Grand Tamasha

Former Chief Economic Advisor Arvind Subramanian on India’s Economic Response to the COVID-19 crisis

Episode Summary

How should Indian authorities respond to the economic crisis caused by COVID-19?

Episode Notes

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After a six-week nationwide lockdown in the wake of the COVID-19 pandemic, on May 3rd the Indian government commenced a calibrated relaxation of this unprecedented shutdown. To discuss the economic impacts of the crisis and what steps government can take to cushion the blow, this week on the show Milan welcomes back the economist Arvind Subramanian. Arvind served as the chief economic advisor to the Government of India between 2014-2018 and is currently a professor at the Kennedy School of Government at Harvard and a Senior Fellow at the Peterson Institute.

Milan speaks with Arvind about how Indian authorities should respond to the economic crisis, the utter failure of global economic cooperation, and whether China’s reputational hit offers India an opportunity. Plus, the two discuss Arvind’s long-standing support for a universal basic income (UBI) for India and whether the country has the necessary infrastructure in place to deliver an effective UBI.

Episode Transcription

Intro 00:00

“Unabashed,” “the most unpredictable,” “becomes a headline,” “the most volatile,” “outrageous behavior,” “unsubstantiated narratives,” “a battle of personalities.”

Milan Vaishnav 00:11

Welcome to Grand Tamasha. I'm your host Milan Vaishnav of the Carnegie Endowment for International Peace. Before we get to today's show, I'm excited to announce that we'll be putting on a special live edition of Grand Tamasha on Tuesday, May 19, at 11 am Eastern Standard Time. I'll be joined by Grand Tamasha regulars Tanvi Madan of the Brookings Institution and Sadanand Dhume of AEI and the Wall Street Journal for a special, live version of our monthly news roundup via YouTube. Details and links for tuning in and asking questions are provided in this episode's description. This is an experiment for us, but I think it should be a lot of fun, and I hope you'll join us on YouTube on May 19.

Milan Vaishnav 00:47

As for today's show, we're recording this episode on Thursday, April 30. We are on day thirty-six of the unprecedented nationwide lockdown in India. The government has signaled that it hopes to engineer a calibrated relaxation of this lockdown starting on May 3. To discuss the economic impacts of the crisis and what steps the government can take to cushion the blow. I'm pleased to welcome Arvind Subramanian back to this podcast. Arvind, as I'm sure most of our listeners will know, served as the chief economic adviser to the Government of India between 2014 and 2018. He's now a professor at the Kennedy School of Government and a senior fellow at the Peterson Institute. He has been nothing if not prolific in his commentary on the current crisis. It's a pleasure to have him back on the show — Arvind, good to chat with you.

Arvind Subramanian 01:29

Great to be on the show, Milan. If you recall, this is — we did the first show together. So, it's great to be back.

Milan Vaishnav 01:37

We did the first show together, and I'm now, I think, on episode 53. and counting. Arvind, I want to go back to something you said when this crisis first began to take shape. And it's actually occurred in a tweet that was quite prescient, and I just want to read out the first tweet and a thread that you began. You wrote the following "Wanted: Committee to Save the World. Coronavirus pandemic requires a global response, especially as threat spreads to poorer countries. But the Kissinger question haunts, 'Whom should we call?'" That was the end of the tweet. So, I'd like, if you could, to maybe evaluate for us the international response to date, particularly on the economic side and then maybe you could answer this question you yourself raise, which is whom should we call?

Arvind Subramanian 02:28

Right. I think, first of all, I think it's fair to say, Milan, that if we were to give a grade to the international response, remember, there's a kind of health component to it and the economic component, and I'm not an expert on the health component, but I think many people would say it's been — the response has been — highly deficient as well. But on the economic side I would give it a you know, D minus or sorry, a D plus or a C minus because think about it relative to what many people think should be the scale of just the financing, that developing countries might need to combat the crisis. Basically, what's been announced is a short-term moratorium by a few creditors, that would help a few countries. So, it's been completely inadequate because I think I've seen estimates that the financing requirement could be something like two, two and a half-trillion dollars. But nothing's been available nor has been forthcoming. And of course, if you remember the G20 was a bit of a letdown, or even the call to increase, the IMF special drawing rights actually was blocked at the end. So really one is talking about a response that just grossly incommensurate with the need of the hour. Now, which leads to the second question, therefore Whom should we call? I guess a kind of semi facetious answer, which is not semi facetious, is if she exists, I mean God, but you know, hopefully it's a feminine God without the toxic masculinity that we're seeing all around. But the truth is, really, there is no one to call at this stage.

