PPE बाजार और वैश्विक एकजुटता की सीमायें

by RK Ranjan (Phd Candidate at the Valand Academy of Gotheburg University, Sweden)

कोरोनावायरस के संदर्भ में अगर कोई बात बार-बार दोहराई गयी है तो वह यह कि इस लड़ाई से अगर हमें जीतना है तो हमें एक साथ आना होगा. इस संकट से उबरने के लिए आपसी सहयोग कितना महत्वपूर्ण है, इसको डब्लू एच वो सहित हमारे देश के राजनेताओं ने भी रेखांकित किया है. भारतीय दृष्टिकोण से इस वैश्विक एकजुटता का प्रमाण तब स्पष्ट रूप से सामने आया जब भारत ने दुनिया के कई देशों को हाइड्रोक्सी क्लोरोक्विन (एच सी क्यू ) की आपूर्ति कराई. इस कदम के लिए कई देशों ने भारत के प्रति अपना आभार भी प्रकट किया है. यहां तक कि ब्राज़ील ने अपने आभार में भारत की तुलना हनुमान से कर दी जो कि रामायण के संजीवनी बूटी संस्करण की याद दिलाता है. भारत एच सी क्यू के निर्माण में अग्रणी देशों में से एक है. एच सी क्यू एक सस्ती दवा है जो मलेरिया के इलाज में काफी काम आता है. भारत सरकार के एच सी क्यू को निर्यात करने के निर्णय की काफी आलोचना भी हुई लेकिन सरकार का कहना है के देश में इस दवाई की प्रयाप्त उपलब्धता है. जब कोई संसाधन व्यापक तौर पर उपलब्ध हो तो उसको साझा करने में और वैश्विक सहयोग के बारे में सोचने में अक्सर कोई समस्या नहीं आती है. लेकिन क्या ये उदारता उन संस्धानों के लिए भी संभव है जो प्रचुर मात्रा में उपलब्ध ना हो? 

भारत में कोरोनावायरस के संकट ने प्रवासी मजदूरों की पीड़ा को सामने लाया। इतना ही नहीं इस संकट ने यह भी साफ कर दिया कि आर्थिक और सामाजिक संसाधन के हिसाब से समाज के अलग-अलग वर्ग के लिए इस संकट के मायने भी अलग होंगे. इस तरह की असमानताएँ केवल देश के अंदर नहीं बल्कि विश्व स्तर पर भी है.  इसलिए जरुरी है कि हम इस पर भी ध्यान रखें कि ये वैश्विक असमानताएँ कोरोनावायरस के संदर्भ में किस प्रकार का रूप ले रही है. दुनिया के सभी 195 देश अपने स्वास्थ्य कर्मचारियों के लिए पर्सनल प्रोटेक्टिव इक्विपमेंट (पी पी ई) उपकरण खरीदने की होड़ में है. पी पी ई खरीदने की यह लड़ाई कहीं से भी बराबरी की लड़ाई नहीं है. भले ही वैश्विक एकजुटता और सहयोग सुनने में अच्छा लगे लेकिन जमीनी सच्चाई यही है की अब दरारें साफ दिखने लगी है. यहाँ तक की जर्मनी और नीदरलेंड जैसे अमीर देशों ने भी अपनी चिंताएं अभिव्यक्त करनी  शुरू कर दी है. पी पी ई के अमेरिकी डॉलर में खरीद-फरोख्त होने की वजह से अफ्रीका के कई देशों के लिए मुश्किलें और भी बढ़ गयी है. भारत को भी पी पी ई से जुड़ी सामग्री (जो कि प्रयाप्त मात्रा में भी और अपेक्षित गुणवत्ता वाली भी हो) हासिल करने में काफी दिक्कतें आ रही है. अमेरिका ने शिकायत की है कि उसकी कई कंपनियों को चीन में अपने कारखानों से निर्यात करने में कठिनाइयों का सामना करना पड़ रहा है। इन उभरते दरारों के बावजूद कुछ जगहों से अभी भी 'वैश्विक सहयोग' पर बल दिया जा रहा है. असमानतों की पृष्ठभूमि पर उपजी और सिंचित, सहयोग और साझाकरण की नीति हमारे अस्तित्व को खतरे में डाल सकती है. इसलिए बेहतर यही होगा की हम दुनिया के बाकी हिस्सों से अपनी उम्मीदें कम कर लें. 

