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‘Capacity, not funds key to development’

May 27, 2024 06:56 AM IST

Muralidharan told Grand Tamasha host Milan Vaishnav, state capacity is the crucial variable that determines whether development spending in India translates into better development outcomes.

A new book by development economist Karthik Muralidharan, Accelerating India’s Development: A State-Led Roadmap for Effective Governance, is one of the most detailed and exhaustive books written about the political economy of India’s development in recent years. Over 600 pages (plus 200 pages of notes), it takes readers on a granular deep dive of India’s governance challenges, especially in delivering essential public services. The book draws on a wealth of research and practical insights to offer actionable, evidence-based strategies for reforms.

Karthik Muralidharan was the featured guest on last week’s episode of Grand Tamasha, a weekly podcast coproduced by HT and the Carnegie Endowment for International Peace. (HT PHOTO)
Karthik Muralidharan was the featured guest on last week’s episode of Grand Tamasha, a weekly podcast coproduced by HT and the Carnegie Endowment for International Peace. (HT PHOTO)

The author was the featured guest on last week’s episode of Grand Tamasha, a weekly podcast coproduced by HT and the Carnegie Endowment for International Peace. Muralidharan is the Tata Chancellor’s Professor of Economics at the University of California San Diego and a prolific economist whose work spans public finance and development economics, with a focus on education, health, welfare, and public service delivery.

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As Muralidharan told Grand Tamasha host Milan Vaishnav, state capacity is the crucial variable that determines whether development spending in India translates into better development outcomes on the ground.

“So, the way my mind makes sense of this is, broadly speaking, state capacity is the capacity of the organization to fulfill the goals it takes on. And then when I say we haven’t invested adequately in state capacity is what I really mean is that we haven’t invested adequately relative to our democratic goals. India’s unique trajectory of early universal franchise democracy expands the ability to make claims on the state before the state has the capacity to meet those claims.”

Whereas previous work has often measured capacity by looking at outcomes, Muralidharan argued that this does not tell us much about how you actually improve the capacity of the state. “What the book is doing is responding to the call of people like Devesh Kapur who noted that scholars should be looking at the state not just as an institution, but an organization. As an organization, you get into the black box of the beast and say, ‘let’s understand why it is or is not effective and how you improve that.’”

Muralidharan’s new book also sets its sights on redefining global development debates. “Within development economics, so much of academic research has focused on what should governments do without asking how they will do it, or can they even do it,” he said. “The book is trying to bring state capacity to the core of the global development discourse in saying this is not just something that happens, it is something that one needs to deliberately invest in. Because that is going to allow us to do more of everything.”

In that sense, he argued, he is trying to plot a third way in the traditional bipolar debates between economists like Jagdish Bhagwati and Arvind Panagariya who emphasize economic growth and their peers like Amartya Sen and Jean Dreze who focus instead on human capital. “What I am saying is that the growth-wallahs are the physical capital people, the development-wallahs are the human capital people. And I am the TFP [total factor productivity] person,” Muralidharan explained. “Paying attention to productivity is going to let you do more of everything.”

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