform ideas which i have is again going back to this idea
#
of you know autonomy and process and accountability for outcomes okay so whereby it's not just see in
#
a way the government of india faces exactly the same problem say that a world bank faces when it's
#
doing development aid okay which is you want to give money to the places that need it okay but
#
the places that need it are also the poorest most poorly governed okay and so in a way you put in
#
all of these conditions because of the poor governance in the places that needed the most
#
but that also ends up biting the better off states that are well governed and frankly don't need your
#
interventions okay so you know one intermediate level might just be performance-based autonomy
#
okay forget performance-based financing but just performance-based autonomy that says
#
i mean frankly today a government of tamil nadu or kerala will say what do we have to learn from
#
government of india on education we're doing better on all of these indicators right i can mean so
#
for the states that are doing better at least right i mean you might say here is money with
#
fewer conditions and just report right you still have to report but there is a lot that can be done
#
now of course eventually i think having an element of performance-based funding again going back to
#
70 2010 right that says you know here's government money we're going to allocate this a certain
#
amount equally by by child a certain amount an additional amount for underperforming or backward
#
states that just allows them to build those gaps and 10 on performance right so that there is skin
#
in the game for everybody to kind of innovate on delivering right so those would be kind of some
#
of the reform ideas at the central level so you know things and then there is a third core reform
#
idea of the central level which draws on this business standard article i wrote in 2011
#
which really is and and the good news is more of this is happening okay more of this is happening
#
but it's to really unleash the states in terms of policy experimentation okay so when we think
#
about you know very contentious issues like land reform or labor reform or other things like that
#
you know trying to do this at the government of india level is just too difficult right because
#
there are multiple veto players it's too risky but you just say listen let states innovate and
#
experiment but remember many of these issues are in the concurrent list okay so the government of
#
india rules will still override the state government rules so for the state government rules to take
#
primacy within the state still requires presidential assent so there is a provision for that but
#
government of india can encourage a lot more state level policy innovation in the concurrent list by
#
kind of indicating that if you kind of provide a very clear rationale for this right and then
#
we will be more willing to kind of support this for presidential assent okay so those would be
#
sign of concrete things that can happen at the government of india level then there's a lot more
#
things that need to happen at the state level right and so so one of the things there is this
#
business the nuanced decentralization i talked about because that's completely within the limit
#
of a state government right because you control the people you control the budgets and so it's
#
about how much am i empowering local governments similarly investing in property tax capacity
#
is something that a state government can do right i mean that strengthens local government
#
and then see in some ways the most radical reform would be kind of more empowered mayors you know
#
which which many people have talked about now the interesting thing here is one view okay is that
#
chief ministers don't want to do this because it creates alternate power centers right i mean
#
which is a threat to them so so just like in new york in the state of new york the mayor of new
#
york is often more powerful than the governor of new york state who's sitting in albany but
#
new york city is the cash cow and that's where all the action is right similarly an empowered
#
mayor of mumbai would become a real threat to the chief minister of marashtra in like indonesia you
#
know jokowi became president of the country from mayor of jakarta right like you know so that was
#
kind of like a really important post imposition but here is a way why i think empowered mayors
#
can be politically incentive compatible right which is one of the kind of design dysfunctions
#
of our democracy right now is that we elect mlas and mps to be legislators but their voters
#
fundamentally see them as providing constituency services okay so the voters are not evaluating
#
them on did you pass good laws the voters are evaluating them on did you make my life better
#
okay so part of the dysfunction of the system why does an mla or mp want the power to transfer
#
people because even though we call that political interference the flip side of that is it is the
#
power to transfer that gives this guy any authority on the otherwise kind of you know indifferent
#
official who may not listen okay so in many ways like i mean the mla or mps are kind of dealt a
#
very very difficult hand where they are expected to deliver constituency services without being
#
given the means to do that because all they have is this mplad which is a minuscule amount of money
#
compared to the actual budgets of the departments right so what an empowered mayor does and why i
#
hope there will be political demand for this right i mean is that even if a chief minister
#
is hesitant like a bunch of mlas themselves would prefer to be empowered mayors like i mean
#
of their areas where there is kind of alignment of accountability and what the voters are holding
#
you know so in a way voters are holding them accountable for constituency services but they
#
don't have the means to deliver that so if you harmonize those things it would also kind of you
#
know strengthen our democracy by better aligning accountability with authority to deliver on that
#
so again this is the kind of thing the good news is that there is nothing that prevents a chief
#
minister from undertaking these reforms within their state okay so and why i think the level
#
at which we need to have these reform conversations is now government of india can kind of you know
#
they can do a few things like finance commission has put some incentives for states that increase
#
their property taxes and stuff like that and i think finance ministry has also done some of
#
that right but fundamentally this is a state-level political action okay so you know all it takes is
#
one chief minister and it's actually quite interesting in my conversations on tamil nadu
#
right for example informally they will say that kerala has done much better than us in decentralization
#
and this is something that we should consider so i think again the desire and willingness to take
#
up new ideas is there i think the challenge is how do you de-risk this okay how do you de-risk
#
this because nobody even at a state level tomorrow see ntr like going from districts to blocks to
#
mandal this is a big change right that happens across the state so even politicians who are
#
well-meaning are often just risk averse of trying to do something massive that is irreversible
#
so one of the things which you know i briefly discussed i mean again that's why each of these
#
chapters can become an entire book right i mean is to then see are there kind of constitutional
#
and legal mechanisms that allow some experiments to be done in a sub region of the state as opposed
#
to kind of doing it for the whole state so then you might feel okay here's a couple of districts
#
where i'm going to or a couple of cities or tier two cities where we're going to experiment you
#
know with more empowered mayors so i think in each of these things the each the question and
#
i'll come back to see just at the end is that i this is a broader meta point i want to make
#
right i mean which is that part of the reason a lot of these changes don't happen is we are
#
just not having the conversations across the different stakeholders in the system okay so
#
you know and leave the politicians out for a moment right even just academia industry and
#
bureaucracy okay so when i look at go to these policy conferences there are so many low-hanging
#
fruit of policy area where better academic research and analysis can immediately improve
#
outcomes okay the problem is that the academics have no patience for the bureaucrats and the
#
bureaucrats have no respect saying the academics are sitting in the theoretical world like i mean
#
hamko matlab they are not working on problems we care about and then industry thinks academics
#
are too esoteric and bureaucrats are too slow so but again everybody has a stake right i mean in