Arvind Subramanian 04:27

To be fair, I think at least some, maybe the head of one or two institutions, are taking the lead and are not being supported by their membership and by the leading countries. But in some sense, this is — it's only to be expected given if you believe you know, what I've said that we have a G minus two world where the to the status quo power and the incumbent power i.e., U.S. and China, they are not just not providing global public goods, they're actually actively proactively providing public bads. So, in this situation, is it any surprise that the response has been so weak?

Milan Vaishnav 05:13

So, Arvind, I just want to follow up with you on this because you served in government, you engaged with policymakers from the U.S., from China, from the EU from all around the world at the highest levels. But specifically, when it comes to the U.S., how surprised are you at the lack of U.S. leadership when it comes to kind of rallying the troops around the world, both in terms of kind of like-minded governments as well as countries like China, which are rivals, but who you need to corral if you want an effective international response?

Arvind Subramanian 05:52

You know, I think, Milan, that question requires kind of a two-part response. Right? I mean, first, obviously, there is the obvious punching bag, which is the current administration, which is kind of eccentric and incontinent, to say the least. And, and therefore it's very, very difficult to envision this leadership, providing the kind of coordinating role that, say, President Obama provided in the aftermath of the global financial crisis. So, there's obviously a kind of a leadership problem and but that's not my area of expertise. You know, we all know what the problem is. But I think the kind of deeper question to ask is, this is twofold one how much of this is just a problem of erratic transit, real leadership, and how much does it reflect really something more basic going on in the U.S., which is that with this complete polarization within the United States is this domestic political dysfunction, more structural, or just transitory. So, I think that's kind of an open question. And I think you could argue that both ways. The second, of course, bit to that is it is kind of easy to fault the U.S. administration. But if you step back and think about it, the — as a rising, as a status core incumbent power, is there not more bipartisan support in the United States that China does represent an existential threat to U.S. hegemony, and therefore is it, again, more structural, rather than just associated with the current leader or the current administration. So I think that I think that is the more — so the implication of that is come November say things change in Washington will kind of the U.S. response to dealing with China, to dealing with international court cooperation, or to dealing with issues like immigration, will that be kind of vastly different from what it is today? It's kind of an open question.

Milan Vaishnav 08:25

So, I'm going to come back to the issue of China, but let's talk first about India. Give us a scale of the economic impacts that COVID-19 is having on India. You know, the IMF projects that India's GDP will grow at about 1.9% in the coming fiscal year, that's 2020/2021. But at The Indian Express' virtual Adda just the other day, you call the IMF projections both bizarre and absolutely mystifying. And you know, those are pretty strong words, Arvind. And so, you know, what into your mind is a more realistic projection for India's growth?

Arvind Subramanian 09:01

Yeah, so just first, let's just discuss why I kind of used those words. If you look at the IMF's forecasts for advanced countries, let's say, right, broadly, it's projecting an eight and a half percentage point decline for the advanced economies, right? It predicts going from 2% to minus six minus seven in that ballpark, that's an eight and a half percentage point decline. Now, if you look at India, remember heading into the crisis, the economy was weakening very, very significantly. So, the pandemic was not the first shock, it was a shock coming upon a long-standing decline and weakening of the economy, including a very fast, fragile financial sector. So that's point one. Point two, you know, the response of the Indian government the policy response to lockdown has not been very different from most advanced countries. In fact, many people have commented about how dramatic and severe the Indian lockdown has been. So, in terms of the policy response and, therefore, the economic impact, it's not very different from advanced economies. Third, if you compare the fiscal response of advanced economies in India, the advanced economies at the moment, something like their response amounts to eight and a half percent of GDP and India's is less than 1%. So, a shock that's hitting a weaker and weakening economy, the policy response has been similar, and the ability to respond via fiscal is much, much worse. So how could you possibly say that for the advanced economies, it will decline by eight and a half percent, and for India, it will only decline by two percentage points?

