Yamini Aiyar discusses how the Modi government approaches welfare, the role of technology in augmenting state capacity, and the unfinished business of the past.
When Narendra Modi campaigned for India’s top job in 2014, he contrasted the incumbent Congress Party’s “politics of welfare” with the BJP’s preferred approach, which emphasized the “politics of growth.” Modi and the BJP famously dismissed the Congress government’s emphasis on entitlements, arguing that--if brought to power--it would prioritize empowerment. Five years later, the BJP has won its second consecutive single-party majority. While political scientists are debating the precise factors that led to the BJP’s triumph, the consensus view is that the ruling party’s roll-out of popular welfare schemes--from healthcare to gas connections to toilets --was an important contributing factor. This week on the podcast, Milan sits down with Yamini Aiyar, President and CEO of the Centre for Policy Research, arguably one of India’s finest public policy research institutions. Yamini is one of India’s most respected voices on development, having worked for years at the intersection of public service delivery, policy, and politics. Milan and Yamini discuss the Modi government’s approach to welfare, the role of technology in augmenting state capacity, and the unfinished business of the past.
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. When Narendra Modi campaign for India's top job in 2014, he contrasted the Congress party's politics of welfare with the BJP's preferred approach, which emphasized the politics of growth. Modi and the BJP famously dismissed the Congress government's emphasis on entitlements, arguing that if brought to power, it would prioritize empowerment. Five years later, the BJP has won its second consecutive single party majority. While political scientists are still debating the precise factors that led to the BJP's triumph. The consensus view is that the ruling party's roll-out of popular welfare schemes from healthcare to gas connections to toilets was an important contributing factor. To discuss India's welfare state and much, much more, I'm joined today by Yamini Aiyar. Yamini is president and CEO of the Center for Policy Research, arguably one of India's finest public policy research institutions. There are few Indians who have spent more time thinking about the design and implementation of social policy than Yamini. I'm pleased to have her on the show for the very first time. Yamini, good to have you on.
Yamini Aiyar: 01:13 Delighted to be here. Thank you for having me.
Milan Vaishnav: 01:15 Last year you wrote a column in the Hindustan Times on the Modi government's welfare policies and you wrote that while the government began its tenure by distinguishing its welfare narrative from that of the Congresses pitting empowerment against the Congress party's right based agenda. That framing did not last, and I want to quote directly from your 2018 piece in which you said as the government enters its final lap, the narrative has decisively shifted jobs, skills and startups have given way to a medley of social sector schemes, housing, sanitation, gas connections, health insurance that are being used to craft this government's primary political message. So to start the conversation now, tell our listeners what prompted this shift from empowerment to traditional entitlement based welfare programs?
Yamini Aiyar: 02:01 Milan, I'm going to remind you of a piece you wrote back in the 2014 campaign where you said that even though the BJP is trying to position itself very much as a right-of-center, a market friendly political party if you look internally within the BJP, there isn't a clear consensus in terms of over whether or not that's the way forward for the BJP. And in fact, if you look closely at how the BJP runs state governments functioned and behaved even in the run up to the 2014 election, you could well make the argument that they were in some senses more welfarist, and arguably better at being welfarist than Congress governments were. Many of the Congress flagship schemes were better implemented by state, BJP-run state governments, than Congress state governments during that time. Regardless, I think the challenge that Prime Minister Modi faced when he was candidate Modi and, and the challenge you faced in the immediate aftermath of him coming to power was that he needed to very clearly distinguish himself from his predecessor government.
Yamini Aiyar: 03:05 And the Congress led UPA was very much viewed as a left-of-center government, a government that promoted the idea of inclusive growth a government that was, it was in fact significantly more welfarist than any of its predecessors. And I think he chose to do it by attempting to reposition his own government and his governmental policies. Now part of that was to argue for a more growth led, skills India, mak in India, jobs, startup India kind of framework. But the other part, no political party in India can actually be a genuine competitor without having a welfare narrative. And so what Modi was trying to do was to reframe his welfare narrative by positioning himself as different from the Congress and arguing that he has a much, much more meaningful imagination of welfare. One that spoke to the kind of person, Modi himself was so somebody who comes from you know struggles through life to actually make it to a position of power.