#
moving this stuff together now we do have certain fora of these conversations you know cii will
#
you know get together industry government whatever but i think part of how we move forward
#
is by marrying kind of a certain amount of conceptual clarity with a very real understanding
#
of what are the risks of the reform and thinking about ways of de-risking the reforms okay and
#
accompany that with a certain amount of implementation support which is partly why we're
#
building sieges and then also accompany that with evaluation and research to say like you know are
#
the reforms working so in a way like if you look at the uh the different parts of the production
#
function of knowledge to action right there is kind of there is deep research that says okay what
#
is the impact of a specific policy then there's policy recommendations that say based on all of
#
this research here are reforms we should do then there is kind of you know implementation support
#
that says if you want to do this how do you actually make it happen and then you need to
#
close the loop back with research and evaluation saying did this actually move us in the right
#
direction and if not how do we course correct quickly right so so yeah so that's my long-winded
#
way of kind of saying how i see us making progress on these things and the good news again
#
is that bilaterally right at the political level is bureaucratic level i the amount of support i
#
see i mean there's property taxes right i mean is it oh yes but the problem for your typical
#
bureaucrat they are just firefighting i don't think any of us understands how much pressure
#
right like you know say a principal secretary of finance is under right i mean these are people
#
controlling budgets of about 200 000 crores and the sheer amount of pressure they are under right
#
is just you know you're just constantly firefighting right constantly firefighting so when you go in
#
with kind of both a conceptual clarity and an implementation roadmap and some support i'm
#
seeing that people are actually very very very willing to listen so yeah so we have to be
#
optimistic and keep trying you've you've made me incredibly sympathetic towards a principal
#
secretary of finance who's constantly firefighting about what to do with 2000
#
crores man what a problem like you know i'm very excited by these ideas as you can see i'm swaying
#
back and forth in my head or that could also be because the moment you said everybody has a steak
#
i i felt hungry so you know and just thinking aloud you know one way of politicians becoming
#
risk-averse about politicians feeling that we can move ahead with this we know it's the right thing
#
to do but now we can actually do it is if there is a public constituency for these ideas like in
#
a sense we need public intellectuals like yourself to be the gandhis of good ideas
#
right and which is why i hope your book does really well and at some point you know maybe
#
youtube series we should brainstorm some time because you know i think for real change to
#
happen you need to hit the demand end of the political marketplace the supply end can sometimes
#
be a bit shaky so sort of last question on federalism in these reforms until our next
#
episode the last question this episode is uh you know uh how you you know in percentage terms
#
because i think rather than say how optimistic are you you'll say huh i'm optimistic so many
#
people are good people they won't change but if i ask you to put a number on it and say that
#
what is uh in percentages what is a chance that by 2030 you know enough of these changes would
#
have been implemented for you to feel that there has been you know a meaningful progress
#
you know what would be that percentage chance and frankly honestly even if it's one percent i would
#
still say it is worth trying because the impact of that would be so massive that it's you know
#
positive eevee just to try for that so i'm not going to judge by percentage i'm just you know
#
trying to get a sense of how likely you feel it is by asking you for a number no see i think i mean
#
so i don't think i have a number in the for the following reason right which is
#
and i can come back and you know talk about seizures as well a little bit more see the way
#
i'm approaching this is what maximizes the probability right mean that a lot of these
#
things will happen right so the book is laying out an entire menu of reform ideas right so some of
#
them will catch fire somewhere others will not some will fall completely flat and nobody will
#
pick up anything right but then what we're seeing is seizures is that there is already
#
so much appreciation of the work that we're doing right i mean and you know again i would
#
i prefer the government to kind of talk about it rather than me talk about it but i'll just say
#
that there is there are enough indicators of real reveal preference right i mean in terms of the
#
cross conversations happening across states and people calling us and stuff like that so i feel
#
actually very optimistic that out of this broad agenda in we will do maybe somewhere between 30
#
to 50 percent of these ideas in at least one state okay and over 10 years right because like
#
they say people you underestimate what you can you overestimate what you can do in one year and
#
underestimate what you can do in 10 years right means so which is partly why you know i see this
#
as a 10 20 year investment right i mean in the kind of reforms but i'm actually i'm very optimistic
#
kind it's not just you know okay i mean now to be realistic in terms of the nature of even
#
government officials of bureaucracies right i mean is that see there are 20 and this i'm just
#
generalizing right but in most orgs about 20 percent who are really outstanding okay who kind
#
of are thinkers who are well intentioned motivated really really kind of want to get stuff done
#
there's about 60 percent i would say like you know who are good but over time have had the enthusiasm
#
beaten out of them right i'm here and so they have essentially kind of doing you know not doing bad
#
things but not going out of the way to kind of you know take on things they're kind of minding
#
the store and then there's always the 10 to 20 percent you know who are actually kind of the
#
malevolent actors or at least who have kind of figured out how to milk the current system who
#
are therefore very nervous like you know of certain changes but you know the good news what i'm seeing
#
in many states and maybe this is again reflecting the fact that the main place i interact with is
#
finance is that most states actually put really good people in finance because finance is not
#
something you can afford to mess with because you know you see srilanka you see other things
#
like states go bankrupt okay so in fact in many of the states that we work in the finance has a
#
certain amount of both sanctity and competence right i mean so yeah so maybe that's why we are
#
seeing a positive reaction because every finance secretary is kind of so a different way of saying
#
this is that almost all of our public discourse happens on kind of quantity of expenditure to
#
sectors we just have much less discussion on the quality of expenditure right i mean and the core
#
thing we're doing is about improving that quality and that's something that any finance secretary
#
instinctively understands and so if you are able to support that you know people have been very very
#
positive about it of course all the ideas eventually have to go through political filters
#
and stuff like that but you know the the and even as an economic advisor i think arun jaitley once
#
said this about arun subramaniam he said you know his job is to present ideas we don't have to accept
#
all of them right i mean but we will listen and that's the most you can ask for right so yeah
#
yeah that's kind of what this podcast does our job is to present talk about ideas other people can
#
only listen uh so and may choose to and may choose to you know do something or not but yeah and and
#
they choose to listen and they're still here four plus hours into the thing and why are they here
#
they're here because we haven't discussed your paper yet you said it's the most important
#
paper you've done we haven't discussed it yet we cannot we cannot disappoint them at this moment
#
in time so uh briefly you know i i know you're tired i know you're tired i don't want to i don't
#
want to mess with you too much india needs you take care of your health don't get covered again
#
so tell us about your nr ega paper and you know i think you know why it's so exciting yeah so i
#
mean we can have much if at some point we do an episode just in welfare and social protection we
#
can have a longer discussion but see i think the core so what is the paper doing okay the paper
#
is presenting large-scale randomized experiment evidence of what happens to the overall economy