Arvind Subramanian 10:57

It absolutely makes no sense. Even if you allow for the fact that the Indian economy is more is on a, it has a higher potential rate of growth, which I think I would dispute because of the pre-existing vulnerabilities, so it absolutely makes no sense to say that the Indian economy will be vastly more cushioned than advanced economies, despite all these things, pointing the other way. So, I would say that I'm not going to make a projection because, as you know, talking about GDP numbers always gets me into trouble. All I will say is that a prudent sensible economic policy planning in India should not rule out the possibility of definitely negative or possibly even substantially negative growth rates this coming year. And that's why in the Indian Express Adda I use the in Hindu mythology, the equivalent of the biblical flood is called "pralaya," the deluge. And I think that's what it is. And already, Milan, I mean, not to belabor this, if you look already at the economic hardship that has that we've seen in India if the unemployment and employment numbers are even remotely true that have been put out if you've seen what's happened to the migrant workers, if you've seen what's happened to the stresses in the financial system, I mean, the impact has already been visible, and absolutely severe, and nothing we've seen in Indian economic history.

Milan Vaishnav 12:33

So, if the crisis is so severe, the question is, what should India do in response, and, to date, the Modi government's economic package has been criticized for being too meager amounts to about 1% of GDP. You have called for India to spend much, much more: an extra 5% of GDP, on stimulating the economy in the wake of the crisis. And so obviously, the first question that's going to come to me many people's minds is this: how is India going to pay for this kind of package? And you know, you have just published a three-part series with our mutual friend Devesh Kapur in the Business Standard, we'll link to that on our show page. In those pieces, you outline several ways in which India could finance this additional expenditure. Tell us a little bit about what some of the most important ideas are on the financing side?

Arvind Subramanian 13:24

Yeah, I think Devesh Kapur and I kind of said, possibly the additional expenditures should be about 5% of GDP. This is just a rough kind of illustrative number. I think it could be a bit more bit less. But if you add in the costs of the health responses, you add in the kind of social insurance that you need to provide; if you add in also, the fact that you know, the states need to be provided with a lot of money, I think you're still looking at something like that. And of course, also to support the commercial side, the corporate side, the small and medium enterprises.

Arvind Subramanian 14:05

Now, how will it be financed? I think that we said that India is maybe it doesn't have the fiscal space that many advanced countries or do, but in India, amongst developing countries, kind of has more fiscal space. And that's why we said you should do not any one thing, but do a variety of things, so we said India needs to raise first cutting down some kinds of expenditures, which governments have already done like, a freeze on wage increases going forward, that's not insignificant. So cutting expenditures, raising money from abroad, including from nonresident Indians, then issuing bonds to the public and some monetary financing and in the end, we say, maybe also some kind of solidarity taxes on the part of the wealthy, so, so it's kind of a five-pronged or five avenues for financing, and we give numbers on each of these.

Arvind Subramanian 15:08

So, I think there are three issues that are, I think, now important. One, can we take the fiscal hit? Two, what is the logic of the monetary financing? And three, how should this be allocated between the center and the states, remembering that the states are in the frontline of the response? So, they need a lot of money, and they need it quickly. So, there are three parts, if we could go through that, Milan, one at a time, right? First, the extra a debt that we have to be issued will it make India will it elicit downgrades in ratings and kind of make India much more vulnerable going forward? And it's true that you know, if you look at many former central bankers have warned against excessive privilege. You are saying that we don't have the fiscal space. But my response to that is into three parts. See, first of all, I think that when we talk about the fiscal response, we should always keep in mind the counterfactual of what if you don't respond? If you don't respond, not only do you get all the hardship and things, I mean, you could have a level of economic activity that's so much more depressed, that you know, your debt to GDP ratios, in fact, look even worse without the action. So that's point one.