पहले अपनी जरूरतों को पूरा करने का हवाला देते हुए कई देशों ने महत्वपूर्ण उपकरणों के निर्यात पर गंभीर प्रतिबंध लगाए हैं. वैश्विक एकजुटता को कम करने के साथ इन कदमों ने वैश्विक बाजार में उपकरणों के खरीद-फरोख्त पर भी काफी असर डाला है. ऐसे देश जिनके पास निर्माण की क्षमतायें सीमित हैं या तो वह वो बिलकुल ही निर्माण नहीं कर पर रहे या फिर जितना कर पा रहे हैं वो जरूरत के हिसाब से प्रयाप्त नहीं है. नतीजा ये है कि अपने जरूरतों को पूरा करने के लिए ऐसे सारे देश मुख्य  रूप से पूर्वी एशिया के कुछ देशों पर अब निर्भर हैं. न केवल इन देशों से आपूर्ति सीमित है, बल्कि अनिश्चित भी. अगर महामारी का संकट इन देशों में फिर से जोर पकड़ता है तो ये सीमित और अनिश्चित आपूर्ति भी तेजी से सिकुड़ जाएगी. 

माँग के दृष्टिकोण से देखा जाये तो जिन देशों में कोविड के मामले तेजी से बढ़ रहे हैं उन्हें इन उपकरणों की तत्काल जरूरत है. लेकिन अनिश्चितता के इस दौर में कमोबेश सारे देश इन उपकरणों को इक्कठा करने में जुड़े हैं. लॉकडाउन हमेशा के लिए नहीं रह सकता और इसलिए लॉकडाउन के पश्चात कोविड के मामले सब जगह बढ़ने का खतरा काफी सच है. आवश्यक उपकरणों की मात्रा का अनुमान लगाने में कठिनाई मामले को और भी बदतर बना देती है. ऐसी पृष्टभूमि में जहाँ इतनी अनिश्चिततायें हो ये स्वभाविक है कि सारे देश किसी भी तरीके से इन उपकरणों को इकठ्ठा करने में लग गए हैं. इस होड़ को होर्डिंग कहना कोई अतिश्योक्ति नहीं होगी.  

जरूरतों और अनिश्चितताओं से उपजी माँग और समवर्ती आपूर्ति की कमी ने चिकत्सा सम्बन्धी सामानों की खरीद-फरोख्त को एक जीरो-सम गेम बना दिया है. ऐसे खेल में एक खिलाड़ी के लिए जीतने का एकमात्र तरीका दूसरों को हराना होता है. परिकलपना कीजिये कि दो देशों में लोग मर रहे हैं, और दोनों के पास वे सभी पी पी ई नहीं हैं जिनकी उन्हें आवश्यकता है। ऐसे हालत में देश A में जाने वाला हर PPE जो देश B को नहीं जाता है, वह देश B के चिकित्सा कर्मचारियों को जोखिम में डालता है.   इसलिए, देश बी के लिए यही तर्कसंगत है कि  वह हर संभव प्रयास करे अधिक से अधिक मात्रा में  पी पी ई  जुटाने का. और वह ऐसा देश A की कीमत पर ही कर सकता है. 