#
then you improve the implementation of nr ega okay so now nr ega itself as a program when it was
#
rolled out was not randomized okay so the best evaluations to date have relied on what's called
#
a difference in difference where you look at districts that got it with districts that did not
#
but the problem is those districts were not randomly selected right so there's other pre-existing
#
differences and the other problem is that there wasn't a big round of the nss at that time so you
#
actually haven't had good enough data on many of the outcomes we care about so the literature in
#
nr ega itself has had you know what my co-author sandeep suktankar calls so what we call suktankar's
#
third law of nr egs right which is for every study that finds x there are studies that find
#
minus x or zero okay so and that's part of the challenge with research because the results are
#
sensitive to the method sensitive to the data sensitive to the state and that's been a big
#
that's been a big challenge so the opportunity in this paper was and frankly this was a bit of an
#
accidental paper we're not expected to write it the reason it's an accidental paper was
#
the randomized control trial we did was actually designed to study an intervention to reduce
#
corruption and improve implementation okay so that paper which was published in the american
#
economic review in 2016 was called building state capacity and that was studying in unified
#
entrepreneurship in eight districts randomized across a population of about 20 million people
#
it was studying the effectiveness of biometric smart cards on improving nr ega implementation
#
okay so the outcome there was really just nr ega implementation which is how much you know did you
#
get your money so we measure leakage very carefully because we measure the administrative data on how
#
much money was dispersed to a given job card and we do matched household surveys to measure did you
#
actually get it okay so part of the problem with the public discourse and say other biometrics and
#
leakage is that the government says we have reduced leakage because we have reduced the spending
#
okay the activists will say yes but you have increased exclusion because the money you know
#
people are not getting so unless you have matched data between the government disbursals and what
#
people are getting you are only seeing half the side of the puzzle right so the methodological
#
i mean the strength of the paper is a we have randomized so across eight districts at the
#
mandal level so in fact statistically this is why it's lovely to work in andhra pradesh
#
alangana because you can randomize at the mandal level and get a large sample because you have
#
four times as many mandals districts so but that was a side benefit right that's not why we were
#
there we were there because i'd worked in the state before but and ap was one of the leaders
#
in nr ega okay so but long story short that paper which is was done in 2016 essentially finds that
#
the smart cards had a dramatic positive effect in improving both kind of in reducing corruption
#
improving timeliness of payments and improving the predictability of payments okay so in every way
#
and that's why that paper is called building state capacity because it brings the program closer to
#
what the framers of the law intended it to do okay so that's what that paper does now the how this
#
paper emerged was really as an accident and going back to what i'm saying you know as researchers
#
the joys in discovering new facts and then making sense of it right so this is really an example of
#
that journey right we had not expected to find these results or write this paper so one of the
#
results we were looking at in 2015 or 2014 was looking at the impact on total incomes of the
#
poor in the treated areas okay and what you saw was that there was this huge increase in income
#
okay and the increase in income was 10 times higher than the increase in nr ega income because
#
remember we've reduced corruption in nr ega you've reduced the work done in pays so there is
#
obviously an increase in nr ega income okay but what's interesting is that the total income
#
increase goes up about 12 to 13 percent and only 10 percent of that is coming from nr ega the
#
remaining 90 seems to be coming from other sources okay and so that became this huge puzzle and was
#
such a big puzzle that we realized that we could not do justice to that in the previous paper
#
okay so that previous so this is then i mean this is something paul sandeep and i've been working
#
on now for about 14 years okay we started 2009 okay so to give you a sense of what the academic
#
life looks like two papers okay two major papers we worked on for 14 years okay so you know we
#
thought and designed the experiments we worked with the government to get the buy-in we raised
#
the funding for it we did the randomization there were two years from 2010 to 2012 where the actual
#
experiment happened you had end line data collection in 2012 then it took us kind of you know a year to
#
clean and analyze the data start writing the first draft start presenting in conferences getting
#
feedback iterating submitted for publication in 2014 then you get the revise and resubmit from
#
the journals finally appears in print in 2016 okay so that is that first paper the genesis of
#
the second paper starts in about 2015 when we start seeing that these income effects are so big
#
and we're like how on earth do you make sense of this okay and then what was really kind of
#
interesting was that we see that the private sector income has gone up very sharply in both
#
agriculture and non-agriculture we see that the market wage has gone up and then the most kind
#
of stunning result is that not only has the wage gone up but private sector employment has also
#
gone up okay which is kind of violating econ 101 which is normally when wages go up employment
#
goes down okay so how could wages and employment both go up okay so it's a long story short i
#
think we have ourselves puzzled and struggled right i mean and in fact in the early years so
#
this paper we had first written and presented at one of the top conferences in 2016 and we thought
#
we had enough in those results because it was randomized right because the experiment was
#
randomized so we thought we had enough on those results to merit a top journal publication right
#
so we submitted then you know to the qj now these are intricacies of the academic publication process
#
which is you know the quadrilateral economics and we get we got a very kind of you know sympathetic
#
rejection saying that everybody thought the question was important everything was important but
#
basically people felt the results were too big okay that they just couldn't make sense of it and
#
they wanted us to probe harder on the mechanisms okay of what is happening what is the mechanism
#
by which both wages and employment could go up and because the result is so counterintuitive
#
and this goes back to the peer review process because the result is so counterintuitive i think
#
it's natural for reviewers to pressure test more okay and saying is there some mistake right in
#
your data collection in your sampling and stuff like that so long story short we got rejected at
#
both the qje and the aer the american economic review which are two of the top publications
#
and then we went back to the drawing board because we really had a sense that this result was truly
#
important right and this is where the value of the randomized control trial comes in because
#
suppose the result was just correlational i would always say okay maybe the result is spurious
#
because of some omitted variable okay but because this was randomized there is no questioning the
#
facts it's like charlotte combs says right if the facts then you change your mind and that's again
#
the power of the rct in this case was because the facts were incontrovertible right so we
#
then had to go back and question our assumptions of how do you make sense of the fact okay and
#
if you go back to econ theory you'll see that basically how can wages and employment both go
#
up they can go up for multiple reasons they can go up if the enrega assets made people more
#
productive okay they could go up if basically if there was employer market power okay with
#
monopsony so this has been kind of a very nuanced kind of result but essentially a monopolist is
#
kind of going to suppress quantity and jack up price a monopsinist who's a single buyer if you
#
have market power you will keep the wage low and keep employment also low so historically if you
#
look at the origins of trade unions and why unions in the 19th century uk were a good thing for both
#
equity and efficiency is that if you have a monopsinist buyer then putting market power on
#
the side of the employees actually improves both wages and employment up to a point okay it's only