Arvind Subramanian 16:42

Point number two is that look in these things we always say the problem is what happens afterward, right? And my point here is that the way markets should assess what you know, what India's kind of outlook is going forward should be based on what India also does when the dust settles, if, for example, you have to spend all this money, but afterward you have a fairly reasonable, prudent plan of getting back onto some sustainable fiscal path. And to be fair, this government had a record of not being too profligate and not being very cautious about inflation. So, you can this government is credible, if it says going forward, we will be responsible. Finally, I think the most important point is this that we save in order to spend for a rainy day. Now, this is not just a rainy day, this is a deluge. And if you're not going to spend, if not now, I mean, what's the point of being prudent in the past or being prudent going forward? When the time comes, you're not able to respond.

Arvind Subramanian 18:02

The last thing I would say about these credit rating agencies and so on, remember that doubts about government's attitude to prudence and responsibility also depends upon what got you into the mess in the first place. This is a purely exogenous shock, which had nothing to do with any fault of this government or any other. So, you can't say that India's response has, to some extent, is reflecting changed behavior, irresponsible behavior, because there's going to be red ink all over the world. All governments are going to be doing this. So why should India be singled out? So that's on the fiscal side.

Arvind Subramanian 18:44

The monetary side, Milan, is that there are lots of concerns India is not like advanced countries, it has higher inflation. There's also a current overhang of liquidity, but on balance, again, I do think that we can some amount can be financed monetarily. It should be one-off; it should the magnitude should not be too much. And my sense is that this shock is going to be demand deflationary for a very long time. So, the fear that suddenly either this will lead to a lot of inflation, or that it's going to lead to permanently irresponsible behavior in the future, I think those concerns are unwarranted—last point about the, the center and the states. I think the states need a lot of money. Their revenues have been collapsing because of weak growth. They're doing a lot of spending, and I think and also that the money that was due to them under the GST has been falling short. So, I think we need to get them money quickly. And I have two suggestions. One would be that the monetary financing is the quickest way to pump money, so maybe when we do the monetary financing, it should be to the states in the first instance. And also, I think the finance commission transfers that were presented recently, maybe they need to be revisited to provide much more money to the states.

Milan Vaishnav 20:19

So, I want to talk about the center and state issue, but not so much through the prism of financing but through the prism of coordination. One of the things that you and Devesh speak about in your second piece is that there must be either a new institution created or perhaps even an old institution, resuscitated, something like the Interstate Council, to coordinate between the center and the states. Describe for us why you think that's important, and what purpose do you think such a body would serve in the current moment?

Arvind Subramanian 20:51

See, I think that the need for coordination is absolutely clear in the pandemic. You know, so many things, whether it's where the resources come from, or whether it's how do you treat the migrants, whether it's coordinated movements across states, or whether it's having common testing standards the availability of protective equipment, possible vaccines. So, all of these will have to be done center and states together. So, I think the need for coordination, I think, is not, doesn't need to be established. I think, what is more, I think important is what should be the format for this coordination, both now and what lessons do we learn from this going forward?

Arvind Subramanian 21:43

Now, the first thing I would say is that remember that in the recent past, we had one great example of center—state coordination, in what we call cooperative federalism, which is the passage of the Goods and Services Tax leave aside whatever the difficulties and glitches of implementation have been for the GST. The point is this was an example of both all the states and the center, giving up their fiscal sovereignty to some extent to pool that to create this one market, one tax, etc. So that's, I think, a really sterling example of cooperation and coordination. Now, in this crisis, I think we have seen the prime minister has been holding meetings frequently with the states. And it's proceeding somewhat well. Maybe in some cases, I think the states feel a little bit shortchanged because they're not getting the resources quickly enough. But I think the key point is that it's not so much what structures you create, as you know, how you use them, and you know, all — in all these things, Milan, as you know, institutions get built in the following way. You know, you get into the habit of talking and talking and talking, it produces good results that, in turn, gets institutionalized. People see the benefit of that, and that's how you kind of make some of these structures more permanent, because people see value in them. So, I am less kind of interested or concerned about whether it should be the Interstate Council or NITI Aayog or whatever. But just the fact that we get into the habit of coordinating and talking all the time, and then creating making those structures permanent because everyone sees value in them. Why it's important is because today it's the pandemic. You know, Mr. Arun Jaitley and I always used to say that if you take whether it's agriculture or power, these are all subjects which need a lot of reforms but where the levers are both controlled by the center and the states. So, you can't say in India I think to say, oh, let's decentralize is not a, I think, a good recipe at all because all these things are both center and states control the leavers. So, if you want reforms going forward, it has to be done together — some amount of competition, but a lot of coordination as well.

