Last week LSE hosted The IGC Growth Week. India at LSE pulls out India-related highlights

South Asia, LSE

LSE Research Online

2014-10-4Looking back at The IGC Growth Week 2014blogs.lse.ac.uk /southasia/2014/10/04/igc-growth-week-2014/Looking back at The IGC Growth WeekLast week LSE hosted The IGC Growth Week. India at LSE pulls out India-related highlights.State CapabilitiesIn the State Capabilities Research Session, chaired by Henrik Kleven (LSE), Karthik Muralidharan (UC San Diego)who presented findings from the paper, “Building State Capacity: Evidence from Biometric Smartcards in India”. Theauthors of this paper worked with the government of Andhra Pradesh state in India to randomise a large-scalerollout of biometrically authenticated electronic payments for two flagship social welfare programmes in India. Therewere significant positive impacts of this intervention: payment processes got faster, more predictable, and were lessprone to corruption. In addition, the project was highly cost-effective, and had strong support from the povertyprogramme beneficiaries. Muralidharan highlighted the potential for introducing similar systems in other countries,but emphasised that having political will is essential for effective implementation.CitiesProfessor Simon Alder (University of North Carolina) presented his work on “Chinese roads in India: The effect oftransport infrastructure on economic development” as part of the Cities Research Session. The paper investigateswhether the Golden Quadrilateral (GQ) highway project in India benefited the regional economy, and how wouldIndia’s development trajectory be if it had transport infrastructure like China. The results show that the GQ projectbenefited the targeted areas, while other areas lagged behind and if the lagging areas were better connected (as inthe China case), they would have experienced higher growth. Ashish Vachchani (Ministry of Finance, Government ofIndia) remarked that the government is in the process of building railways to connect the interior regions of India.Further, he noted that the cost of building highways in India is much higher than China, given the complicated andcostly process of land acquisition in India.EnergyThe Energy Research Session started with a presentation by Professor Nicholas Ryan (Yale University) titled“Lighting up Bihar”, which highlighted an incentive scheme for increasing electricity distribution revenue in thenorthern state. The research project aims to increase revenue of the electricity utility by providing an incentive toelectricity users at the level of the feeder area. These incentives include higher supply of electricity. It found thatrevenue from electricity consumers improved dramatically in only two months in the area where the incentive ofhigher electricity was provided. This pilot is now being expanded in Bihar.Responding to this, Mr. Sanjay Kumar Singh, Secretary to the Chief Minister, Government of Bihar said that therewas a clear commitment from the Chief Minister to improve electricity provision. This increased support for thisscheme also provided a signal to electricity consumers that the Government is committed to providing moreelectricity if consumers pay for electricity in full.The second presentation also focussed on India. Prabhat Barnwal (Columbia University) discussed the impact of adirect benefit transfer mechanism for cooking fuel subsidy in India. India’s cooking fuel subsidy is provided byreducing the price of a certain kind of LPG cylinders for domestic use. Due to this subsidy, a large black marketexists to sell the cheaper LPG cylinders to non-eligible users.The Government decided to link the distribution of these subsidised LPG cylinders with biometric identification ofeligible households. Using this system, subsidies were transferred to the bank account of eligible households1/3instead of reducing the price of the LPG cylinder.The research indicated that biometric verification was effective in reducing leakage and the fiscal burden of thesubsidy for the period under review, suggesting these results can be generalised and biometric verification of eligiblehouseholds to link subsidy payments can be extended to all welfare and subsidy programs.India-BiharGrowth Week also featured Country Sessions, led by the country offices. The India-Bihar session was Chaired byDr. Shaibal Gupta, Co-Country Director, IGC Bihar.Dr Clement Imbert (Oxford University) presented the findings of his study “Information Technology, Transparencyand Corruption in Public Programs: Evidence from a Large Workfare Program in Bihar”, which showed that theintroduction of Central Plan Scheme Monitoring System (CPSMS) in transferring funds to Panchayats seemed tohave reduced leakage in MNREGA.Dr Johannes Urpelainen (Columbia University) also shared the preliminary results of his study “Solar Power ofStreet Vendors: problems with the centralized charging stations in urban