#
when you go over that that it becomes kind of you know then it's an insider rent seeking business
#
okay so that the theoretical mechanisms were could there be monopsony and then the there is
#
an aggregate demand effect okay which is that if the poor have more income they can mean and if
#
they're demanding local goods and services then that could create a demand one multiplier in the
#
local economy okay so but then we had to go back to the drawing board to figure out how would we
#
test all of these possible hypotheses and mechanisms correct so the first kind and again
#
we got very lucky in some ways that the experiment happened 2010 to 2012 and this was a period when
#
the socio-economic caste census happened in late 2011 and the economic census happened in 2013 see
#
one of the this is now very technical but one of the challenges for us was that our data in our
#
survey we were sampling from the universe of enrega job card holders okay so that is 50 percent
#
of the population but we didn't have survey data from the employers okay from the landlord so even
#
if wages here are going up maybe there is enough offset there that the net effects could be negative
#
okay so how do you truly say that the effects are positive so for that we need to get census data
#
that goes beyond our survey so we got lucky that the sccc is a census the economic census is a
#
census and this happened late 2011 2013 so long story short this is a bit like a i keep saying
#
that but it is a bit of a detective story right because i'm giving you a sense of both the results
#
in the journey of how we got there right so now what happens with the sccc data which is really
#
nice is that we have data on every individual in the village correct but it also gives you the land
#
holdings and so that allows you to construct a measure of landholder concentration in every
#
village which is then a measure of monopsony and a measure of employer market power okay and what
#
we're able to test and show is that the employment effect of improving nrega is more positive in
#
areas where there is more employer market power which is completely consistent with the monopsony
#
story okay and so then that gives you the smoking gun evidence on the mechanism and then what's
#
very interesting is because our survey data is not like the nss we didn't have very detailed data on
#
consumption okay but we had good data on savings and you see that people are spending most of this
#
extra money right and so we also find evidence of this demand multiplier because what you see in the
#
economic census is there is an increase in the number of non-agricultural firms and an increase
#
in the employment in these firms and most of these are very very very small local firms okay so
#
and again this goes back to so the reason i you know i'll come back to why i think the paper is
#
kind of why i personally find it the most important paper is because it also connects to many many old
#
classic issues in development right that that when people are very very poor you can get these kind
#
of demand externalities whereby you can kind of crowd in a positive cycle of kind of firm creation
#
as well and you know so anyway long and then there's a bunch of other work in terms of mechanisms
#
and credit and all of this so that's why it's you know but a paper like this and the journal
#
restricts us to 40 to 45 pages and then we've got about 60 pages of appendices right mean with each
#
appendix going through different robustness building a formal model of rural labor markets
#
quantifying the extent of employee market power and so yeah so i think you know the journey of
#
the paper is after we did all of this i think in 2019 with 2019 yes this is again giving you a
#
sense of how long these things take and submit econometrica right which is another most prestigious
#
journals so three referees but then i think the editor got caught with covid and health issues
#
and stuff so it took 11 months to come back then it took us 11 months to kind of do the revision
#
including most of last summer because we took three entire months just redoing so much of the
#
analysis then there is this very cool piece of analysis we did which will then bring me back
#
to how this is connected to federalism okay so because that was the context in which i sent you
#
the paper you know is that one of the cool things we were able to do in the revision is that we were
#
able to do a full distributional analysis in the following way right because remember i told you we
#
only have data on n rega job card holders which is only 50 of the population okay but what we were
#
able to do is even in that n rega sample it turns out that the returns to land actually fall okay
#
because if wages have gone up and productivity has not gone up then somebody has to lose okay and
#
prices have not gone up so it turns out that land profits do fall okay like i mean in areas with
#
better implemented n rega and what we can do is we can take that result and overlay that on the
#
secc land distribution because secc gives you the entire distribution and that provides this very
#
nice distributional analysis that shows that the aggregate effects are positive but the bottom 92
#
percent of the population does much better okay but the top seven and a half percent of top land
#
holders do lose because their loss of profits is greater okay like i mean than the gain in income
#
and that connects us back to the political economy of local elites and distribution right that even
#
though this was a program that on aggregate improved both equity and efficiency it did come
#
at the cost of local power structures and which is why there was so much vociferous opposition
#
from landlords okay like to this which is documented both by you know dres and and
#
but in fact there's other beautiful american economic review paper by ashok kotwal and
#
co-authors in fact he just passed away recently there is a giant and you know in economics
#
and this was a paper called clientelism in indian villages where they study local elections in
#
maharashtra very very carefully and one of the points they make is that the entire reason local
#
elites want to control local governments is that they want to thwart the implementation of programs
#
like n rega okay so and you can see how this connects all the way back to our federalism loop
#
right i mean that a progressive state that wants to improve outcomes for the most marginalized
#
has to deal with the resistance that will come from local elites and what made n rega what improved
#
n rega implementations even today in bihar and other places the feudal structure has been too
#
strong for n rega to be effectively implemented right so it took a political decision in andhra
#
to prioritize n rega implementation the chief minister put one of their top officers as rural
#
development secretary for five years to kind of continuously push on different aspects of n rega
#
implementation so there's another whole book recently by rajesh viraraghavan called patching
#
development and he talks both about the top down and how the implementation itself took kind of
#
very strong political and bureaucratic will and a lot of this required top-down technological
#
interventions and bottom-up mechanisms of social audits whereby you did bring the community in
#
but you empowered them by kind of creating a directorate of social audit within the department
#
and then gave people the power to go and audit whether these projects are actually taking place
#
right so even something as you know what sounds like oh this is just implementation it's an
#
enormous undertaking right to take a program like this that is upending local power structures and
#
how do you implement that and this is then circles back with why the research is so important and why
#
do i consider this the most important paper it's because because it proved my initial hypotheses
#
wrong right i mean so my initial hunch in the 2000s was that this is kind of you know that it
#
cannot be good for the economy to boost wages without boosting productivity right and the fact
#
that we found this was positive it was positive in the experimental results so that forces us
#
to go back and question our priors think about what is the data that will allow us to test these
#
things and then it's a detective story right like i mean okay and then one initial hypothesis we
#
had was maybe it's the nrga assets okay that are building productivity but then you go look at the
#
data and do some calibrations and it turns out it is not the assets okay so anyway so this is now
#
getting into the weeds of the paper and people can read 100 pages if they want at least 45 pages of
#
it and then you know we just got our second round revised and resubmit and you know we spent 11
#
months and given how grumpy referees tend to be like you know one of the gratifying things was
#
the referee report starting with i have been very impressed by the amount of work the authors have
