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Building State capacity for accelerating development through effective governance
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Governance
Electricity Act amendment: The need for a cautious approach
The recently proposed amendment to the Electricity Act, 2003 comes after nearly two decades with few legislative changes. In this post, Dixit and Josey review electricity sector developments, especially technology driven changes during that time, and discuss the positive effects that some of the proposed amendments would have on the sector's functioning. At the same time, they highlight aspects of the amendments that pose further questions and should be approached with caution.
The WhatsApp effect: Evidence on political engagement, preferences and polarisation
In recent years, political parties in India have increasingly leveraged WhatsApp as a tool to reach voters, raising concerns about the influence of social media on the democratic process. This article looks at the effects of interpersonal nature of social media and its ability to engage voters. In the context of the 2021 elections in Tamil Nadu, it finds that political WhatsApp groups improve voter knowledge, without increasing polarisation, and only sway the party preferences of moderates.
Demographic and development outcomes of administrative proliferation
This creation of new administrative districts by splitting existing districts is a frequent occurrence in India, where the number of districts has more than doubled in the last four decades. Looking at data from 1991 to 2011, this article considers the effect of this fragmentation on economic outcomes. It finds that impacted districts tend to be more homogenous than before; the split is especially advantageous for newly created districts, which reap the redistributive benefits of bifurcation.
Do value-added taxes benefit firms? Evidence from the adoption of state-specific value-added taxes
Value-added tax (VAT) systems have grown popular in the last 30 years, especially among developing countries looking for ways to raise tax revenue efficiently. Using 2000-2012 data on product, state-specific, and firm-specific tax rates, this article examines the staggered adoption of VAT across states between 2003 and 2008 on firms. It finds that the VAT reform increased firm sales by 45% within four years of the reform.
Private returns to bureaucratic appointments: Evidence from financial disclosures in India
Bureaucrats often face rigid salary structures, and face low-powered incentives that have less wage differentiation based on performance. Using bureaucrats’ self-reported asset declarations from the Immovable Property Return (IPR) reports for 2012-2020 in India, this article concludes that officers encounter high-powered incentives – in the form of private returns – on reassignment to an ‘important’ ministry. These officials see their immovable properties increase, both in value and number, and it is concluded that these effects are partly driven by their rent-seeking behaviour.
Fixing incentives for power plants to reduce outages
Consumers in India face frequent power outages despite relatively high-quality infrastructure and ample supply of power plants. This article identifies a novel explanation for India’s blackouts: when the cost of purchasing electricity rises, utilities choose to buy less from power plants, thereby restricting the amount of power that reaches end-users. Reforms in wholesale supply that lower wholesale prices may help reduce blackouts in a cost-effective manner.
Does going cashless make you tax-rich? Evidence from India’s demonetisation
During 2014-2017, the share of adults using electronic payments in the developing world increased by over a third, and policymakers have expressed optimism regarding the role of this trend in promoting tax compliance. Leveraging the 2016 demonetisation in India, this article shows that areas that were more impacted by the policy, experienced faster growth in electronic payments and, in turn, average sales reported to the tax authority increased.
How colonial is Indian law?
Critiques of the colonial rule in India and its legacy have been extended to law – with many allusions to the need to shake off the yoke of the colonial legacy. In this post, Roy and Swamy unpack the legacy of colonial rule in India on its present-day legal system, with a focus on three broad domains pertaining to economic activity – land, corporate and company law, and environment and natural resources.
Budget and politics in pandemic times
Applying a political economy lens to the recently announced Budget 2022-23, Yamini Aiyar contends that the emphasis on capital expenditure over welfare in the two Budgets announced during the pandemic are a mere continuation of a shift in political narrative towards “market-friendly reforms” that began with the Modi government’s re-election in 2019.
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