Milan Vaishnav 24:26

So, one of the things that institutions would be important to do, presumably, is kind of fashion what you call a new social contract. You touched upon this in the third part of your series with Devesh, and that social contract would help bind society together in the wake of this awful pandemic. And when you kind of spell out some of the elements of this social contract, there are things like a new tax on billionaires' wealth, freezing wages for public employees, new property taxes, universal basic income. You know, many of these things sound you know positively, Thomas Piketty-esque. How have your views on what economic policies the state must adopt evolved as this crisis has evolved, as we've learned new facts?

Arvind Subramanian 25:17

Right. You know, I think many of these ideas predate Piketty, but I think I've been reading his book recently and am very impressed with the book. So maybe there is a residual Piketty kind of influence here, but not really. If you think about it. If you remember, a million, the whole idea of the universal of universal basic income is something that we raised what, four years ago in the economic survey that we wrote, so, so that idea was always there. And there the open question always was how do you finance it, right? That was, do we have the fiscal space to finance something like a universal or what I call it quasi-universal basic income. But as we were writing about this Devesh had this, I think, really important insight, that in order to respond to the current crisis doors to sections of society that have been relatively protected from this, i.e., the wealthy, and those with secure jobs the salaried class as it were, I mean, they were few, and they were cushioned against the shock, and the vast majority 70—80% have actually suffered from the COVID shock. So, it was like for this current crisis, why shouldn't there be some expression of solidarity in the form of a tax contributions by the wealthy and by the salaried class, to fight this crisis?

Arvind Subramanian 26:50

Then what we said was okay, but this is an idea that I think should have more permanent expression going beyond the crisis to a more permanent social compact. And so this is where I think at least my thinking has evolved in line with the solidarity argument, which is that I was always keen on universal basic income. But this idea of solidarity, then raised the idea in our head that maybe we can have more permanent taxes on the wealthy and on property as dedicated resources to fund the universal basic income. Remember, in public finance, we don't like earmarking specific resources for specific uses. But FDR's great insight doing the New Deal was to say, no, forget about this purism of public finance. You know, actually, if you get dedicated taxes for dedicated uses, it's politically more saleable, and that's how kind of Social Security began. So that was the inspiration for us to say, look, maybe we can do something similar as the new social compact. You know, taxes on wealth taxes on property, dedicated to finance this universal basic income. And remember, even property taxes and wealth taxes, at least for me, whatnot, I mean not because the whole what I call the French musketeers Piketty, Saez, and Zucman talking about this, because when I was in government towards the end, some of us were on a tax committee, and you look at India, you look at India, and you see, property taxes are highly, highly undertaxed. Now think about this, Milan, a developing country in the most dynamic phase of its growth, property values, soaring, immobile factor, it's just the juiciest tax handle with the least you know, efficiency costs, and we've completely underexploited this. So, it will be almost fiscal irresponsibility if we did not do something about this. So, it's something we needed to do in any case, and the same thing for wealth taxes. So, the challenge really is what you need to do, what you should have done in any case, can we think about it do a better job of actually taxing it, in order to create this new social compact. You know, the issues are not easy because property in India can be taxed at multiple levels, wealth taxes were there in the past, and they were kind of didn't yield very much revenue. So, we do need to think about how to do it technically. But the fact of the expression of solidarity making that permanent, and financing a universal basic income is actually I think, for me a very attractive and for Devesh and me a very attractive idea.

