Prof. Mukul G. Asher introduced students to the concept of growth diagnostics framework and shared a strategy of applying it in the Indian context while figuring out policy matters.

He spoke about a broad range of related issues such as the need for economic versus non-economic reasoning and analysing trade-offs while taking impactful decisions.  He further elaborated the concept of economic discipline and how private and public organisations can coordinate more to determine incentives are of utmost importance in a developing country like ours.

“Economic laws and tendencies apply to everyone. But the context in which they are being applied needs to be reconsidered,”he remarked.

He exemplified his point by stating that economics doesn’t change for anyone-whether it’s the poor or the rich, a developed or an underdeveloped country. Their economic tendencies can remain the same but the framework in which they are used differs.

“Things will improve if the policymakers understand this framework in which economic policies are adopted,”he said, adding that this will lead to diagnosing growth challenges in a context-specific manner.

According to him, with the right set of incentive structures and coordination, any country can bring about a behavioural change.

“Economic reasoning suggests that a measure is likely to have differing impact on different segments. We have to have a balance in everything,”he suggested.

He also pointed out that there are problems with time frames as well, such as experiencing a short-term pain for achieving a medium-term gain. So, a responsible analyst has to communicate to policymakers that they have to look at both sides of the coin.

He further spoke about the advantages of implementing progressive economic activities such as more investment in technology, knowledge application and productivity while citing examples of new age companies such as Ola, Uber and Airbnb that are bridging the information asymmetry and the supply-demand gap in their businesses.
In the education area, he said there was a need to set up a skills university and how the ITIs had become bureaucratic by not catering to essential market needs.

“Instead we should build skills that will be employed right away,”he suggested.  

He referred to operation areas such as waste management, agriculture, health sector, construction and housing, and how we need to develop capacities and skill sets for the current needs. In each of these areas, planned initiatives are needed, in addition to minimising imbalances in demand and supply, and bringing in sector-specific risk mitigation strategies that are well-designed and implemented.

He said that a lot of developmental activities are related to outmoded regulations and processes and we have to systematically start moving towards removing those for efficiencies to come in. He gave the examples of poorly administered taxes and poor enforcement of property rights.

“The only difference between well-governed and not well-governed countries is that the former worked out their small problems in a cumulative way, which has brought their economy significant progress,” he said.

During the lecture, Prof. Asher conducted a small activity for all students in which he tested their creative aptitude. Dividing them into groups of five, he gave each group one case study asking them to make presentations based on those studies. He asked them to apply economic reasoning to their respective sectors. The five project topics were the Amritsar bus terminal, football stadiums of Chile, a sports stadium in Singapore, the Airports Authority of India and the Gujarat international financial tech city.

Through this talk, Prof. Asher gave the students some ideas on how to think about the sectors they were trying to analyse and advised them to use those ideas for other projects too. He directed them to look for weak and strong links in growth diagnostics, in addition to deciding the kind of sequencing to be done. The baseline of the whole concept is that along with technical skills, planners need to develop conceptual thinking if they want to move ahead.
 

Watch more videos from Prof Mukul G Asher talking about Public Private Partnership (PPP): Conceptual Foundations and Lessons from International Experience

Prof Mukul G Asher is a professor at the Lee Kuan Yew School of Public Policy at the National University of Singapore. He has also taught in India, the US and has undertaken research in UK, Sweden, Japan, Australia and Malaysia. His area of research is focussed on fiscal reforms, India’s external economic policies and pension reform in Asia.

He has authored and edited several books and has published numerous articles in national and international journals. He has been a consultant on tax reforms and social security issues to the Government of Gujarat, World Bank, International Monetary Fund, Asian Development Bank, Organisation for Economic Cooperation and Development (OECD), and World Health Organisation (WHO).