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INI9: 9 minute conversation with Rohini Nilekani

I discuss sanitation, malnutrition and dams with Rohini Nilekani in the latest INI9: 9 minute conversations on strategy, policy and politics.

The conversation happened on the sidelines of the Takshashila-Hudson conference, Shaping India’s New Growth Agenda: Implications for the World, Bangalore 2014.

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The Unhistoric US-China Climate Deal

China and the United States of America inked a climate pact this month and this has been lauded by various corners as landmark and historic. Vasudevan Mukunth quoted me in his article for Scroll.

Here is the full text of my comments to Scroll.

The history of the global negotiations on climate change negotiations has so far shown two things:

One, big emitters have typically employed salami slicing tactics, where they inch up the emission levels they are willing to go down to. Changing the base years and letting the reduction targets slide are commonplace.

Two, any penalty measures used to enforce emission reduction targets have been repeatedly flouted – including by countries like Canada – with no direct consequences.

I remain skeptical of this deal because the size of the Chinese emissions ‘peak’ remains unknown. That gives a lot of wiggle room for China. Secondly, there is no tangible enforcement mechanism presented, nor does one seem feasible. At best, this is a gentlemen’s agreement between the United States and China, and there are no gentlemen in international relations.

Implications for India and other developing countries:

India has routinely done a poor job of defending its record in global climate change negotiations, though it has done far better in substance than the likes of China. There is a risk that India will be painted into a corner, in spite of being a low carbon emitter on a per capita basis, and in spite of significant efforts at home to promote renewables.

Further, India’s more immediate focus must be on climate adaptation, but international financing and promotion of mitigation efforts serve to distract domestic policy. For India to get back to high economic growth, India must be willing and able to use all forms of energy — from coal to natural gas to nuclear power and renewables, and use the growth to provide better public goods and build resilient infrastructure.

This deal and its seeming historicity makes it a harder challenge for India to make its case convincing for a global audience.

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A Long Overdue Hike in Bangalore’s Water Prices

The Bangalore Water Supply and Sewerage Board (BWSSB) recently hiked its water tariff, a move that was long overdue.  I am quoted in Citizen Matters on why this hike is a good move.

The hike in BWSSB’s water tariff is a welcome development that was long overdue. BWSBB has been a national leader in the professional delivery of water supply and sewerage services, and it is no accident that Bangalore has the largest number of metered water connections in the country.

Water is an increasingly scarce resource in the 21st century, and pricing it at its highest marginal cost is essential to conserving this vanishing resource. While we talk about excessive or misdirected LPG and petrol subsidies, the water subsidy that even the most prosperous Bangalore receives is much higher.

The higher price of water will also spur more people to do rainwater harvesting and efficient use of water. We must also recognise that people pay many times more for water tankers – a small increase in BWSSB tariffs could in fact reduce overall water cost for the city’s residents.
[Citizen Matters: Should Bengalureans be grateful for BWSSB’s water rates? 11 November 2014]

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Liberalising Medical Education in India

I spoke on liberalising medical education in India, on the health panel at the Takshashila-Hudson conference on ‘Shaping India’s Growth Agenda: Implications for the World.’

We need a lot more doctors in India than we are currently producing and the stranglehold of the Medical Council of India on college education needs to be done away with.

A companion opinion piece to this video will be published soon.

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In Times of India: No Room for Jugaad on Mars

I write in the Sunday Times of India on how India must pursue high excellence like reaching Mars and get rid of the culture of jugaad.

Think of numbers about Mars. One jumps out at you. Rs 450 crore (approx $75 million). India crossed a technological milestone this week by successfully injecting a spacecraft into Martian orbit. While celebrating the fact that India has been able to achieve an elusive goal, we also want to celebrate the idea that ours is the cheapest mission to make it to Mars. A successful series of ads from Maruti Suzuki in 2010 showcases our love for the “low-cost” like no other. In one ad that was spooky in its foresight, a NASA tour guide is showing off a top-notch new spaceship meant for Jupiter. The first question that an Indian visitor asks is, “Kitna deti hai?”

ISRO did not get to Mars by using duct tape and M-seal to make the orbiter work. ISRO is not trying to repair cars by refashioning cycle chains. It takes several minutes for the ISRO command centre to beam a message to the orbiter and an equal length of time to hear back. The “thoda adjust kardenge” attitude of jugaad with people tinkering on the fly would have failed like a wet cracker here. ISRO built a top-class launch vehicle and payload, and we should not cheapen its success by harping on any number. India’s space programme is a testament to a culture of tackling hard challenges because they are hard, not because they are easy. Of doing the best, and not the cheapest. Jugaad in India was born as a necessity in impoverished conditions, and instead of elevating it to godhood we should be trying to escape a culture of jugaad as quickly as possible. ISRO is showing us the way.