Milan Vaishnav 29:55

I mean, you rightly pointed out that this issue of a UBI is something that you have been discussing quite publicly at least for four or five years now. It's an issue that you first highlighted in Economic Survey when you were the CEA. But the idea of a UBI in the Indian context rests in part on the success of what you termed the so-called jam trinity. Most of our listeners will know what jam stands for. It's the trio of Jan Dhan Ayojana, or universal bank accounts that are biometric authentication and mobile money. But critics continue to point out persistent problems with this jam infrastructure, which makes both errors of inclusion and exclusion not just possible, but highly likely. And I'm wondering at this point, can we acknowledge that these critics do have a valid point here?

Arvind Subramanian 30:49

Yeah, I see. I think, again, it's a question of really the half empty/half full thing, right? I think this government deserves a lot of credit for actually building starting and initiating this jam of plumbing or infrastructure, but first of all, by creating these accounts for all Indian citizens. So, I think the progress has been huge, and we have something to work with. But I do think the critics have a point, because we've had a lot of, or there are a lot of last-mile challenges, it is not the case that everyone can access these accounts for reasons of geography, for reasons of still financial non-inclusion you may not have ATMs, you may not have banking correspondence, you may have to walk three miles to a bank. So, I think those problems do exist. But I think that this is a problem that actually can be cracked through more concerted action by both central and state governments. So, this is a solvable problem. At the moment, yes, there are both errors of inclusion and exclusion. But as an aside, I think, in the current crisis, I still think we should pump money into this and not worry about so long as a lot of deserving people get the social insurance. You know, at this stage, we should not worry about whether some undeserving got it or not. But yes, in the long run, we need to complete the jam plumbing. So that's something like a universal basic income can become a practical reality as opposed to just a kind of ideal that we should be aspiring to.

Milan Vaishnav 32:40

So, before we end, Arvind, I want to bring this conversation back to China if we could, because many people have pointed out that the global backlash against China presents kind of a unique opportunity for India, perhaps to finally make its way into major global supply chains as multinationals look to relocate from China elsewhere. You know, many people who know you from your work on India may not know that you've long been a scholar and an observer, an expert on the Chinese economy as well. And so, I'm wondering, is there a genuine opportunity for India here? And if so, if you agree with that, what would it have to do to really exploit it?

Arvind Subramanian 33:21

See, Milan, it's a very good question except that I think we have to be a little bit careful here. You see, that much bigger, long term structural opportunity was created by maybe five, seven, eight years ago as China was graduating out of being a low-cost producer and exporter of low skill-intensive goods like clothing, footwear, etc. So, that opportunity has been there for about five, seven years. We economists used the term you know, the Lewis Curve term for China some while ago. And so, but, but that opportunity has been there for a long time, the real long-term structural opportunity. But the truth is that none of that relocated away from China and came to India in any significant quantity, despite the prime minister's "Make in India" program. To whatever extent the relocation happened, we know that it went to places like Vietnam and Bangladesh who've become the you know, the next generation exporting superstars. So, so that long term opportunity we didn't exploit. Yes, it's true that now you've added to that opportunity, one more level, but the bigger opportunity was earlier. So, what Devesh and I said was something along the following lines. Let's not get over-excited by this new opportunity because we didn't exploit the old opportunity. But can we be a little bit more specific and concrete this time around? I think the world is going to reevaluate its reliance on China. It's important, especially for things like pharmaceuticals, the whole the active pharmaceutical ingredient for antibiotics. For example, China is one of the dominant producers and exporters in the world. India, once upon a time, used to be an efficient producer of these API's and as you know, India has a very competitive generic pharmaceutical industry. So, can we, this time around, not talk about make in India more broadly— this kind of a generic thing — but just say focus on one sector. You know, the crisis has created the opportunity for the pharmaceutical sector, let's say, Can we kind of devote all government, energy, government and industry get together and say let's do the "Make in India," but this time in pharmaceuticals, and if that's successful, maybe we can replicate that for other sectors. So that's the way I would approach it this time around. Not to get overexcited because we haven't exploited it in the past, but maybe start narrow and specific, exploiting the specific opportunity created by this crisis, namely pharmaceuticals.