Milan Vaishnav: 04:07 And it's kind of this U.S. idea of, you know, pulling yourself up by your bootstraps.
Yamini Aiyar: 04:10 Absolutely. And so he says, my welfare is not about entitlements, quote unquote, where I'm handing out those to the poor. My welfare is about empowerment where I'm actually enabling and capacitating the poor. Now, anyone who studied welfare closely, will have, may well argue that in fact that positioning is false because it isn't that the Congress's welfare was an entitlement based welfare. It articulated itself very much in the framework of rights. But regardless, he was trying to establish something different and he wasn't ever able to clearly explain what the difference was, but you do see some signs of it and some of his early speeches as prime minister in 2014 and 2015 where he talks about you know, in short social insurance contributory insurance as being very important part and parcel of his welfare agenda where he talks about the combination of Aadhaar, which is the digital identifier, mobiles, and financial inclusion for building a more inclusive banking system for the poor, which was famously termed "JAM" that between these pillars, you would see a much less interventionist welfare state, a welfare state that was sort of handing out cash to the poor.
Yamini Aiyar: 05:29 And also at the same time, building a foundation that the poor could then leverage off in the market. In all of this, you also saw a substantive cut in welfare expenditure across the range of welfare schemes that were Congress led. And so it gave the space for many to argue that Modi was in fact promoting a government that was less welfarist, that did not want to prioritize social policy. And if one just looks at budget allocations and broad rhetoric of the first two years of the Modi government, you could well come to that conclusion. Two very important things happened right around the first year and a half of the Modi government. Firstly, they lost two very critical elections, the election in Delhi that was held in February of 2015 and the election in Bihar that was held in November of 2015.
Yamini Aiyar: 06:20 These were important because they were very much part of a sort of, they pricked a hole in the Modi bubble, in the BJP bubble. And just as these elections was, the Delhi election was completed and at the BJP was sort of gearing up for the Bihar elections, Rahul Gandhi - the Congress president, well, vice president at the time - made I think his most powerful intervention political intervention yet where he -
Milan Vaishnav: 06:47 Some might say "only" but we'll go with most powerful to date.
Yamini Aiyar: 06:53 Where he accused the prime minister of being a government that represented the rich. He called the government the suit boot ki Sarkar. And I think that that combination of factors losing two very important elections that were critical to keeping the momentum of the BJP alive and combined with the accusation of being a suit boot sarkar led to a significant rethink.
Yamini Aiyar: 07:17 And, and almost as soon as the Bihar elections were completed in November of 2015, you see a significant ramp up in expenditures led by the central government force for schemes and the launch of a whole set of new schemes. So that when we get to the UPA election, which I think was a turning point of the first term of the BJP government,
Milan Vaishnav: 07:36 And this was, just to orient our listeners, in the January, February, 2017.
Yamini Aiyar: 07:40 Right. So the results came out early March. So in that January through February phase you saw a big push on key flagship welfare programs of this government. Those included the moochwala scheme, which is a scheme that was handing out some subsidized LPG gas cylinders to women. And the Swachh Bharat, which is the Clean India toilet open defecation-free India toilet promotion program. And one of the important things here was that not only did Modi now shift the focus on welfare, he also did it in a very Modi way.
Yamini Aiyar: 08:15 So all the attributes of Modi's political style and persona now came, now found themselves being expressed in the welfare agenda. Just in terms of the noise factor, the top-down monitoring that was taking place. So grand announcements, very ambitious targets, big focus from the center, all the schemes renamed as the prime minister's schemes. And this clearly sort of indicated that Modi recognized that welfare was important and Modi recognized that if he were to take his political persona and his political style and frame it, frame the welfare argument through that, he will gain votes. And I think the UP victory certainly reinforced that.
Milan Vaishnav: 08:59 But this is an important kind of political economy argument you're making because one of the things which has bedeviled previous Indian governments is this idea that you launch schemes, you launch programs, and at the end of the day you don't get the credit for it because if you're at the central government level state governments may claim credit and those aren't necessarily politically aligned with you. So somehow the BJP managed to overcome this problem of credit claiming. Right? And the question is what were the two or three things that allowed it to do that? Because this is certainly something that many other governments are gonna want to copy going forward.