उपकरणों को तेजी से खरीदने के लिए दुनिया भर में सरकारों पर दबाव है। ऐसे हालत में बाजार खरीदने और बेचने वालों का सामान रूप से नहीं होता। बाजार बेचने वालों के मुट्ठी में हो जाता है. बोली लगाने के इस युद्ध में, खरीदार जो ज्यादा से ज्यादा कीमत देने की पेशकश कर सकते हैं, वो सभी के लिए बाजार की कीमतों को बढ़ा  देते हैं. यदि प्रत्येक देश और राज्य के पास सामान आर्थिक संसाधनों की मौजूदगी होती तो अलग बात थी. लेकिन मामला वह नहीं है। भारत जैसे देश के लिए, और जिस मात्रा में PPE की जरुरत है, कैलिफोर्निया या न्यूयॉर्क जैसे अमेरिकी राज्यों के खिलाफ लगातार बोली लगाने और जीतने के लिए संघर्ष करेगी, जो एक दूसरे के खिलाफ बोली भी लगा रहे हैं। नतीजन, कई देश या तो आवश्यक मात्रा से कम या अवांछित गुणवत्ता वाली PPE ही प्राप्त कर पायेगी. 

कीमत पर प्रतिस्पर्धा एकमात्र समस्या नहीं है जो हाल के दिनों में सामने आई है. जिन देशों के पास नगद में भुगतान करने की क्षमता है या फिर शक्तिशाली हैं वो सारी आपूर्ति अपनी तरफ कर लें यह एक वास्तविक और निरंतर खतरा बन रहेगा. अंतरराष्ट्रीय अनुबंधों को लागू करना, जो कि सबसे अच्छे समय में मुश्किल है, वैश्विक संकट के बीच में लगभग असंभव हो जाता है। यदि स्पैनिश फ्लू की तरह कोविड लंबे समय तक रहता है, तो यह संभव है कि जिन देशों में अधिकांश आपूर्तिकर्ता आधारित हैं, वो चुनेंगे की दुनिया के कौन से देश कोविड की लड़ाई में जीतेंगे और कौन से देश हारेंगे. 

भारत जैसे देश के जरुरी है की वो तेज़ी से बदलते बाजार को पहचाने और समझे. हमें यह स्वीकार करना होगा कि कम समय में उच्च गुणवत्ता वाले उपकरण प्राप्त करने का एकमात्र तरीका यह है कि हम अमीर देशों द्वारा पेश की जा रही कीमत को मैच करें. लेकिन सरकार के सीमित संसाधनों को देखते हुए यह कहना उचित होगा कि हम  यह बहुत लंबे समय तक नहीं कर सकते. इसलिए, चिकित्सा उपकरणों के घरेलू उत्पादन को रफ़्तार देने की तत्काल आवश्यकता है. इस संदर्भ  में परमिट प्रदान करने की प्रक्रिया को तेज करना एक अहम कदम होगा. पंजाब जैसे कुछ राज्यों ने इस संबंध में कुछ अच्छे कदम लिए हैं और अन्य राज्यों को इस पर अमल करना चाहिए. गुणवत्ता की चिंता इस बात से दूर हो सकती ही कि ऐसे हालत में जब अंतर्राष्ट्रीय शिपमेंट पर प्रतिबन्ध है, घरेलू बाजार में राज्य सरकारें बड़े खरीददार के रूप में उभरेंगी जो ये सुनिश्चित करेगा कि बाजार स्वरुप  विक्रेता से ज्यादा ख़रीददार तय करे. खैर किसी भी परिस्तिथि में गुणवत्ता की चिंता परमिट देने के रास्ते में नहीं आनी चाहिए. इस दिशा में लिए गए  ठोस प्रयासों से मौजूदा कमी तो दूर होगी ही, साथ ही साथ इससे देश को फिस्कल इस्टीमुलुस भी मिलेगा. 

बढ़ती मांग और सीमित आपूर्ति से होने वाली परेशानियां वैश्विक एकजुटता के लिए एक बड़ी चुनौती बानी रहेगी. इसका अर्थ यही नहीं है को किसी भी तरह का वैश्विक सहयोग नहीं होगा लेकिन हमारी सभी समस्याओं के समाधान के लिए वैश्विक एकजुटता पर निर्भर होना नासमझी होगी। एक पुरानी कहावत के अनुसार, मदद करने वाले हाथ को खोजने का सबसे अच्छा स्थान आपके खुद की बांह है।

Can global solidarity survive the zero-sum game in the market for PPEs?