[Full Article: No Room for Jugaad on Mars, September 28, 2014]

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In Business Standard: Setting our sights beyond Mars

On the day after India’s successful Mars orbiter insertion, I write in Business Standard that India and ISRO must now focus on achieving human spaceflight, and that we have to do things differently in order to achieve it:

The target of human spaceflight is necessary because successful space programmes need visible goals to orient themselves and not get lost along the way. They also need public confidence and steady government support since the development cycles are long.

Space exploration is primarily a pursuit of excellence: of exploring the unexplored, doing the impossible and pushing the frontiers of knowledge and human ability. As India has seen in the last decade, having ambitious plans to get to Mars and the moon inspired ISRO to step up its game.

Clear targets like human spaceflight breed innovation and spark creativity. For the Mars mission to succeed, various ISRO wings had to align their objectives and work at their best, as a complex mission requires flawless execution. ISRO needed to figure out deep space communication, precision orbital planning for such a long and complex journey, as well as mechanics and electronics that leave little room for error – and they had to do all of this within a tight deadline.

Similarly, human spaceflight will require ISRO to develop technologies for more powerful launch vehicles capable of transporting larger capsules to space. It will need the ability to re-enter the atmosphere and reach back to earth safely. It will also need all the trappings necessary for humans to survive and thrive while in space, and more. These skills and technologies are transferable, and will eventually aid ISRO’s other efforts and the economy at large.
[Full Article: Setting our Sights Beyond Mars, September 24, 2014]

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In Business Standard: Indian Cities, New and Improved

I write in Business Standard today on the 100 smart cities plan announced by Venkaiah Naidu and the lessons they must learn from JNNURM almost a decade of centrally-sponsored urban development schemes:

JNNURM had a tantalising premise when it was first launched: the Union government will give cities money for infrastructure as an incentive for states to devolve power to cities, and for these cities to reform. The Union government was a third party in the state-city equation, hoping to tip the scales in favour of cities and true decentralisation.

The promise of JNNURM was lost for two broad reasons. One, the ministry of urban development had to perform two conflicting functions: it had to spend money by disbursing it to states, but it also had to audit and verify the reforms process. The outlays were conditional on meeting reform targets. Though the ministry did a lot in checking whether cities had completed enough reforms, the spending mandate usually won through, and poor reformers were rarely punished. This made it a weak incentive for genuine urban reform. Some cities like New Delhi also received large infrastructure funds from sources such as the Commonwealth Games, making JNNURM irrelevant as an impetus for reform.

Two, the Union ministries demanded an extraordinary amount of scrutiny and control for the projects approved. For example, if a town in Karnataka wanted to finance a water supply project under JNNURM that improved the lives of its residents, often the project had to meet extremely trying norms such as 24/7 water supply or complete metering of connections, which were enforced by Union ministries and attached bodies. While these are desirable, the lack of state-level decision-making led to the projects losing local relevance, apart from being subjected to an excruciatingly long and difficult process of approval. If the intent of the Union government was to incentivise reform, then perhaps it should not have controlled the type of infrastructure projects beyond setting broad norms.
[Full Article: Building Blocks to Smart Indian Cities, June 3, 2014]

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Do cash transfers make people spend more on alcohol?

The most oft-cited reason in favour of in-kind subsidies against cash transfers is that the latter will make people waste the money on alcohol or other “temptation goods”. It turns out that all the evidence we have today debunks this as a myth. 

Rohit Pradhan shares a new research paper from the world bank, ‘Cash Transfers and Temptation Goods: A Review of Global Evidence‘ by David K Evans and Anna Popova. In this short paper, the authors review all empirical research on the topic to date. Since the success of Bolsa Familia and other experiments, conditional cash transfers have become an increasingly successful reform measure in welfare policy, moving away from an old idea of the state providing in-kind private goods to those considered deserving.

Cash transfers have also been slowly but unsteadily making their inroads into Indian welfare policies – with a Direct Benefits Transfer programme that was launched in January 2013. Linked to the Aadhar unique-ID system, the DBT if well implemented could bring about a welfare policy that is both more targeted and has lower delivery costs. That said, the parliament during the same UPA regime also passed a massive National Food Security Act that legislated the provision of food grains to two-thirds of India’s households. This schizophrenia awaits resolution with a new cabinet soon to be sworn in, and this paper could not have come at a better time to quash the last remaining refrain against cash transfers.