Yamini Aiyar: 09:38 True. I think a few things. First and foremost, a political acumen and sheer luck coming together that creates a degree of political alignment between center and state. So don't forget through a significant proportion of the first term of Prime Minister Modi's led a National Democratic Alliance. You see a large number of States that sort of became BJP-run States. There were some big ones like Rajasthan, Madhya Pradesh, Chattisgarh already were BJP States before they came into power. And then others slowly headed in that direction. So once you have political alignment, a lot of things become possible. But more than that, I think there was a very careful strategic deployment of welfare that allowed for this credit shift, shift in credit claiming. And this was done in the following way. First and foremost, all the key flagship schemes were renamed to become the prime minister's schemes.
Yamini Aiyar: 10:35 Now this is common practice in Indian politics. If you look at all the schemes that were launched under the UPA and Congress governments, you will find Jawaharlal Nehru, Indira Gandhi, so on and so forth. In fact, the National Rural Employment Guarantee Act had to be renamed Mahatma Gandhi National Rural Employment Guarantee Act, because many state governments were beginning to rename the scheme to suit their own particular political movements. And the Congress government at the center was smart enough to realize that that will then just take it away. Yeah. So if you just call it a Mahatma Gandhi scheme that it's going to be very difficult for state, for other political parties to take credit at least for the name. So, the naming was important. Secondly I think, I'm not quite sure whether this was by design or just if you pull all of these schemes together, you begin to see this.
Yamini Aiyar: 11:29 But there, there was a clear focus, which in retrospect one can say was a policy shift for this government or private of, of public goods, provisioning of private goods. So housing, toilets, gas cylinders, these are all in some senses, private goods that are now being publicly provided. And importantly, that means that you're essentially delivering directly to your voter. Now that's different from health and education, right? Where the delivery is much more diverse. And even with health towards the last phase of this government, they launched the National Insurance Program, the Ayushman Bharat Program, which again was designed as a direct benefit given to an individual. So I think that also allowed for more direct contact between the prime minister and the voter. And these are things that are coming to your house. So if it's a gas cylinder, it's coming to your kitchen. If it's a toilet, it's coming to your house or your property and all the cash for it is going into your bank account, right?
Yamini Aiyar: 12:24 So it's literally like the prime minister is opening up the coffers of the central government and handing over directly into an individual's account. Thirdly technology and now the Indian governments implement, sort of implementation failures are quite well known. But they had been a growing consensus that of course predates the Modi government that technology could play a very important role in streamlining delivery by bypassing the corrupt local government. And what Modi did when he came to power, and I think this came from his own fascination with technology, was to accelerate the experiment that the UPA had started with the Aadhaar. And with expanding the banking network using technology to the last mile. And these two things, having expanded as sort of natural coming together for process that had started some years ago, allows you that opportunity to then do this direct public delivery of cash delivery into the, into bank accounts and therefore establish a direct connect with the voters.
Yamini Aiyar: 13:23 And lastly, but I think actually in some ways, most importantly when the BJP recognized in the sort of value of, the political value of welfare programs, it did two very important things. It's, it drew on its own sort of centralized administrative style - and again, that was very much Modi style as chief minister - and inculcated that culture in the bureaucracy in New Delhi. And what you found was that, you know, secretary government of India would give these ambitious targets and would directly monitor service delivery all the way to the ground. And you know, when we were following blocks, just to get a sense with blocks at the last administrative unit where implementation takes place, just to get a sense of how programs were being delivered. The big distinction between administration in the 2014 to 2019 phase versus administration in the 2009 to 2014 phase was just the speed at which things were being done. Every week there would be a new target, lots of centralized monitoring, the blocks and the districts were sort of whirling in circles trying to get things done. So that allowed again for a lot of direct monitoring and direct action. And that then was leveraged through the organizational network of the BJP. So through the entire election campaign of 2019, you'll see that the vast organizational machinery at the grassroots was mobilized to touch households and talk to them about the prime minister's schemes. And they were specifically defined as a prime minister's schemes and even those who weren't who hadn't actually received the schemes, we're often told, don't worry your neighbor got it. You will too. So again, it established this direct connect between the prime minister sitting in New Delhi and the recipient of a welfare programs setting in a village out, far out in rural India. And that insured that the credit claiming was much more a directly linked to the government in power in Delhi than it has been in the past.