"We are all in it together" – is a common refrain in these troubled times. From local politicians to national leaders to the WHO all have pointed out that we can only overcome this crisis if we all cooperate. From an Indian perspective, nowhere has this sense of global solidarity been more obvious than when shipments of Hydroxy Chloro-Quinine (HCQ) were sent across the world. Many countries conveyed their gratitude with the government of Brazil even invoking the Ramayana, with India playing Hanuman bringing sanjeevani when it was needed most. HCQ is a cheap drug used often in malaria-stricken countries like India. Its widespread availability is why, despite some criticism, the Indian government has maintained that it has sufficient reserves. When supply is not a limiting factor, cooperation and sharing of resources are rarely of major concern. But can this bonhomie extend to resources that are not in abundant supply?

The suffering of great masses of migrant labour across India brought the vulnerability of marginalized groups into sharp focus. As we grapple with the enormity of our domestic problems, we must not be blind-sighted by the potential fallouts of asymmetry in endowments across countries, both economic and otherwise. All of the 195 countries in the world are in competition to procure equipment, particularly Personal Protective Equipment (PPE), to equip their health workers and it is not a fair fight. Fractures in inter-country cooperation are beginning to show up, with even rich countries like Germany and the Netherlands voicing their concerns. Countries in Africa are struggling to source from an international market where prices are denominated in US dollars. India has also faced problems with sourcing materials in the required quantity and of expected quality. The USA has complained that many of its firms are facing difficulties in exporting out of their factories in China. In the face of the emerging acrimony, some have continued to rally global cooperation. But in a situation where cooperation and sharing can jeopardize one's prospect of survival, we would do well to temper our expectations from the rest of the world.

Many any countries have placed severe restrictions on exports of critical equipment citing the need to take care of their own first. These moves, along with undermining global solidarity, have also served to severely restrict supply in the global market. Parts of the world with limited manufacturing capabilities cannot manufacture the required equipment, and even among those who can there are few, if any, that can produce all they need. This has led almost all of them to rely on supplies from a few countries, mostly in East Asia. Not only is the supply from these countries limited, it is also precarious. Any indication of another outbreak in these countries and the supply would shrink very rapidly. 

On the demand side, countries that are facing a surge in COVID cases need medical equipment urgently. But the urgency of stocking up before the surge hits is not lost on the other countries. Lockdowns cannot last forever and the inevitability of the spread of the virus in its aftermath means that the urgency of the latter group of countries is not less than the former. The difficulty in predicting the quantity of equipment required makes matter worse. This uncertainty drives countries to build as large a stockpile as they can. The buying patterns that emerge in a situation like this is akin to hoarding.  

The urgency and uncertainty that is driving demand and the concurrent lack of supply have made the procurement of essential medical supplies a zero-sum game between states. In such a game the only way for a player to win is for the others to lose. There are no win-win scenarios. If people are dying in two countries, and both of them cannot have all the PPE they need. Then, every PPE that goes to country A, doesn't go to Country B putting country B's medical staff at risk. It would, therefore, make sense for country B to try and get as many PPEs as possible and it can only do that that by denying country A. 

Government's across the world are under intense pressure to buy equipment and buy them fast. With a few sellers and many, many desperate buyers, this is a seller's market. In the ensuing bidding war, buyers who can afford to will offer to pay higher and higher prices, driving market prices up for everyone. If every country and state had the same amount of resources, higher willingness to pay would simply signal relative urgency. But that is not the case. An economy the size of India, given the quantity it needs, will struggle to bid and win consistently against US states like California or New York, which are also bidding against each other. Consequently, many of the countries will either end up with less quantity than required or worse, with equipment that will not be of the desired quality. 

