India’s Wonderful Reforms

In an Indian Express article by Vijay Kelkar (Advisor to the Finance Minister) and Ajay Shah (Consultant, Department of economic affairs) ponder the question Why is this a very happy Diwali? (Oct 2003) Their answer is REFORMS. It is an interesting article and it belongs to the same class as the series of articles that Arun Shourie wrote around mid-August regarding the rise of the Indian economy.

The article by Kelkar and Shah essentially tells us that the Indian economy is not doing badly and that we would not be remiss if we indulge in a little bit of self-congratulatory back-slapping. They indicate with pride the progress we have made. For instance:

In a recent month, we added two million mobile phones, an event that made the global telecom industry sit up. Prices have crashed. In a truly ironic reversal of roles, land lines are now a luxury, mobile phones are cheap and ubiquitous.
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Every institution exists only in the mind. Each is a manifestation of a very old, very basic idea — the idea of community. They can be no more or less than the sum of the beliefs of the people drawn to them; of their character, judgments, acts, and efforts.

Dee Hock, founder of VISA.

Education for a Nation

An old Chinese saying (I assume all Chinese sayings are old except the ones that come from the little Red Book) goes:

If you are planning for a year, sow rice; if you are planning for a decade, plant trees; if you are planning for a lifetime, educate people.

In the context of development, I think the last bit should be “if you are planning for a nation, educate people.” Especially, primary education. For among all the factors that are necessary for economic development, none is so basic as primary education for a nation. Primary education is the essential basic public good engredient without which there is no known receipe for development. Continue reading “Education for a Nation”

The Skewed Sex Ratio

A report in the Indian Express of Oct 19th Where has the girl child gone? starts off with

The booklet cover says it all: Missing. Released by the United Nations Population Fund or UNFPA, it maps the declining child sex ratio (in the age group 0 to 6) in the country: 20 pages talk of the last decade’s grim reality of the ‘missing girl’ child.

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The Power of Ideas

As an economist trained in the neo-classical tradition, I am constantly on the lookout for market failures. Externalities are a reliable source of market failures and when I come across a positive externality, I get a warm and fuzzy feeling. Consider a story that exhibits the benefits of positive externalities.
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Corruption in India

From The Economist (9th Oct 2003) an article on the perceived corruption of countries.

Finland remains the least-corrupt country in the world, according to the latest annual index compiled by Transparency International, a Berlin-based organisation. The index, which measures perceived levels of corruption, focuses on the misuse of public office for private gain. The United States ranks as the 18th least-corrupt country, only a little less so than Chile. Botswana is reckoned to be less corrupt than Italy.

India ranks 83 in the list of least-corrupt countries. Finland is the least corrupt and ranks first; Singapore is fifth; Botswana is ranked 30th — thus leading India by about 50 places. Continue reading “Corruption in India”

Misconception #8: Curing a disease by intensifying its cause

While reading a paper ‘Sustainable Development’ by David Korten in which he surveys a bunch of publications around 1991-92, I came across his critique of the Brundtland Commission report. What he wrote there reminded me of Schumacher’s comment in ‘Small is Beautiful’ [1973].

“The neglect, indeed the rejection, of wisdom has gone so far that most of our intellectuals have not even the faintest idea what the term could mean. As a result, they always tend to try and cure a disease by intensifying its causes.”

Korten writes:

“The (Brundtland Commission) report’s key recommendation – a call for world’s economic growth to rise to a level five to 10 times the current output and for accelerated growth in the industrial countries to stimulate demand for the products of poor countries – fundamentally contradicted its own analysis that growth and overconsumption are the root causes of the problem.”


Misconception #3: The Digital Divide

Here is an example of muddled thinking from an article titled India Bridges the Digital Divide. The article is about computer kiosks. At one point it says:

Over the past decade, the Internet has been touted as a powerful engine that could raise living standards in poor and remote communities of the Third World by opening up new avenues for education, commerce and participatory democracy.

So far so good. Then it goes into the usual whining about the digital divide.

But the reality is a growing digital divide that is preventing the poor from sharing in the benefits of the Information Age. The gap between digital haves and have-nots is especially wide in India, where a national survey last year revealed that fewer than 1 percent of adults had used the Internet in the preceding three months.