Milan Vaishnav: 15:27 And I think in a more sort of philosophical level, right? Many people, ordinary Indians view the state not necessarily as an enabler of good things, but sometimes an oppressor, right? Or enabler of bad things. And in some small way what all of these schemes possibly could have done is in some way to an ordinary Indian turn the state into, you know, a caring entity that starts to kind of look after and okay, they may not have given us everything that we wanted, but they've started at least on the margins to kind of, you know, provide us with a valuable good or service.
Yamini Aiyar: 16:05 So I think we have to be a little cautious about how we talk about welfare and Modi in that one mustn't forget that India has always been a welfare state. I mean, it has always at least attempted to be a welfare state. Regardless of all the problems it has faced in being able to effectively be a welfare state. It had over the 10 years of the UPA seen a significant expansion of welfare that was unprecedented I think. And it's not that the Congress led UPA schemes were not being implemented all over the country. In fact, if your talk or if you'll remember the debate around the 2009 victory of the Congress led UPA at the time a lot of people were crediting the Congress for the NRG as being the reason why they won elections. The truth is always far more complex than that.
Yamini Aiyar: 16:54 I think what distinguishes Modi's welfare from the Congress's welfare is Modi himself and his ability to have reached out directly in a way that no other prime minister has been able to. And that has a lot to do with the nature of its, of his politics. Also, one must not forget that the BJP has a long history of mobilization through the RSS and the Sangh has actually played a very important role in filling service delivery gaps, schools, health centers for example. And I think that we haven't fully understood the implications of that in creating that dynamic of trust. And the legitimacy. So it's a two way thing. Modi needs his welfare schemes to create moral legitimately with the water. But because of the welfare schemes the water is also, and because of Modi rather, the voter is more willing to trust the welfare schemes of Modi regardless of whether they are delivered or not. And lastly, we don't yet have any good socioeconomic impact evaluations of any of these schemes. So we are very much going on hearsay, anecdotes, narratives, those are not unimportant and politics is about narratives, but we don't know the impact of these programs yet.
Milan Vaishnav: 18:04 So I want to ask you about a thing that you just mentioned about technology specifically Aadhaar, which is, you know, as our listeners probably know, you know, India's massive unique biometric identity scheme. I want to ask you how this fits into the story. So you know, the government has moved to replace welfare schemes with cash transfers that can be sent directly to beneficiary bank accounts, conditional on some kind of biometric authentication. Now economists have been urging the government to do this for years, right? To save money to curb corruption. And prove efficiency. But in some of your more recent writings, you have written skeptically about the idea that technology can fix some of India's capacity shortcomings. So what exactly is the disconnect? Cause I think a lot of people when they hear this say like this is unambiguously a positive development.
Yamini Aiyar: 18:48 I think when, when we talk about the Indian state, especially at the grassroots, so from the district down to the, to the local, we talk about the Indian state with a great degree of exhaustion and naturally so. Our experience of the Indian state has been one of a state people by corrupt, apathetic, inefficient people seeking a government job. So they have to do nothing for the rest of their lives and using their power and status as government officials to exercise power over poor citizens. And in that exhaustion, we want to try and solve the problem by getting rid of the problem altogether. But when you have a large welfare architecture to run, you can't get rid of the problem. You have to work with the problem. What technology did is that it gave us an instrument and a vocabulary that would allow, that sort of created an imagination that you can actually get rid of the problem by creating a direct link between the government at a higher level and the beneficiary wherever the beneficiary is and bypass all those layers of inefficiency, apathy and corruption.
Yamini Aiyar: 19:59 But we forget that a technology-led state actually requires a very, very sophisticated state machinery to enable it. Technology's an enabler. It's not it's not the state. It's not the doer. It'll only be as effective as its deployment is. And in that process, we've made the grave error of thinking that you can solve in just capacity problem just by deploying technology rather than saying you need to build a state that can use technology effectively. So for instance, the direct benefit transfer mechanism, which is essentially using technology, specifically the Aadhaar and banking network to directly move cash from the government of India down into a beneficiary's bank account. Now, common-sensically, this would be a very efficient way of getting things done. But the reality is that welfare programs don't actually reach everyone, right? We don't have a universal welfare architecture.