The competition on price is not the only problem that has emerged in recent times. The ability of some countries to wrest away supplies by either paying in cash, or by abuse of power remains a constant threat. Allegations of international piracy is already showing that enforcing international contracts, which is difficult in the best of times, might turn out to be almost impossible in the middle of a global crisis. If the pandemic lasts for as long as the Spanish Flu did, it is not inconceivable that the countries in which most of the suppliers are based will increasingly get to choose winners and losers. 

The need of the hour for a country like India is to recognize the dynamics of this fast-evolving market. We will have to concede that in the short run, the only way to get high-quality equipment will be to match the price being offered by richer countries. But given the limited resources at the government's disposal, this cannot be sustained for too long. Therefore, there is an urgent need to ramp up the domestic capability to produce medical equipment. Hastening the process of providing permits will go a long way in improving domestic manufacturing capabilities. Some states like Punjab, have taken the lead in this regard and others should follow suit. Concerns around quality should be mitigated by the fact that with international shipment severely restricted, the domestic market will have a few large buyers in the form of state governments, creating more of a buyer’s market. In any case, concerns about the quality of the final output should not hinder granting of permissions to firms that are willing to produce the required equipment. Not only will concerted efforts in this direction alleviate the current shortages, it will also create a mechanism for the government to provide some fiscal stimulus to the domestic industry. 

The troubles that emanate from the frantic demand and limited supplies will make global solidarity more difficult to sustain. There will still be cooperation: more shipments of medicines, sharing findings on the vaccine and leading countries might even come together to create a new version of the Bretton Woods. The world will rally in our collective fight against the virus but to expect solidarity to be a solution to all our problems will be unwise. As an old saying goes, the best place to find a helping hand is at the end of your own arm.

On Clarity and Credibility in dealing with a Global Pandemic

India is in a government-enforced lockdown that is harsher than in many other countries. Our streets are being patrolled by the police with instructions to take strict action against people violating protocol. Some chief ministers have threatened to give orders to shoot at sight, others have promised to send violators to jail. Yet, very few are clear on what constitutes a violation and what does not. The list of essential services expands and contracts in response to every crisis that emerges. Kerala recently allowed the sale of alcohol to those with a doctors prescription, Haryana, on the other hand, closed down liquor shops 2 days into the lockdown. These revisions and re-revisions of government guidelines circulate as Whatsapp forwards with varying degrees of accuracy, adding to the confusion, fomenting fear and panic. The lack of clarity among the administration and the public alike is likely to be a most formidable hurdle in India's struggle against the coronavirus.

In the weeks to come, the people of India will be more reliant than ever on the state in its role as coordinator and enforcer. Any loss in the credibility of the government can prove devastating to India's hopes of successfully combating the threat of coronavirus. At its core, the credibility of the state rests on being able to limit opportunistic behavior by any individual or group of individuals. In that regard, the Indian state has not been very effective, even in the best of times. The long record of inefficiency and poor implementation aside, the officials used to making arbitrary decisions while presiding over their fiefdoms, will now be responsible for keeping the country functioning. The few institutional checks and balances and the largely informal private enterprise that helped paper over the cracks will no longer be able to do so as effectively. 

As we wade deeper into the crisis precipitated by the SARS-COV 2 virus, the immediate urgency of fighting the virus will give way to the urgency of getting on with our lives, fatigue will set in, tempers will fray and the number of infractions will mount. Our health infrastructure is certainly not equipped for the surge in numbers that is predicted for the next few months, but maybe we can build and buy our way out of it, with some help from the international community. But if our governance structure falters, there will be very few remedies available. To give ourselves a fighting chance, it is imperative to acknowledge the importance of clarity, wherein all actors, government enforcers, and citizens, know what is expected of them in the days to come. 

