India – a flailing state?

Jaideep Mishra of ETpointed a must read paper by Lant Pritchett in this article on Indian political economy. The paper is  here and is titled as: Is India a Flailing State?: Detours on the Four Lane Highway to Modernization.

The abstract says it all:

India is an emerging global superpower as its rapid growth has transformed its economy and has maintained itself as the world’s largest democracy. But at the same time India lags in many dimensions—its malnutrition rate is one of the highest in the world, its immunization rates are lower than most African countries, and Bangladesh has a better infant mortality rate.

I argue that this is in part because the India state is “flailing”—its very capable head is not longer reliably connected to the arms and legs of implementation. In the four-fold transition of economy, polity, administration, and society the administrative capability of the state is lagging. I use examples from services like health, education, and routine transactions like issuing driver’s licenses to show that the agents of the state routinely do not implement the tasks they are assigned—causing a massive divergence between de jure and de facto reality. The paper concludes with speculations about the causes of flailing and possible future trajectories.

The paper makes you think a lot about state of Indian economy. The way Prtichett begins the paper by citing an example from Slumdog Millionaire is superb:

The premise of the recent Indian novel Q&A is that the hero, an uneducated working class waiter in a downscale restaurant, has won a billion rupees in a game show that requires answers to twelve questions of increasing difficulty2. The novel them weaves in and out of the hero’s life with vignettes that reveal how he came to know the answers to each of the questions.

The novel opens with the hero having won the game show but is being beaten by the police in a Mumbai police station as the producer of the game show, short on cash, has decided to pay-off the police to extract a false confession of cheating by the contestant rather than pay out the winnings. This is not remarked upon as unusual. As one reads the novel in each instance in which the hero’s life intersects with agents of the government–he is treated with the same mix of venality and casual brutality.

This is especially striking for two reasons. First, the bad behavior of the government is not a theme of the book nor is it ever remarked upon, rather these descriptions are there to provide verisimilitude of a real person’s life—to make the book seem realistic and in-touch with the “true” India. Second, the novel was written, not an estranged radical, but by an active duty member of the Indian Foreign Service.

While watching the movie, I never saw it from this perspective.

The paper then looks at the often discussed puzzle- Though Indian economy  is doing really well but as a state we are just declining. India is one of the toppers when it comes to economic growth but is still a laggard on all other indicators like health, welfare, service delivery etc etc.  

He then looks into why things are like this in India and suggests what to do. He realises it is not going to be easy and there is no magic bullet. One should look to Chicago for some inspiration:

Suppose a development expert from a modern, well-governed country, of today, say Norway, were told he was traveling to a foreign country but were really transported via a time machine to Chicago in 1929. He would find a booming economy, but corrupt politics, huge social tensions across races and ethnicities, vast economic inequalities, barely functional municipal services, unplanned and unregulated expansion of a city crowded with immigrants from rural areas and from other nations. What is his forecast? Should he be optimistic or pessimistic? What is his prescription? Where does one start with “reform” when everything seems out of control? From the hindsight of history, he should be optimistic, Chicago, while still perhaps far from being Norway, is a rich, vibrant, and functional city. But there was no magic bullet; change was a long, hard, slog. Corruption did not disappear overnight (or overmonth or overyear or overdecade). The police did not become less brutal and racist with one application of “reform.”

So we don’t have usual laundry list of reforms (thank god for that). But we have to work together to make things work. Unless people themselves realise it and work on it nothing is going to change.

The paper has many excellent insights and is a must read. The case studies on delivery of health, education and driver’s licences are excellent (though picked up from other people’s research). The Gardener’s tale on page 26 is funny and depressing.

One should also read this superb paperby Arvind Subramaniam which also asks the same – How India is managing such high growth rates when all measures show India’s institutions are declining.

While discussing India we should always r’ber Joan Robinson famous words: 

everything and its opposite are guaranteed to be true in India.

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5 Responses to “India – a flailing state?”

  1. Posts about Social Studies as of June 11, 2009 | Tatuaj.org Says:

    […] (WHO) and funded by the UN Inter-regional Crime and Justice Research Institute (UNICRI) India – a flailing state? – mostlyeconomics.wordpress.com 06/11/2009 Jaideep Mishra of ET pointed a must read paper by Lant […]

  2. India – a flailing state? « Mostly Economics | Satelec Phone Says:

    […] See the rest here: India – a flailing state? « Mostly Economics […]

  3. MS Says:

    Nice one, Amol…have you read ‘Trust..’ by Francis Fukuyama ? (Interestingly the same points raised by Fukuyama get referenced in a completely different context in Tom Vanderbilt’s ‘Traffic: why we drive the way we do’).

    Look through Fukuyama’s lens of ‘a trust based society’ – India is definitely flailing. The corruption of government and authority is a just a symbol of the gradual erosion of our core.

    – MS

  4. Interview of Nandan Nilekani « Mostly Economics Says:

    […] India- a place full of contradictions. […]

  5. futuretense Says:

    One of the alternatives not mentioned is injecting competition into service provisioning. As PM Rajiv Gandhi had noted only 15 cents of every Rupee reaches the intended. In other words government services benefit its own before those it serves. For example, competitive cell phone companies have provided more phones at 1 cent rates to more people than the state telephone company did in 50 years. By including private enterprise in the monitoring and delivery of services, proper competition can be introduced and the service designed to be self-policing. A regulatory example of private partnership occurs in the accounting audit of companies. The state does not audit directly but instead through private accounting firms. The accounting companies are insurers who face censure and fines. Could private partnership stop the extra-legal practice of going to “agents” to facilitate getting drivers licenses illegally? Car insurance companies could administer the driver license tests and insurance the driver based on test results. An insurance company would be motivated to not insure untested drivers and would be self-policing in delivering the services. Insurance companies would also deliver the services efficiently since it is current and potential customers they are delivering the service to. Competition and low-income subsidies would ensure against price gouging rates. To enforce tickets on bad drivers, the fines should be affordable enough to make bribery the higher cost alternative. A quota for police would censure police who don’t compare to their peers in enforcing fines. Finally, bonuses or pay from insurance companies would augment the police’ salary to replace seeking bribery rents.

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