Yamini Aiyar: 20:59 You have to be able to identify the poor. Now, the biometric identification of Aadhaar, it can tell me whether Milan is Milan, but it's subtly cannot tell me if Milan is eligible for the rice that I have on subsidy. And the process of deciding whether Milan is eligible is a very, very complicated one. It's complicated because as we have developed more sophisticated ways of understanding poverty, we are talking about poverty as a multidimensional issue. So India in 2011 did something called The Socioeconomic Caste Census that has data-identified thirteen different eligibility criteria on the base of which we determine whether Milan is poor and therefore eligible for the benefits that the government is giving to Milan. Now that's a very effective way of identifying the poor, but it means that you have to have the ability to look through all those thirteen different eligibility criteria.
Yamini Aiyar: 21:52 And today Milan might have a two wheeler, but tomorrow he might have lost his job and no longer has a two wheeler or the other way round. So today he's not eligible, but six months later he might well be eligible. So it has to be very agile. To create that agility, you need to just at a very basic level have boots on the ground. You need to have a larger state, not a smaller one. Think of Brazil that runs these large scale, or used to rather, run these large scale social cash transfer programs. They had Carters of social workers who used to handle individual case loads of beneficiaries identifying them. So that's problem number one. Problem number two getting the, getting the beneficiary to the bank and the bank to the beneficiary isn't particularly easy. There are all sorts of problems and evaluations of DBT will tell you that there was a huge difference in perceptions of beneficiaries on whether they had received their cash, what says what the bank statements were about - what the banking system was telling them. And that was because beneficiaries didn't really know whether or not they had received the, the, where the money had gone into their bank account. So this is, this is a new cohort of people who are entering the banking system. Hell, I barely figure out what my banking structures is like. I mean, you know, and, and, and, and so, so there's a whole series of things that actually require you to make a fairly serious investment in what many officials are now calling a DBT ecosystem of human resources and a state structure that supports a technology. And we've not bothered with that. We just assume that we could bypass the state and technology will solve the problem. And without doing these investments, you've ended up with a lot more exclusion. There are a lot of stories out there of people who should have benefited from these programs that are not being able to access it.
Yamini Aiyar: 23:36 You sometimes are solving the wrong problem because often it isn't just about whether Milan is pretending to be somebody else or not, or money reaching his bank account. It's about the rations, the backend support to the system is functioning and you can't figure that out because you're so busy putting in the technology infrastructure. So essentially, to sum up what I, my, my skepticism on Aadhaar is really not so much about the technology itself, although there are questions to be debated there. It's much more about how we approach the challenge of the Indian state. And I think that thinking that the Indian state can best be rid the challenge of the in, in state can best be resolved by getting rid of the state is far worse then actually saying, I need to confront this head on and figure out how to strengthen the state, even though that's a longer battle to play.
Milan Vaishnav: 24:23 So over the weekend, you and I were discussing a paper that you're writing with Louise Tillin, which is forthcoming on sort of federalism and center-state relations under Modi. And you know, I think many people have made this argument, certainly those who kind of familiar with the headlines that, you know, the government has done wonders for fiscal decentralization. They have put more money into the hands of states. They have worked to inculcate this idea of competitive federalism and so on and so forth. But you and Louise find that the reality is much more nuance. So I'm wondering, you know, where do you think that government has sort of fallen short in your view on this rhetoric of greater decentralization away from Delhi and towards state capitals?
Yamini Aiyar: 25:04 So let's go back to where we began, right? We were talking about how in 2014, the Modi government was widely considered to be far less welfarist than it turned out to be. And it also in its first major budget in 2015, substantively cut social sector expenditure. Now the reason why it did that was because the government had accepted the recommendations of the 14th Finance Commission. So the Indian constitution mandates a setting up a finance commission that determines the distribution of tax resources, of tax resources between the center and the state. And in an unprecedented move the finance commission had essentially moved in the direction of greater devolution to states arguing that success of governments of the past had in fact stripped states of their constitutionally given mandates of, of particularly in on social policy issues whose delivery for which was very much an mandated by the constitution to be done by States.
