This post presents our monthly curation of developments in the Indian policy landscape – highlighting I4I (and IGC) content pertaining to Delhi’s seasonal smog problem, anti-pollution and adaptation measures, high-skilled migration from India to the US, and steps being taken by Indian states to promote industrial development. 

Delhi breathes uneasy

It is November and yet again, the national capital is engulfed in toxic smog, leaving the residents gasping for air. Anti-pollution measures under Stage IV of the Graded Response Action Plan (GRAP) are in effect, and the Delhi government is considering reintroduction of the “odd-even rule” for vehicles in the city. When this license plate number-based driving restriction was first introduced in 2016, an IGC project led by Gabriel Kreindler found it to be successful in reducing traffic congestion¹ as an emergency/short-term intervention. However, the policy did cause some disruption to economic activity, and the researchers recommended exploring more tailored policies that may be applied to specific areas and rush hour intervals – allowing drivers a wider set of options to avoid congestion. 

While every effort needs to be made to curtail emissions, the way things stand, understanding how people respond to pollution and how they may be enabled to cope better, is emerging as an important area for further research – as pointed out by Aguilar-Gomez et al. (2023). The authors also note the potential of air pollution to exacerbate existing inequalities due to the differences in the ability to engage in avoidance behaviour – say between “workers in Mumbai skyscrapers … [and those] … in India’s many small informal businesses”. 

In an IGC study in Lahore, Pakistan, Ahmad et al. (2024) demonstrate that there is willingness to pay for air quality forecasts among urban populations in developing countries. Having greater information on air pollution, in turns, raises residents’ willingness to pay for protective masks. The researchers suggest investing in pollution monitoring and forecasting in cities, as well as complementing education and job trainings with pollution forecasting skills. 

Trump 2.0 and H1-B

On 6 November, when Donald Trump was elected the President of the United States, ‘Google Trends’ data showed that a key concern among Indians was potential impacts on immigration policies. As speculation continues regarding whether Trump 2.0 administration will double down on H1-B visas², we look back on a 2017 study by Khanna and Morales, which shows that the visa programme has had a significant impact on the US IT sector and has also played a prominent role in spreading the boom to India. The “American dream” encouraged Indians to acquire the relevant skills, and this new workforce – along with return migrants – helped expand the field of computer sciences in India. While the researchers conclude that the average worker in both India and the US was better off due to immigration, they do acknowledge its distributional consequences. Read more about the findings here. 

Breschi, Lissoni and Miguelez (2019) dig deeper into the matter of return migration, exploring whether high-skilled emigration is effectively ‘brain drain’, or is it creating potential providers of ‘knowledge remittances’ for the home country. Leveraging data from LinkedIn and Patentsview on migrants that moved from India to the US (mostly in the 1990s and 2000s), the authors provide some insights into why Indians moved and the determinants of the decision to move back. For instance, they find that at the beginning of the study period, education was the predominant motive for emigration, although its importance vis-à-vis work reasons declined over time. In the study sample, work migrants were more likely to have moved back by 2016, as compared to education migrants. On the whole, the research establishes that India does not lose out on account of high-skilled emigration to the US.  

Revival of industrial policy

In keeping with the global trend, the focus on industrial policy seems to be back in Indian states as well. The Cabinet in Odisha has approved an amendment of the Industrial Policy Resolution, 2015 to facilitate the claiming of incentives by eligible investors. Earlier this month, Chhattisgarh’s new industrial policy (2024-2029) also came into effect, providing incentives such as stamp duty exemption for industrial development – targeting backward areas. A “Single Window System 2.0” has been introduced to streamline and digitise processes like permissions and licenses across government departments. According to the Chief Minister, sustainability is a crucial aspect of the policy, with emphasis on manufacturing of electric vehicles and environmental-friendly products.  

Perhaps such measures can enable India to “catch the manufacturing bus”, putting its huge, under-employed workforce on the factory floor – as posited by former IAS (Indian Administrative Service) officer Dr Anup Wadhawan. He further contends that even small improvements in competitiveness can lead to significant gains in exports – despite the general shift towards protectionism, since it involves friend-shoring rather than onshoring and India fits the frame. Read more about the discussion in this I4I blog. 

Join us in-person or virtually on Wednesday, 11 December 2024, for the 3^rd Ashok Kotwal Memorial Lecture, to be delivered by Prof. Rohini Pande (Yale University) on “Regulating Carbon Emissions through Nature-based Solutions: Lessons for institutional design from low State capacity settings”. Please click here for more information and registration details.

Notes:

1. Although the study did not directly measure the impact on pollution, traffic congestion was meant to be the key channel by which the policy sought to reduce pollution.
2. H1-B visa is a non-immigrant visa allowing US companies to hire foreign workers for specialty jobs such as in IT.