Perhaps the most persistent criticism of cash transfers is the misuse of transferred money by the beneficiaries who may spend it instead on alcohol or tobacco. These “temptation goods” could range from the frivolous to the obnoxious. The notion is that cash transfers would allow a callous husband to waste more money on booze that is meant instead for the wellbeing of a household. As the authors explain, past reports have been replete with anecdotes about the same. Without doubt, alcoholism (especially in adult men) and an iniquitous household structure have huge social costs on poor families. This cannot be dismissed or made light of. But it is also not something you can fix through lazy welfare policies, the problems are far beyond their scope.

What the authors show is that alcohol and tobacco consumption are agnostic to cash transfers – things are no better and no worse with other kinds of policies. Whether the state provides a kilogram of grain or the amount of money to buy one, it makes no difference to the household. People will continue to spend as they have, and what all transfers do is augment the income of the household. It is this aggregate effect of all cash and kind transfers that matters most. If the consumption pattern does change, it’s because of an ‘income effect‘ rather than anything else.

In-kind welfare policies for those in need are patronising, brimming with the arrogant assumption that the State knows best as to what a person or a household needs and what they should spend their money on. Now there is sound evidence to show that not only are in-kind welfare policies normatively problematic, but also hold no advantage over cash transfers, and several damning disadvantages.

You can read the full working paper here.

David K. Evans, Anna Popova ‘Cash transfers and temptation goods : a review of global evidence.’ Policy Research working paper; no. WPS 6886 (2014).

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In Pragati: The Strategic Import of India-US migration

I write in Pragati–The Indian National Interest Review on why the movement of people is the most important component of India-US relations:

There are two challenges facing Indian migration to the US today. The first is that while the rich contribution of Indian Americans to the US economy has been widely noted, this has not translated into thought on policies that make it easier for talented Indians to work in the United States. The second is that migration finds little purchase in government-to-government relations that policymakers in India and the US have been trying to boot up over the past decade.

While visa policies can be dismissed as pedestrian concerns beneath the notice of strategic thinkers, immigration is a tie binds the two nations and the two states with greater strength than anything else today. More dinnertime conversations in India revolve around US visas every month than the sum total of all discussions on India’s nuclear cooperation with the US. It is immigration that is the main reason why Indians have had a uniformly high positive attitude towards the United States, across years and presidential regimes. A sound strategic partnership has to start by strengthening this.

The two governments, and analysts on both sides have rarely looked at immigration as a matter of strategic import. From before the introduction of Senate Immigration Bill in April 2013, legislators in the United States mostly considered the US-Mexico bilateral relationship in relation to immigration. The India-US bilateral relationship has had a weak influence, if any, on the drafting of immigration policy.
[Full Article: The strategic import of India-US migration, April 18, 2014]

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In Pragati: Spending for a Modern Armed Force

I write in Pragati–The Indian National Interest Review along with Rohan Joshi on the sorry state of defence modernisation in India:

As Ajai Shukla highlighted in February, only 4 percent of the 2013-14 capital budget is allocated for new acquisitions, down from 38 percent in 2010-11. The interim defence budget announced in February 2014 appears to do little to alleviate this systemic decline. Although a 10 percent increase in the defence budget was announced, there was only a paltry 3 percent increase in capital outlay, with revenue expenses garnering a large part of the increase. What little money will go towards defence modernisation from the overall capital outlay is as of yet unknown.

In the context of the budget, Mr Antony’s admission that there was no money left for the MMRCA deal in FY 2012-13 is surprising. Capital allocation for the IAF was increased in FY 2012-13 by 22 percent, conceivably in order to account for the first installment of Rs. 10,000 crore due to be paid to Dassault after the deal was to be signed in FY 2013.  If we are told that the IAF has spent all but 3 percent of its allocated capital acquisitions budget for FY 2013, where has the rest of the money gone?  The interim budget for FY 2014 has decreased the IAF’s capital allocation budget by about 15 percent (over FY 2013 beginning estimates) to Rs. 31,818 crore.  Worse, if the worrying trend of committed liabilities accounting for 95 percent of the capital acquisition budget lingers, this effectively means that the MMRCA deal cannot be concluded in FY 2014-15 either.
[Full Article: Spending for a modern armed force, March 14, 2014]

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