Clarity precedes Credibility

These are unprecedented times and nobody can draw on past experiences to form their expectations of the coming days. This creates a clarity problem that can destabilize any system of governance; the people who are expected to comply are not on the same page as the people who are expected to enforce. The purpose of the big stick of enforcement available to any government is to get people to comply with rules and regulations. But if people do not know what it is that they have to comply with, the stick cannot accomplish much. In fact, it can lead to a situation where any act of enforcement might seem to be arbitrary and therefore erode the trust between people and the government that it is critical in times like these. Which would then lead to even minimal levels of compliance requiring stricter enforcement, creating a vicious cycle which will be tough to break out of.

The spread in the perception of arbitrariness is going to be expedited if the enforcers themselves are unaware of what it is that they are meant to enforce. It took a day too many before the decision of allowing food delivery services to ply in the lockdown made it to local law enforcement. In the meanwhile, delivery boys were harassed, and in some extreme cases, even beaten up. Allegations of these actions being taken to extort money aside, it is not difficult to imagine that the local policemen were merely trying to enforce the lockdown the best they could.  With a limited force charged policing millions, sporadic cases of highhandedness may be inevitable, but the lag between the formulation of policy and change in enforcement strategy can make the situation worse than it has to be. Not only will it very likely affect the morale of the people policing our streets, but it would also make it difficult for conscientious members of society to file complaints with the police.    

Lack of Clarity Within

Any government is comprised of many individuals constituted in departments, organizations, and committees. One of the key tasks of administration, particularly in a crisis is to ensure that its constituent elements of the government move in sync. Even in these uncertain times, it would be reasonable to expect that plans to cope with the outbreak were made, with detailed instructions for all concerned and that these plans were shared with the responsible authorities. This is particularly true as India was not in the initial line of fire of the virus and the government had some weeks in which these plans should have been put in place. But it does not seem that governments had a detailed plan in place, even for its own branches where it would have been easier to anticipate problems.

Consider the case of the measure where the central government asked public sector banks and undertakings to work with 50% of staff, while still providing all essential services. The trouble with this requirement, besides the extremely short notice in which it was to be carried out, is that not all of these firms need 50% of their staff to provide basic services, some need less, some need more. If they need less, the person in charge of making these decisions in the organization would have to either risk putting more colleagues in harm's way than required or being hauled up for not enforcing orders. If they need more, the problem is even more severe. In either case, the person in charge will have to make harsh decisions, which, might risk insubordination in the not too distant future.

It is unclear if the 50% mandate was meant to avoid confusion, a manifestation of the lack of trust in the decision-making capabilities of the top leadership of these organizations or merely a result of the lack of willingness to give up authority by people at the center of the decision-making matrix. Whatever be the reasons for which the decision was made, it ended up reducing clarity by having two requirements that were not necessarily compatible with each other.

Lack of Clarity Without

The lack of clarity that seems to be dogging the government's machinery from within also extends to the public at large. In the lockdown that has been in force since 23rd March, a common refrain has been that essential goods and services will be available. The big problem has been with the term essential. There was an original list of services that every state government released, but each of those lists has been amended many many times since. The trouble of keeping track of these changes is compounded by the increasing divergence in the positions taken by different state governments. This not only creates problems in identifying what activities people should and should not engage in a particular state but also the possibility of disaffection with people in state A not able to access somethings that people in state B can.

Decentralization has often been touted as a panacea to India's governance problems. We are a diverse country and it is very difficult to come up with one size fits all solution. However, in the present crisis, while de-facto decentralization in implementation decisions is unavoidable, it is very much desirable that 720 districts or 36 states (& UTs) do not make policy independent of each other.  A stark example of the problems that arise from the lack of coordination across the country is the migrant labor crisis. It is difficult to ascertain if the trigger for large scale movement of people was any specific policy or lack thereof, but it is almost certain that greater coordination across states would have enabled quicker remedial measures. For now, the problem has been dealt with the sealing of borders and providing food and shelter. But sustained lack of clarity on what these people stuck in no man's land can expect from the coming weeks, will lead another round of attempted exodus. Consistency in policy across states, facilitated by the central government, with minor local changes will not only reduce the strain of keeping up with the policy changes in this rapidly evolving environment but also help state governments coordinate better.

