The new DMK government in Tamil Nadu has managed to grab national and arguably global headlines with one of its first executive decisions — the appointment of a high-powered Economic Advisory Council to the new Chief Minister MK Stalin, chaired by no less a personality than Raghuram Rajan, former Governor of the Reserve Bank of India.
As if that wasn’t big bang enough, Stalin has packed the panel with arguably some of the finest economic thinkers around, including the Narendra Modi government’s former Chief Economic Advisor Arvind Subramanian, Nobel prize-winning economist Esther Duflo, leading development economist Jean Dreze and former union Finance Secretary S Narayan. This is a staggering collection of economic policy brainpower and most countries, leave alone a State government, would have been proud to have such a glittering panel behind it. No wonder the move made headlines everywhere.
However, it must be pointed out that in itself, the appointment of such a panel is not an extraordinary development. Not even the fact that it includes Nobel laureates and world-renowned economists. After all, Mamata Banerjee in Bengal had co-opted Nobel laureate Abhijit Bannerjee to advise on the economic revival of the State. And Kerala’s communist Chief Minister Pinarayi Vijayan had also created a stir by appointing Gita Gopinath, now the IMF’s chief economist, as an advisor to the State government.
In fact, Stalin’s immediate predecessor Edappadi K Palaniswami had done something similar. When the Covid19 pandemic devastated the country’s — and Tamil Nadu’s — economy last year, he had appointed a 21-member panel of economists, specialists, top industrialists and senior bureaucrats headed by former RBI Governor and head of former Prime Minister Manmohan Singh’s economic advisory council C Rangarajan, to advise the State on the steps to be taken to navigate the pandemic without suffering fiscal and economic collapse and to suggest measures to boost the State’s economic development in the immediate and longer term.
In fact, the new advisory group could do worse than to start by looking at what its previous avatar had suggested.
The panel had, within three months, come up with a comprehensive 250-page report containing as many as 413 “recommendations and observations” on what the government could do to stem the economic carnage inflicted by the Covid19 pandemic, as well as boost the State’s economic growth in the medium term.
Urban job scheme
The recommendations would have made an ideal playbook to follow for most large, industrialised and urbanised States to follow, not just Tamil Nadu. As immediate measures, the panel suggested, for instance, creating an urban employment guarantee scheme on the lines of MNREGS, which covers rural areas. That makes abundant sense in a highly urbanised State like Tamil Nadu.
As per the 2011 census, TN had the third largest urban population in absolute numbers but was the most urbanised State in the union among large States with an urban population of over 48 per cent (Goa tops with 61 per cent).
Given that about half the population lived in urban areas and a fifth of that urban population poor, it makes eminent sense to push a MNREGA type scheme in urban areas as well, which would have the dual benefit of protecting livelihoods as well as creating infrastructure for financially stressed local self governments (municipalities and the like) which actually administer these urban areas.
The panel had also asked the State to step up its capital expenditure to ₹10,000 crore that year, and to immediately use the ₹3,200 crore available in the construction workers welfare fund to provide relief to construction workers who had been hit by the cessation of all construction activity due to the lockdown. The report is loaded with other sensible suggestions, including ramping up health expenditure to ₹5,000 crore in just 2020-21, supplementing Tamil Nadu’s fairly decent public healthcare delivery system with mobile services to reach pandemic hit areas under lockdown and to “substantially increase” the number of healthcare workers.
Among other sectoral recommendations, the panel suggested increasing the capital of the Tamil Nadu Industrial Investment Corporation to ₹1,000 crore so that the organisation can lend long term, setting up of sector-specific industrial parks in medicare and bio-technology, and in agriculture, shift away from water intensive crops.
All excellent advise, which would have done not only Tamil Nadu but the entire country some good if it had been followed. In fact, Palaniswami claimed that his government had acted on “273 of 413” suggestions and observations in the report.
Certainly, the State had managed to ramp up relief measures, including free rations, as well as stepping up capital expenditure, all of which helped it to achieve positive growth of an estimated 2.1 per cent in 2020-21, when India as a whole went into deep contraction.
But in the end, all governments are run by politicians and politicians, as a rule, tend to put political expediency over all else, even very good advice from the brightest brains in the land.
Pinarayi Vijayan quickly dumped Gopinath after a kerfuffle over using a “capitalist” economist. One of the first things that Abhijit Banerjee told the Mamata government to do last year was to ramp up testing, which it totally ignored.
Others too, have tended turn a deaf ear to sound, but politically inexpedient advice. In fact, a Karnataka environment group has even moved court alleging that the Centre ignored its own expert panel’s recommendations on environmental laws. The Centre also famously ignored its own expert panel’s suggestions on Covid responses, and most States, in turn, have ignored the Centre’s expert panel advisories on lockdowns and unlocks.
From administrative reforms to revamping growth to reducing inequalities to cleaning up the environment to boosting investments to skilling youth, the government’s shelves are filled with excellent reports prepared by expert committees, all of which continue to gather dust.
The thing is, it is pretty easy to ask for advice — and if you are the government, equally easy to get good advice — but it is much more difficult to act upon it.
The writer is is a senior journalist