#
done like in this paper but this then gives you an example of why books get delayed because that
#
is still my core job right of kind of actually writing these research papers no it it just
#
sounds like such an amazing paper because it's not just about economics it's also about society
#
it's also about politics like this is a heck of a detective story i mean if it's a web series who
#
would you like to play you i haven't thought about that at all think about it now i'm going
#
to put you on the spot what is this think about it who would you like to play you no you i am
#
i'm just not good at this but yeah eventually like you know maybe yeah maybe you are the creative
#
guy you can think about somebody who would be excited about this but i don't i don't watch
#
enough tv or or movies to immediately have a name see again part of the academic temperament
#
is to say i don't know when i don't know like you know so you can't force me to answer something i
#
don't know okay i'll i'll uh you can tell me in song in the next antakshari we do for the next
#
episode and i'm just like 14 years on two papers my god and you know that's not the only thing
#
that's happening right i mean it is i mean there are a whole bunch of other things that happen
#
but i think part of the research process is that there is this constant process of discovery
#
rediscovery and i think the one thing in economics that's different from other fields is many other
#
fields published very short papers with new facts here's an experiment the thing in economics is
#
because there is this need to not just get the result but at least for the top journals
#
to really probe into mechanisms and saying because you don't get published in the top
#
journal if this was just about enrega in india right it is what is it illustrating about the
#
mechanisms of rural labor markets what is it illustrating about the mechanisms of some of
#
these demand externalities etc so you know it just takes a lot more probing probing probing and coming
#
back to being a you know this is an example where i think the peer review process has been fantastic
#
because it has improved the paper so much because we have been pushed and pushed and pushed and
#
pushed and pushed but we've had to also work our backsides off to do it amazing let me ask
#
you a question let's see how good an economist you are can you answer this and the question is
#
although the ip l and nr ega are completely different things what is the one thing they have
#
but the answer is this let's see uh the bcci like all sporting bodies is basically a monopsony if
#
you're a cricketer you can't sell your services to anybody else but the bcci so now what do you do
#
to break this system and in this case the bcci did it themselves it wasn't imposed from elsewhere
#
they started the ip l you know and what did the ip l do it raised wages and employment so there
#
you go that's what you have in common you know dr jaundre's will suddenly turn on his tv and
#
start watching the ip l that's creating a whole new market but yes but but it highlights again
#
you know if i can you know take a minute and go into the social protection chapter right like i
#
mean why i think you know we need to think about our welfare spending a in a much more nuanced way
#
and b in a fundamentally empirical way right i mean which is we think about okay sorry welfare
#
programs like you know is either freebies or you know again the right things they are freebies the
#
left things we don't do enough okay and again the basic point is that if you look at something like
#
farm electricity subsidies right those are probably the single worst financial policy
#
we have in the country right because it is bad you know when i look at quality welfare expenditure
#
you think about targeting you think about delivery you think about distortions right so it's miserable
#
on targeting because top five percent of farmers get 50 percent of the benefits the bottom 50
#
percent of landless owners basically get nothing so though you call it farmer welfare it's really
#
like a mean a slice of elite farmers second is in terms of going back to your episode with ajay
#
and akshay and electricity reform right i mean that the dysfunction of our discoms is partly
#
hidden behind free electricity right because that allows them to cover the tnd losses and saying
#
and then you have your ecological crisis of the downstream the water crisis that's happening
#
because of the suboptimal kind of cultivation right so kind of and then going back to trust
#
so in a way this was not about farm laws per se because farm laws wasn't really taking on
#
this issue of subsidy reform which is way more complicated right but i think why a program like
#
pm kesan is important is that once you can build the trust with farmers that the state in fact
#
can deliver money to you right i mean and does this a few times then it gives you at least some
#
political space of crafting a reform idea which again i have in the expenditure chapter of kind
#
of saying can i take the fiscally same amount of subsidy and kind of give it to you as a dbt like
#
you know but then with metering and billing of the electricity so it's not about saving money but
#
it's at least about reducing the distortions right so that's the kind of reform that we need as a
#
country it requires both kind of our conceptual architecture it requires communication it requires
#
trust but you know hopefully we'll build enough of a public consensus around something like that
#
that needs to happen conversely something like enrega has been something that improves both
#
equity and efficiency right so you have welfare spending that's bad for equity and efficiency
#
welfare spending that's good for both and there are others that are good for equity bad for
#
efficiency vice versa that reasonable people can disagree but at least as a country if we can agree
#
on moving from this bottom left quadrant where things are bad for equity and efficiency to
#
things that are good and equity and efficiency that's again one of the ways in which you move
#
the arc towards delivering more value for money fabulous and you and i completely agree with you
#
about free electricity for farmers being a bad thing and one of the illustrations of that and
#
it's a classic scene in the unseen is that you know in panjab the farmers were incentivized to
#
grow rice because of an msp for rice right which they otherwise would not have because of market
#
dynamics but it's a it's an arid land rice needs a lot of water what do they do they use bore wells
#
to get the water out of the ground and how do they run these bore wells because electricity is free
#
so you know you have msp's and free electricity distorting the whole marketplace you have a lot
#
of rice what happens with when they produce a lot of rice they've got rice stubble at the end of the
#
season to get rid of how do they get rid of it the easiest way for them is to burn it what happens
#
when they burn it the fumes go to delhi and exacerbates the delhi fog so the worst of the
#
delhi fog happens when farmers in panjab are burning rice and you know again seen in the unseen
#
all of these sort of connections floating around but you know leave and and something like that is
#
an almost impossible problem of the political economy to solve because a panjab politician
#
can't piss the farmers off so what do you do it's just so incredibly complicated but a couple of
#
sort of final questions and one is you know and both are actually in the personal realm but one is
#
the good news for all my listeners that mr kartik murlidharan is shifting to india you know putting
#
skin in the game as it were so tell me a little bit about you know this already people are jumping
#
i can hear listeners in advance so so tell me a little bit about you know what prompted you to
#
come back to india what will you be doing no and i think again i feel like your show is you know
#
i mean there is a certain amount of commitments i'm making and then hopefully following through
#
on them like once i think like you know i said this in 2020 right i mean that i you know that i
#
feel that i'm at this inflection point where so far my life has been nine months us three months
#
india and it's not like i'm moving back fully but i'm just flipping that around to nine months india
#
three months us okay so um so basically i have over a year of accumulated sabbatical i have grants
#
that buy out some of my teaching and so and i think you know at a function so basically it'll
#
mean that we're moving to chennai we're getting there september first and the big and the big
#
marker of moving is that the kids will be in school in india right i mean in chennai so that's really
#
the big marker it's not like i'm just coming on sabbatical like you know they'll be there
#
and i will you know be back for 10 weeks a year and do my teaching in the us so you know so that