Yamini Aiyar: 26:02 And the Modi government wholeheartedly accepted these recommendations, argued that the cuts in social policy expenditure were very much a consequence of greater devolution to States. And these were firmly state subjects. And if India is not spending enough on health and education on social protection, don't blame the central government. Start talking to states now as someone who's deeply committed to the idea of federalism on first principles, this was, I think exactly the right way to go, but it did raise important questions, which needed to be understood and, and debated about how you can ensure that every citizen in India gets a basic minimum quality of public services according to a basic minimum public standard. I mean that's, that's 101 public finance, right? So how do you determine what your core national goals are and ensure that state spending on some of those core national goals stays the same regardless of what priority states set?
Yamini Aiyar: 27:02 It also coincided with the dismantling of the planning commission that was widely regarded as the chief centralizer in chief of the government of India and state governments, particularly chief ministers used to complain long and hard about having to come with their begging bowls, begging the planning commission to give them their funds and how the planning commission in many ways controlled spending on key welfare issues through an instrument called the Centrally Sponsored Schemes where they would control budgets and direct spending in a way that gave very little flexibility to state.
Milan Vaishnav: 27:37 That a lot of strings attached.
Yamini Aiyar: 27:38 It had a lot of strings attached. It also was very, very one size fit all in its approach. And so the two together seemed to really look like we were moving in the direction of greater decentralization and Modi accompanied that with a lot of rhetoric on cooperative federalism, states being drivers of change and set up the NITI Aayog with a cabinet note that in fact articulated the role of the states as being quite central to this whole thing.
Yamini Aiyar: 28:03 But I think a combination of Modi's own administrative style, although I think on first principles and especially as having been a chief minister where he had a in many ways suffered the hands of a very central, fiscally centralized state system. He - the idea of devolution in fact meant that the government of India would lose control or at least wouldn't be able to control the narrative in the same way. And as the government started moving in the direction of greater welfare, which naturally then steps on the toes of state governments it ended up becoming a lot more centralized. S also what what was meant to be the driving force of NITI Aayog and of greater cooperative federalism. Taking away the financial controls of the planning commission, I think created a larger problem. One that was unexpected because the minute you remove the financial controller from the coordination body, which was then the planning commission, it goes straight into the hands of the finance ministry and the line departments, which by design are much more centralizing, right?
Yamini Aiyar: 29:10 It's a finance, ministry of finance is not interested in you know, larger planning and visioning and you know, doesn't have an understanding of the deeper nuances of education and health. They just want to control budget.
Milan Vaishnav: 29:22 Right, they're just looking at account.
Yamini Aiyar: 29:23 Yeah. So, so what you end up with is, is a vacuum, 'cause there is no coordinating mechanism where centers and States could actually dialogue and debate, which in some ways a planning commission in fact provided. So -
Yamini Aiyar: 29:35 Could I just interrupt you there? Because there I thought the whole idea was you abolished the centralized planning commission, which was kind
Milan Vaishnav: 29:42 Of a vestige of India's kind of socialist heritage. And you set up a new body, the NITI Aayog, which was meant to be a more consultative body where the states and the center could come together. They could talk about plans, they could talk about best practices, they could talk about, you know, coming together and have task forces on specific issues. So wasn't that kind of the idea that this agency would play that role?
Yamini Aiyar: 30:03 Yeah. But you never resolved the problem of how do you handle national goals, right? So you kept the centrally sponsored schemes except you moved away. You, you just took away the coordinating body. So a lot of public finance economists in India are currently having this debate that there is there is a traditional vertical and horizontal imbalance that needs to be resolved through a planning, through a finance commission. But India also has a developmental imbalance that needs a certain reorganization of - poorer states need more support more financial support. And the, because the centrally sponsored schemes stayed it meant that in, in some ways the center still held onto the purse strings. So you still needed that coordination body. And, and instead what you had was the ministry of finance and line departments controlling it's a net net. Yeah. And that suits the politics of and the political style of the government, right?