Milan Vaishnav 36:12

So, Arvind, let me sort of wrap up this conversation on a bit of a wonky or nerdy note. I would just note that there are legions, scores of social scientists, economists, political scientists who are out there who see this pandemic staring India dead in the face, and would like to do their part to you know, carry out research that they feel is both timely and relevant, responsive to policymakers. And again, putting on your former CEA hat, as somebody who was a top-ranking government advisor who consumed research that was being done on the outside, in academia, from the think tanks. Are there two or three areas where you think social scientists could meaningfully contribute? You know, if you could sort of have your wish list, what are some of those things burning areas or questions you think should be top of mind?

Arvind Subramanian 37:05

Milan, great question because I do think that's a very, very important question. So, let me throw out two or three ideas that I mean, I think, will be really important going forward. First, India's big failing over the last 75 years has been human capital. In primary education, primary health, we've not done very well. Now, this crisis has shown that Kerala is a model worthy of emulation, right? So, how can we create Keralas elsewhere in India? And it's as much a political economy politics question, as it is kind of just implementation and resources question, which is that, I mean, I would like to know that, after the crisis, Indian states, as they look at Kerala, does the political economy of building state capacity, investing in primary health care, does that become more politically attractive or not? And what would it take to make it more politically attractive — because remember, I think it's not enough to say, Oh, the state has failed. I mean, to some extent, the state has failed because the political parties have not seen the opportunity, and they've not been penalized or rewarded or for doing or not doing health care and education. Does this the Kerala example — if Kerala comes out as a star and a shining success. Is that an opportunity, a political opportunity, and what is the evidence of that across India? I mean, that I really, really first-order question.

Arvind Subramanian 38:51

I think the second thing, Milan, is that one of the things Devesh and I wrote about and you know, is that we think suddenly woken up to the fact that wow, we have so many migrants in the urban migrants, and it's not clear that at all that we treat them as kind of equal citizens. So just understanding how these migrants you know, where do they live, what are the amenities they get, what kinds of social insurance do they get or not get and you know, what inputs Do we need to kind of change that? Because, remember going forward, the last thing we want is for India to have less migration, because migration is really a source of dynamism for India for upliftment dynamism and everything. If we are to retain this, we may have to rejigger our institution structures or social safety nets coordination between governments, but what we need to do — that is something about we need to have much more information and data on.

Arvind Subramanian 40:08

And the last, I think, is just to follow up on what you said. This is perhaps a little bit more just understanding, and we need more data because it's finally an implementation issue to really understand what are these last-mile bottlenecks in finishing the jam, plumbing, the jam architecture I'd certainly like to know more about what are the actual implementation hurdles? How does it vary across terrains across governments? And how can we complete them anything researched that sheds light on that would be valuable for you know, completing the jam infrastructure and creating the basis for what Devesh and I called the new social compact going forward.

Milan Vaishnav 40:55

My guest on the show today is Arvind Subramanian. He served as the chief economic adviser to the government of India between 2014 and 2018. He's currently a professor at the Kennedy School of Government at Harvard and a senior fellow at the Peterson Institute. He has been absolutely prolific in terms of writing about the virus, the global need for coordination, the role of China, what's happening in India. Arvind, it's always a pleasure to talk to you. Thanks so much for coming on the show today.
Arvind Subramanian 41:21

Thanks a lot for having me, Milan.

Milan Vaishnav 41:25

Grand Tamasha is a co-production of the Carnegie Endowment for International Peace and the Hindustan Times. You can find us on iTunes or wherever you get your podcast. Don't forget to rate and review; it helps others find the show more easily. For more information about the show and to find the writing we referenced on this week's episode, visit our website Production assistance comes from Megan Maxwell and Rachel Osnos. Tim Martin is our audio engineer, and Lauren Dueck is our executive producer. Thanks for listening and see you next week.