#
way i'm still a ucst professor that's kind of my main job but the big thing i'll be doing in india
#
in addition to kind of you know uh not just hopefully finishing the book and getting it out
#
but doing a lot more dissemination work of getting the ideas out in a much more you know
#
accessible way right i mean spending time in indian universities giving talks doing stuff like that
#
um but also it's really building out sieges right because he just is now you know like that's the
#
skin in the game that's the walk the talk kind of piece of this whole enterprise right i mean which
#
is it's one thing to have a bunch of ideas but you really and and i don't have money what i have
#
is time right means so the way i put skin in the game is committing my time to things that i think
#
are truly important and um you know this uh so i can say a little bit more about sieges now right
#
which is the center for effective governance of indian states um you know we're a non-profit that
#
works with state governments usually in partnership in the finance departments right mean to just try
#
and slowly right very very gently um start implementing some of these principles in areas
#
of kind of low-hanging fruit and the key usps you know because there's both intellectual and
#
conceptual clarity and therefore a certain credibility with the government and being a
#
non-profit allows us to you know i think unlike a consult see i mean consulting firms are constantly
#
dependent on government contracts so you have two problems there right beyond the confidence and
#
confidence intervals quip i made like you know i mean it's that so one is because you are a paid
#
vendor right mean you only execute what you're told in a very tactical way right but you don't
#
kind of actually take on a broader thing of what should be done and the second problem is again
#
yeah because the the consultants in some case in some ways are not interested in state capacity
#
right they want state dependency because that's what creates the contracts that's kind of what
#
you're interested in and because you know we're coming in as a non-profit with a deep commitment
#
to improving state capacity so for example in telangana which is where we started work and
#
mainly because a lot of this just requires trust right i mean and so the current principal secretary
#
of finance you know was commissioner school education in 2004 when i first started working
#
in the state right so they know that there's a long-term commitment when i'm there right
#
and so but one of the things we've done there is that the government has seconded a bunch of
#
its own staff to this unit so that they are getting trained in the data analysis in the ways we're
#
doing things and so yeah so that's kind of building up in a big way we added we've added one state a
#
year right it was telangana then delhi and tamil nadu asam and there's demand now from three or
#
four other states so i think the biggest thing i'm going to be doing is really you know this
#
vijayan team are building the org but i will function more in the realm of ideas of saying
#
you know here is what we need to do how do we build kind of the broader understanding of what
#
needs to happen so that's the hope you know so and then at a personal level like i said normally i
#
come to india every three months in the pandemic i've come only twice in two and a half years
#
so i just want to go back to the field i just want to reconnect i want to be in the field going back
#
to schools going back to clinics going back to panchayat secretaries and just you know just
#
really really reconnecting and that's what i'm hoping to do fantastic more power to you and
#
and one suggestion regarding sort of the writing you do moving forward is that why don't you start
#
a newsletter you know where you write every week and i'm serious it and it doesn't have to be about
#
ideas or research or study just start something personal where you talk about how your week was
#
something interesting you read something interesting you did and and i'm since i'm saying this
#
sort of on a forum where others can hear this advice that i'm giving to you i actually give
#
this advice to everyone i think for most people it's a good idea because it's a good way to
#
always be thinking about stuff getting their mind working moving the writing muscle you don't of
#
course need those things because you do think about stuff enough and write enough but you know
#
just as a way of writing it's sort of a way of thinking aloud like one of the fascinating
#
things that i find about twitter is that if you curate your feed properly you get access to some
#
of the brightest minds in the world thinking aloud for your benefit what a privilege that is
#
and if someone like you writes a newsletter as well you know other people get that inside they
#
get to know the person they become more receptive to the ideas therefore you're going on a journey
#
you're taking them with you you know maybe they would have been with you on your 14-year journey
#
of writing these papers so a serious suggestion i'd give which you can think about and meanwhile
#
you know the you know the mandatory sort of last question would you like to recommend you know books
#
films music which you haven't recommended before because i've completely forgotten if i asked you
#
this in previous episodes and you recommended stuff but whatever is top of the mind these days
#
what are you enjoying you know what gives you joy yeah you know and again i i think what i said last
#
time was that i'm listening to podcasts much more than reading books and so i you know there's
#
there's a whole new list of your favorite episodes you know i think which i just really enjoyed so
#
much i think and particularly i think you've been doing a great job of you know of of just having
#
more women on the show and i've just loved you know whether it's whether it's rayana whether it's
#
lanjana whether it's nirupama rao who i know urvashi you know so all of these have been great
#
episodes i've loved i think the sneaky artist one the one with minal pandey was great i've just
#
loved so many of these episodes right because i just walk walk and listen and it's been fun
#
because like i said i connect the dots i'm sometimes learning new things there's just so
#
much from new perspectives for example you know i think the the more artistic people right who
#
you talk to who i think clearly at one level are very suspicious of you know markets and efficiency
#
and commoditization and scale you know i think the episode with anuparna was great right like
#
you know about just the making those japanese because it's all it is not about scale it is not
#
about cost effectiveness it is not about it is about kind of you know that intrinsic beauty and
#
the the slowness is part of what it's about right means i think it's just coming from kind of a
#
productivity paradigm right i mean the way i do i think kind of just hearing those has just been
#
you know it's not like i don't have that part of me with my love of music and all of that stuff but
#
it's just very nice to uh to just hear those pieces right so yeah i think in terms of books
#
you know more recent i think in the context of federalism in fact i mean the one thing again
#
which i thought you would ask which i did want to cover a little bit right i mean is as we think
#
about india at 75 you know you you ask the hope and despair type question you know the things
#
about so there are some things i am you know there's one thing i'm very concerned about which i do
#
want to talk about uh but in thinking about federalism i actually there's this little volume
#
by madhav khosla that he puts together like you know letters to chief ministers uh where it was
#
just mind-blowing to me that jawal al neru used to write letters every 15 days to every chief
#
minister okay and he did this for pretty much 14-15 years um and like madhav says you know i think
#
the value of those letters is that when you read neru's books they're all pre-independent so they're
#
really more as a political activist as opposed to kind of taking so like they say right you campaign
#
in poetry and govern and prose right i mean so kind of taking the grand lofty ideas of the you
#
know of the idealist into the practical realities of running the government and seeing that discourse
#
with the chief ministers i mean i just think it was yeah it's just wonderful in terms of what it
#
shows about thoughtfulness about inclusiveness going back to what you were saying about you know
#
writing every week i mean i never thought about that but you know here i say i don't have the time
#
but here was a prime minister making time to do that kind of writing i mean every 15 days
#
and it suggests that how important it was partly as an act of self-reflection partly as an act of