OK, let’s get one thing clear. It is not the digital divide that is preventing the poor from benefiting from ICT. It is the fact that they are poor that is preventing them from benefiting from ICT. Not just benefiting from the use of ICT, the poor also are not benefiting from the advances in medical technology, in cosmetic surgery, in plasma TV technology, ad nauseum. It is not the digital divide, stupid, it is an income divide, it is a wealth divide, it is an opportunity divide.

If the poor had money, they would not be poor, and like all non-poor, would be able to buy all sorts of stuff — including, but not limited to — digital gizmos. They would buy education, clothes, food, houses, cell phones, cd players, DVD players, plasma TVs, and computers. There would not be a digital divide. It bears repeating: the digital divide is not the cause of poverty nor is it the cause of the persistence of poverty. The digital divide is a result — an effect, a consequence — of poverty.

Now coming to India: India does not have a digital divide. Let me put that in bold.

India does not have a digital divide.

If a vanishingly small number of people have something, there is no divide. For instance, it is pointless to talk about a BMW divide: we are all in the same boat when it comes to having BMWs and therefore there is no divide. So also, to a first approximation, Indians don’t have access to the Internet, except for a few million people. And the few million who do have it, have to pay inordinate amounts of money to get a slow uncertain connection.

I hope that we can put that myth to rest one of these days.

Culture and Development

In an email to Yuvaraj, Mr. M V Subbiah of the Murugappa Group wrote:

Thank you very much for sending me the RISC model.

I have read it with interest and entirely agree that India has very little chance of being a major player in world without integrating the rural economy. Having said that and having been trying in our own small way to integrate the rural areas which we are working with in our sugar factories, I am beginning to believe that we need to get some help from specialists who understand the social anthropology of our people. I do not know if any one else in your team feels the same way.

I could not agree more with Mr. Subbiah that the cultural context of our economy is extremely fundamental to our economic development and therefore having the insights of cultural anthropologists is important.

In a sense, economics and anthropology are intricately linked because humans are cultural creatures and our aspirations and our drives are shaped by the culture that surrounds us. Our thinking is bounded by the limits that culture places on us and any fundamental shift in our thinking has to accompany, if not be induced by, a cultural shift.

Fortunately, we are immensely pliable creatures and given sufficient reason to change, we change. India’s economic woes can be traced to at least some extent our culture of acceptance of the status quo and a fatalistic acceptance of what is instead of striving to improve our lot. We need to expound a new vision and spread it throughout the nation so that we start to acknowledge our potential and thereby take the first step to realize it.

Change in the way we think about the problems we confront is critical because the same sort of thinking that has created the problems cannot possibly get us to the solutions. It is the avowed goal of our team at Deeshaa to think very deeply about the source of our problems to understand what it was that created them. Then we proceed from that understanding to the next step, that of creating a solution that is not mired in the old mistaken ways of thinking. Finally, we propagate the solution to all corners of the country, the first step of which is to implement the solution as prototypes to demonstrate that the proposed solution is feasible.

The Information Divide

We have been discussing the so-called digital divide in the recent past and generally reaching some tentative conclusions that the focus on it is misplaced and that resources are largely misdirected in that regard. What is important is for us to remember that ICTs merely give us a tool. And like all tools, if our focus is on the tool rather than the end for which the tool may be appropriate, we could end up doing silly things. To use an old saying, it is like the finger pointing at the moon. If we focus on the finger, we will miss all the beauty and the glory of the moon.

You may ask, what is the goal? And how is the focus on ICT distracting us from recognizing the goal? Or, what is the real divide that we should be concerned about if not the digital divide? What is the reason for the apparent confusion of means and ends?

No one can argue that the digital divide does not exist, just as one cannot argue that the Rolls-Royce divide does not exist, or that numerous other divides don’t exist. (More on my view of the digital divide.) One is only arguing that bridging the digital divide is not the end, but it is a possible (and one of many possible) means to an end. I will argue here that the end is to bridge information divide and that the tool could be provided by digital ICT. In some applications, digital ICT could well be the answer, while in others, other technologies may be more appropriate. In some cases, ICT for development goals may be an entirely inappropriate tool. We need to think very carefully to avoid the pitfalls some of which I have identified in a previous post Misapprehansions, misconceptions, …

What is the information divide and why is it relevant? The information divide is important because it empowers people. It empowers people not just in the marketplace but also in the political arena. Vested interests are threatened by an informed citizenry. So you would not hear too much noise about bridging the information divide. Bridging the information divide is likely to run into political opposition. There is a hoary history to the deliberate maintenance of an information divide. That is another story that we can address in a separate entry in this blog.

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