markets”. He argued that energy povertyamong the urban street vendors is a major constraint: around 80 per cent of the vendors rated improved lighting asthe “top priority”.The second part of the session was a panel discussion on ‘What Next for Bihar’. Senior policy makers from Bihar –Anjani Kumar Singh (Chief Secretary), Rameshwar Singh (Finance Secretary), Sanjay Kumar Singh (Secretary tothe Chief Minister) – all participated in the session. Mr Rameshwar Singh made a presentation highlighting theachievements of Government of Bihar in the last 7-8 years. He said that the government should continue with thecurrent level of spending on social sectors but Bihar needs to formulate policies that can increase the effectivenessof government expenditure. Mr Anjani Kumar Singh listed the priorities of the Government of Bihar: upgrading theskill of youth of Bihar; improving the power availability; policies to improve the quality of education; greaterinvestment in human capital; Need for value addition in agriculture by providing marketing facilities to the farmers;continue with the policy of positive discrimination for women. Mr Sanjay Kumar Singh explained how thegovernment is not only working towards improving the connectivity and access to power but also simultaneouslytrying to improve the quality of electricity. He argued that Economic growth is directly linked with the development ofenergy sector.India-CentralThe India-Central session focused on infrastructure provision and was chaired by Montek Singh Ahluwalia (formerDeputy Chairman, Planning Commission of India).Oliver Vanden Eynde (Paris School of Economics) presented his research on connecting rural India. The projectexplores ‘Bharat Nirman’ – a flagship infrastructure programme of the government and seeks to analyse two keyissues: (i) factors determining successful programme completion, particularly in conflict areas, and (ii) impact of ruralinfrastructure provision on local socio-economic and political outcomes. It finds evidence of particularimplementation difficulties in conflict areas, with varying patterns across different infrastructure types. Lack ofcoordination across projects is also visible.Ashish Vachhani (Ministry of Finance) gave an overview of the new government’s priorities for infrastructure andrelated regulatory issues. Over 2012-2017, the aim is to build world-class infrastructure, involving investment ofUS$1 trillion. This will have important spinoffs for manufacturing and employment growth. Infrastructure has beentraditionally provided by the government due to natural monopolies and public interest, but this has led to operationalinefficiency, quality concerns and inadequate investment. The opening up of telecoms in 1991 marked a change.There is now consensus that government regulation plays an important role and there is optimism regarding policyagreement for regulation in railways, highways and real estate.2/3Rathin Roy (National Institute of Public Finance and Policy) said that a binding constraint on growth in India is theramshackle infrastructure. Addressing this requires money; there are three layers of challenges: (i) poor productivityof investment in India; (ii) declining government contribution in infrastructure financing, implying greater reliance oncommercial banks. This strategy is difficult to sustain and hence, there is a need to bring in foreign investment.There are constraints in terms of a capricious, ill-suited regulatory framework and bias of the financial systemagainst long-term finance for emerging economies; (iii) savings from developing countries are increasingly beinginvested in the developed world.Nuno Gil (University of Manchester) highlighted the complexities of mega infrastructure projects, which involve vastnetworks of public and private actors. There are delays, cost overruns and evolution of the initial scope and targets.This leads to slippages in performance expectations and it is no different in India. Some additional challenges inIndia include premature announcement of hard targets, centralised governance, resource scarcity, tension betweenlender conditions and evolving nature of mega projects, and a lack of trust. Projects end up being successful forsome actors, leaving some others disappointed. There is a need for a more inclusive goal to unify parties,decentralised governance structures and flexible institutions.This post is compiled from session summaries by Miska Daredia, Country Economist, IGC Ethiopia; NoopurAbhishek, Country Economist, IGC India-Central; Sohaib Athar, Country Economist, IGC Pakistan; ChinmayaKumar, Country Economist, IGC India-Bihar and Nalini Gulati, Country Economist, IGC India-Central. To see the fullwrite-ups from all the sessions visit The IGC website.Image credit: The IGCCopyright © 2016 London School of Economics3/3

Looking back at The IGC Growth Week 2014

Abstract

Similar works

Full text

Available Versions

LSE Research Online