#
communication and i think the reason i want to call attention to that is going back to something
#
else you said about kind of how our public space for dialogues and difficult conversations seems
#
to have kind of shrunk right i mean where people are talking past each other you know there's
#
posturing there's extremities and how do you kind of find the middle um so i found that quite nice
#
i there's this other recent book which i don't know if it's out yet but i got a pre-copy from
#
my friend rahul sagar who's got you know two books one is on indian foreign policy and
#
intellectual thought in 19th century the other one is called the progressive maharaja which i
#
think so it's an incredible piece of historical detective work and it's it's uh based on you know
#
sir madhava rao who was the divan of travancore and then the divan of baroda and it's a set of
#
lessons in governance and statecraft right mean that he had put together for the young prince
#
and so what is great about it is it's kind of you know it's both deeply indian but also western
#
and it reflects kind of you know what i hope and india will be which is both kind of confident in
#
what we are but open to the best from around the world right i mean and so i think that book is
#
yeah i mean and also it it it kind of resonated with what i'm trying to do right now which is
#
really i guess right a modern book on statecraft in some ways but more internally facing as opposed
#
to aspects of externally facing so yeah i mean these are a couple of recent books which i've
#
liked a lot well thanks a lot and and so i'll ask the hope this fair question since you prepared
#
for it or have you already given the answer it was not even prepared you know i mean i think
#
basically the i think see the as we take stock about india 75 i mean i think the
#
the thing you know the thing i do want to reflect on and you've said a couple of
#
times it was not even about preparing it was more connecting thoughts based on things you've said
#
about you know what keeps the country together right i mean what keeps the country together and
#
are there things that we are taking for granted are there fault lines that we need to be careful
#
about that we need to kind of do purposeful deliberative thinking about these fault lines
#
without assuming them away okay so because these are very complex issues that are coming down the
#
turnpike okay so i think the the larger question about what keeps india together i think you know
#
i think you know ram does justice to that and there are themes of that in many of your episodes
#
right including chinmayon migration right i mean just that shared amount of internal migration
#
connection you know keeps everything together which is wonderful i think there's something else which
#
i don't know if it's been in an episode but which i think is worth and this is interesting right
#
because ram the book is masterful that last chapter on kind of why india survives is masterful but you
#
know it actually does have a bit of a blind spot which i think speaks to some of the broader fault
#
lines we face as a country right now which is it completely ignores the you know so he does talk
#
about religion but says religion is not what unifies the country because we are not a religious
#
state which is true but there is also a level where there is a cultural component of travel
#
and pilgrimage say right like you know i mean that people just travel around the country and
#
one of the book references in fact which many of you readers may not have seen is this wonderful
#
book by diana eck who's a professor of religion indian religion at harvard right like you know
#
called india sacred geography and she's got this lovely phrase there about saying that this is not
#
a country unified by the power of kings and princes but by the footsteps of its pilgrims
#
right i mean uh and you know so and growing up in ahmedabad i know how for example my south
#
indian relatives would come and go to dhwarka and go to somnath and that was an important part of
#
coming to gujarat you know whether it's going to kashi whether it's going to rameshwaram so i think
#
you know that's there and so but the reason i'm saying all of this is that we have going back to
#
federalism and going back to the optimal size of countries and going back to what keeps india
#
together i think the there are many many many layers right so there is a modern there are
#
traditional reasons for why we are together including say things like pilgrimage there
#
reasons like migration reasons like the modern institutions whether it's a civil service so all
#
of these things have kind of played their own role in stitching together right the miracle that is
#
india okay uh but we can't take it for granted we can't take it for granted and you know for
#
example there used to be this thing called national integration council okay and part of their job was
#
precisely to constantly think about you know identifying and pre-empting fault lines right
#
mean through kind of proactive action so i think as i think about india what worries me the most
#
is kind of the parliamentary delimitation okay that can mean that may be coming up right and so
#
that's the can we've kicked down for 50 years right with 71 there was a constitutional amendment and
#
we frozen representation at that 71 population but if we were to redo this now okay based on
#
population and then effectively you are completely reshaping the political map of the country right
#
in terms of the the population ratios if you were to keep kerala as a constant right mean would have
#
more than doubled in up and bihar right relative to and not just the south the parts of the west
#
as well right so as we think about the grand federal compromise that's india and you can see
#
why this is such a core tension right because there are democratic reasons to say that we need
#
to not we are too far away from one person one vote okay so which would say that any delimitation
#
is the right thing to do but that also goes deeply contra right like i mean to kind of this federal
#
spirit and you can see and because the south would then not just south of the south and the west
#
right i mean is worse off both economically and politically right like and so how do we
#
navigate this is going to require an enormous amount of political and you know an imagination
#
to say here are these principles that are in tension with each other and how do we architect
#
something that allows everybody to be better off right and but that requires you know genuine
#
dialogue it requires creating the space for dialogue and i don't think it's something that
#
you know this particular government is incapable of right i think arun jaitley is you know he
#
shepherded gst through partly through kind of a consultative temperament that listened to everybody
#
right like i mean and brought things together and i do think that this is something that we should
#
prepare for right i mean and have either you know some body of experts constitutional body political
#
representation to kind of you know so that it doesn't hit us out of nowhere and then because
#
once again positions get entrenched it'll be very very difficult right because you know if you have
#
people saying no one person one vote we have to do this or others say no we had actually talked
#
about population control education as a national goal and there are states that have met this and
#
states that are not and if you were to follow delimitation you would completely change the
#
federal contract so that i think is very very it's one of the most difficult problems i see coming
#
down the turnpike and you know you can't just push it away right and so it's going to require
#
both political and institutional imagination right so there are ways to kind of navigate this
#
you know one you might say is listen we froze things in in 2001 and things have turned out fine
#
like you know so we can keep that and you know things have served us fine the other is to say
#
we are deviating more and more from the principle of one person one vote and so you need some
#
modifications and so then you could have you could think about saying that maybe right you know you
#
think about the two houses of parliament right i mean going back to the original purpose of
#
rajasabha as something represents it so you're saying there are maybe the loksabha becomes
#
population proportional and then but the rajasabha goes to kind of a fixed number per state or you
#
know some hybrid so that there is a certain amount of voice that is kind of there for the
#
less populous states or you could have formulae that look like saying we will freeze political
#
representation the way it is but on the fiscal side allow the finance commission to start
#
accounting for newer populations right so anyway so i'm just putting this out there is saying that
#
you know i am india at 75 is an incredible achievement that you know we're all proud of