Yamini Aiyar: 30:56 As you start increasing your welfare expenditure and making them prime minister schemes, the money has to come from the center. So what they did back in 20, 2015 is so all these centrally sponsored schemes had a sharing mechanism. So center would put some money, government of India will put some money, states would add a contribution. They shifted the balance of that such that the state contribution increases by at least by about 25 percent for a large number of schemes. So States are suddenly putting in more money than they had before for government of India programs. And as the Government of India starts expanding its budgets for its own flagship programs it therefore for the centralizes expenditure and states have less room for maneuver and they don't have an institutional mechanism where they go hash this out and talk with one another.
Yamini Aiyar: 31:45 So that combination. Now also don't forget that the Indian, the government of India has over the last ten to fifteen actually over the last twenty years by by some calculations in fact become a much smaller spender per capita, as a percentage of GDP than states because of the tax GDP ratio, and so the only way in which the government of India can finance all of these expenditures is by encroaching on States. So what the government of India did, having accepted the recommendation to the 14th Finance Commission, which devolved more supposedly to states, it started increasing its own stresses and it's all, and these particular taxes constitutionally don't fall within the divisible pool. They don't need to be shared with the states. So if you take the total gross tax revenue of the center and then you look at how it got shared, shared with States, it never met the expectations of the voluntary finance commission and in the, as you can, as you increase your centrally sponsored schemes by one calculation, essentially the total expenditure that the government of India was making through centrally sponsored schemes and central sector schemes increased in the time-frame of 2015, 16 to 2019/20 rather than decrease as was expected in the past.
Yamini Aiyar: 32:58 And lastly, it's important to remember that the NITI Aayog is essentially servicing the prime minister's office in a way. It has representation of states in the form of these chief minister subcommittees, but in no way has this sort of created a genuine institutional mechanism for center-state dialogue. And whenever they talk about cooperative and competitive federalism, it's very much more about the center driving through rankings and aspirational districts, programs and other States to start competing with each other rather than States politically engaging in a dialogue with the center, which is what genuine cooperative federalism should be.
Milan Vaishnav: 33:36 So I want to end by asking you, we know looking ahead that the government is planning a big push on clean drinking water. It's something that was rumored. The prime minister confirmed it during his Independence Day speech. You know, you've now sat and watched the government of India roll-outs scheme after scheme after scheme. What friendly advice would you offer the prime minister if you could sort of think about, you know, a couple of principles to keep in mind as you're designing a brand new scheme that could potentially have a transformative impact. I mean everyone would agree that clean drinking water is absolutely essential for a variety of reasons, not least, you know, public health education and others. What are some of the things that you think we've learned about, you know, pitfalls to avoid or principals to push?
Yamini Aiyar: 34:20 Stay true to decentralization. If you look at the the sort of whatever they have now put out in the public domain in terms of the plans and rules of the schemes that they are launching. In fact I have little to quibble with. They recognize the importance of local governance and communities and community based watershed management. And I've drawn on lessons from the past that India has a long history of doing this. And so on paper I think it's headed in the right direction. I think that it's going to be very important that we stay true to that. And this is going to sound completely counterintuitive, but the only way in which you can stay true to decentralization is to take the lid off a little bit in on the sort of mission mode, ambitious targets.
Yamini Aiyar: 35:09 You know, in public policy schools you're always told that, you know, you have to ensure that you got the right targets, you have clear goals that you monitor and measure them. And that's how things happen. I think things in India are complicated. I actually, I think development itself is complicated across the world. And these tropes don't always work. In fact, sometimes they can be counterproductive because the goal or the target becomes the end goal, not the outcome. And and therefore if we have to do this right, it has to be done through decentralized participation and that can only happen effectively if we step away from the temptation to go down the road of mission mode, ambitious targets, grand announcements, and lots of political mileage. Political mileage will come when people are drinking clean water.
Milan Vaishnav: 35:55 My guest today is Yamini Aiyar president, CEO of the center for policy research based in New Delhi. She's joined me today from our grant, the motion studio in Washington, D.C., Yamini. Thanks for coming on the show.
Yamini Aiyar: 36:05 Thank you Milan. This was fun.
Outro: 36:10 The 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 podcasts. 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 GrandTamasha.com. 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.