Sabyasachi Kar Profile picture
Sep 14, 2018 6 tweets 4 min read Read on X
1/6 The govt. wants to #MakeinIndia by improving our ranking in the World Bank's #easeofdoingbusiness indicators.

My paper (bit.ly/2NJmxSB) with @kunalsen5 and Rajesh Raj (EPW, forthcoming) shows that business climate and productivity cannot be improved this way. Image
2/6 India's business climate has always been poor. Our ranking in the World Bank’s Doing Business Indicators have forever been low.

The current government has attempted to reverse this situation by improving the #rules related to the World Bank's Doing Business indicators.
3/6 Can their attempt really improve the business environment and increase productivity to ensure #MakeinIndia?

We answer this question by using firm level data, looking at business environment in terms of number of days it takes to get operating license or construction permit.
4/6 We find that states with weaker quality of governance provide better 'business environment' in terms of the speed of obtaining licenses and permits.

This suggests that firms ensure greater ease of doing business through 'regulatory capture' of weakly governed states.
5/6 We also find that for most states, licenses and permits are obtained more quickly by less productive firms.

This shows that easing the norms of business regulations need not necessarily lead to higher firm productivity.
If this is the reality of India's business environment, then the government's attempt to achieve #MakeinIndia by reforming the 'de jure' rules related to #easeofdoingbusiness in India seems unlikely to succeed in its objective.

@MilanV @CafeEconomics @Roshanjnu @GlobalDevInst

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More from @Sabya_K

Aug 5, 2023
🧵 1/13

India’s new licensing policy for laptops.

Two Qs have been raised in social media about this policy.

Q1. Can this be characterized as a return to License Raj?

Q2. Can this protectionism lead to lower productivity and lower growth?

Here, I share my views on Q1.
2/13

So, is this licensing policy for laptop production a return to License Raj, or not?

The answer, like most of economics, is conditional.

It has two parts.
3/13

1. The current policy is different from the regime of the 60s/70s, and it would be misleading to characterize it as a return to License Raj.

2. But it could lead to a creeping return to a License Raj-type regime over time. Unless specific steps are taken to counter these.
Read 13 tweets
Apr 23, 2021
1/
Thread.

A lot of useful discussions going on about pricing of vaccines. Some thoughts on this.

There are 2 issues here. The first, how much should the vaccine producers charge for the vaccines?

The second, how much should the citizens pay to get themselves vaccinated?
2/
It is important to address these two issues separately, rather than conflating them.
3/
Let’s start with the second one, the amount we have to pay to get vaccinated.

Here, for the vast majority of our citizens, it makes complete sense to provide it for free, with the government (centre or state) picking up the tab.
Read 14 tweets
Dec 8, 2020
Thread. Agriculture as shock absorber.

In all the discussions on Indian agriculture and farming, one aspect of this sector gets largely overlooked.

Its role as a social safety net.

1/11
For the poor and the vulnerable, the agricultural and allied sectors are still the main safety net in times of crisis.

And it is much bigger and more effective than all the other safety nets - like MNREGA - that we currently have.

2/11
Safety nets are most important in countries that have a lot of vulnerable people and have adopted a market-led growth strategy.

Markets are useful in driving higher growth over time, but are also much more vulnerable to many types of shocks.

Covid-19 is a good example.

3/11
Read 11 tweets
Oct 19, 2020
Thread.

Politics and political-economy of Bangladesh vis-a-vis India.

Since independence, the political developments in Bangladesh has not been great.

Military coups. Political killings. De facto one party rule.

1/6
But the political economy of Bangladesh has been great for growth for a long time now.

The garments industry is the engine of Bangladeshi growth.

And Irrespective of who has been in power, the garments industry has always received royal treatment.

2/6
In India, on the other hand, politics has done well. The one success that we have had is democracy.

It has its flaws. But who doesn't?

Looking at what is happening in even developed countries right now, we have done well.

3/6
Read 7 tweets
Oct 5, 2020
The disruptions caused by Covid-19 and the lockdowns may make the work of macro policy more complicated than usual, simply by worsening the short-run tradeoff between growth and inflation.

Let me explain.

1/6
A major factor behind the growth-inflation tradeoff is that in any economy close to full capacity, there is excess capacity in some sectors, while others face capacity constraints.

2/6
Increasing aggregate demand in such a situation lead to more growth in the excess-capacity sectors but also more inflation in the sectors facing constraints.

This is the tradeoff.

3/6
Read 6 tweets
Oct 5, 2020
Short thread on the politics of economic policymaking.

How does economics analyze the impact of politics on policymaking?

The most common framework used for this in economic analysis, is the median voter theorem.

1/5
This framework suggests that a majority rule voting system will select the outcome most preferred by the median voter.

This would imply that an average voter (represented by the median) has the power to determine policy choices.

2/5
An alternative framework that has been influenced by political science is elite theory.

This approach suggests that powerful groups like business or political elites determine policy choices.

The average voter doesn't really have a significant role or influence.

3/5
Read 5 tweets

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