#
that we're all a part of but i think i do worry and this goes back to some of your older you know
#
earlier questions about that are we shrinking the public space for the difficult conversations about
#
you know where we are able to listen and really come up with win-win solutions or solutions that
#
are effectively compromises that represent kind of the validity of different people's positions and
#
how do you come up with something like that right and so yeah so not to be pessimistic but i'm just
#
saying that we we cannot take these things for granted and it does require constant purposeful
#
engagement by the citizens and leaders of the country to kind of make sure that we continue
#
to stay on track and get to full potential i i couldn't agree with you more that we can't take
#
it for granted and i think sometimes a mistake that we make is when we think of india as lines
#
on a map that these are the lines on a map and you know this is what we are and and to me it's
#
a little bit more than that and it's possibly too nebulous to articulate precisely what my idea of
#
india pompous words might be but more and more i think we can't take it for granted because it is
#
under threat you know when i see some of the fault lines in our society exploding today like the
#
anti-muslim politics of today for example it makes me really worried about where it could go and you
#
know if the worst-case scenarios were to come about however low probability there might be
#
what is the way out of that i worry about that as well i mean you know and even this whole sense of
#
okay we've reached 75 years as this geographic entity and more or less these lines on a map's
#
minor modifications here and there and china's nibbled away a bit of it recently but this is
#
kind of what we've got but i think it's it's only been 75 years that's not very long things
#
don't last too long you know i think what one of the biases we have is we think the present moment
#
is permanent that everything will be as it is today and that is not really the case i mean one
#
way in which which it could change which is a positive way is that you know technology has this
#
push towards globalization where we can all be global citizens and it doesn't really you know
#
nation states become more and more irrelevant they don't die or they don't vanish or something
#
they just become more irrelevant because individuals become empowered to join whatever collective they
#
feel like in whatever way even if they pay taxes in a particular geography but another you know
#
when i think about the delimitation for example i wonder if that can be you know if not handled
#
properly can that be something that you know provides a trigger for the lines on the map
#
changing and not looking the same and i don't even know if that would be a good thing or a bad thing
#
like one musing that i think i brought it up in my episode with niranjana which you mentioned you've
#
heard is that what if at independence we weren't one large country like we are but a whole bunch of
#
small countries you know federalism by force as it were would it be better and would it be
#
would it be worse and i can make arguments for either really so who knows where things are going
#
i mean i once you know when i was a poker player wrote a column called unlikely is inevitable
#
about the law of truly large numbers which basically states that no matter how unlikely
#
these something is given a large enough sample size is bound to happen and i think given the
#
sample size of time itself you know given the sample size of space we are one tiny planet in
#
you know such a large universe you know millions of years have passed and we've just you know
#
gotten through 75 of those you know you cannot take anything for granted and you have to fight
#
for what you believe in and which is which is in fact but no but i want to be more optimistic
#
right and again going back to one of your episodes i think it was annapurna right i think in the end
#
there was this thing about uh knowledge and love and she talked about you know loving every part
#
of this country right i mean having traveled you know having traveled around right and so
#
i do think that even though these are lines on a map that there is something truly special
#
about the modern indian state and then coming back to refrain that you've had in many episodes
#
right which is was this a liberal constitution illiberal society again so i think rahul varma
#
had the best answer to that right i mean which is that whatever it is it is the only version that
#
could have worked where essentially the core idea of the indian constitution is a constitution that
#
accommodates diversity right i mean and that's why india is important both intrinsically for itself
#
and for the world right i mean it is that in a world that you know is constantly driven by
#
different kinds of conflict so you know even the current government like you know wants india to be
#
quote unquote vishwa guru but that vishwa guruness comes not from proclaim it but comes from your
#
actions right i mean and the actions of kind of building a modern polity right that can accommodate
#
this kind of diversity in an inclusive pluralistic way while kind of building the foundations of
#
economic growth and prosperity and also kind of you know building an agenda of empowerment of the
#
most marginalized which again we've never succeeded as close to our aspirations but those aspirations
#
are there right so i think you know and i end my book partly with kind of saying strengthening india
#
leading the world right like i mean which is in the end the idea of india needs to be something that
#
is sustained by its attractiveness as opposed to by its force right so and coming back to another
#
episode where pramit i think talked about when he was a student in assam that he would face these
#
kind of you know there would be the separatist kind of sympathies right among the youth among
#
students whatever and how has he grew older he's like listen i would still much much much rather
#
be in india than china which is the counterfactual right like i mean and so essentially the power of
#
the idea of india is just the this unique experiment in human history that has accommodated
#
this kind of diversity right i mean and created that space for flourishing every kind of diversity
#
so and that's why i think it's important that we we survive and we flourish and we do all these
#
things not just for us but also for the world but i think as we go back and read some of these early
#
documents of the founders of these these letters you know and i think rahul was again as an old
#
friend right i mean part of his rediscovery for example of indian public life was that
#
of all these periodicals and the incredibly active intellectual life of pre-independence india where
#
people were writing and writing in periodicals and rebutting and going back and forth you know
#
that we and that's why i think again not to flatter you right like you know but what makes
#
i think the podcast then an important space is that we simply do not have the space in our public
#
discourse right for these long deep conversations that are you know measured respectful engagement
#
of course they are all bilateral but eventually like you know maybe there are fora and things
#
that we can create that can do these things so thank you for doing your bit and we shall stay
#
optimistic about you know where this great country goes in the next 25 years yeah and i should point
#
out of the rahul sagar book you're referring to i think it's called to raise the fallen people
#
the publishers just sent it to me so i must read it and invite him on the show as well
#
and you know i mean i love this country as much as you do that's why i that's why we must fight
#
for it but i i don't want to be vishwa guru i want to be vishwa bandhu i think you know male
#
ego is the end of everything karthik karthik boss thank you so much for this you know and i'm so
#
flattered and almost like awed by you know you're using my episodes as footnotes in your conversation
#
with me it's quite mind-blowing i'm you know i'm gonna dream about this so thanks for coming on
#
the show and hopefully we can actually meet in person soon which we haven't yet and you know
#
have an even longer conversation thanks amit thank you if you enjoyed listening to this episode
#
check out the show notes enter rabbit holes at will you can follow karthik on twitter at karthik
#
underscore econ you can follow me at amit varma a m i t b a r m a you can browse past episodes of
#
the scene and the unseen at scene unseen dot i n thank you for listening
#
did you enjoy this episode of the scene and the unseen if so would you like to support the
#
production of the show you can go over to scene unseen dot i n slash support and contribute any
#
amount you like to keep this podcast alive and kicking thank you