The Way Forward

The basis of an ideal governance structure is the clarity that emanates from classifying actions into good and bad. The people being governed know of this classification. Some of them take good actions due to innate preferences, others follow due to the threat of being caught by the police and still others follow due to the threat of the other people complaining to the police. The police follow their own classification of actions in identifying deviants and punishing them. More than a week into the lockdown these classifications are still not clear.

Should I take food and rations to the nearby slum, would that be a violation of the lockdown? Would my actions increase the danger of the virus spreading? What should the police do? Should they ask me to go home? Should they take the food from me? Should they let me be? If the endgame of the lockdown, as the WHO seems to suggest, is to test more people, should go get tested in a private facility, if I can afford it? Or will I be tested by government officials when the time comes? If making toothpaste is not an essential service, will we not run out of toothpaste soon?

This is an evolving situation and not all measures, counter-measures and their outcomes could have been foreseen by even the most astute observers. The swiftness with which we went from the PM 'asking' for a few weeks of our time to full national lockdown surprised many, but maybe the decision had been delayed to a point where there were few remaining options. It is apparent that irrespective of the policy choice made, there will be many fires that will need to be put out in the weeks and the months to come. This monumental task, if it has to be accomplished without moving to a decidedly authoritarian form of governance, can only be carried out if the government and its people trust each other.

Only clear and honest communication from the government can form the basis of this trust. Information about the state of the country; its finances, capabilities of its health infrastructures, and the expectations from individual citizens will form the bulwark against panic and recklessness. Platitudes and promises that reveal themselves to be hollow, create a trust deficit which foments rumor mills. If the objective of credible governance is to limit opportunistic behavior, the lack of clarity about the world resulting from rumors make this objective ever more elusive.

Many of us will be forced to make very difficult decisions in the times to come. Whether these decisions will back the government's efforts or obstruct them, will in large part, be determined by the information we have about the government's plans. There will still be those for whom the threat of punishment must be maintained, but for most being informed of what we should and should not do, along with the assurance that our near and dear will be taken care of, will suffice. The Indian republic has survived for 7 decades, allegations of weak governance and opportunistic citizens notwithstanding. It is time that the government of India gives reposes faith in its citizens and tells us exactly what they plan to do, and how we can help.

On the Disease and Lockdown Cure

A crisis of unprecedented proportions is upon us. In the last few weeks, suggestions from experts and requests from governments have been unsuccessful in convincing everyone to take all possible precautions. With ill-considered risky actions by many making it infeasible to rely on individual decision making, governments across the world have imposed very stringent restrictions. The consequent impact on the economy has been very severe. Business is suffering, many millions have lost their jobs and by all accounts, many more will. In India, nowhere has the impact of the lockdown been more apparent and more poignant than in the pictures of unemployed migrant workers walking hundreds of kilometers to get home. 

The US President has already called out the possibility of the effect of the lockdown being worse than the disease it is meant to address. Bolsanaro of Brazil has gone even further, stating that a few will die, but most will be unaffected by the virus. The leaders of many other countries though, including India, have acknowledged the economic distress, but have taken the position that the cost of not having a lockdown is too high. Besides creating a unique situation in which the critics of the Indian PM might have the US President in their corner, the immediate consequences of the lockdown across countries have raised the question: if a lockdown was the best response to the pandemic. 

Some have argued that maybe it would be better to let the virus claim its victims, fight the war in the hospitals as best we can and let other aspects of life be. This more extreme opposition harks back to UK's stated policy until a few weeks ago. Some others, particularly in India, have argued against the way in which the lockdown was implemented, positing that the government should have given people more warning. This, the claim goes, would have potentially avoided the problems that migrant labor is facing. These are both legitimate concerns. The debate around the questions that they raise will determine the decisions that governments will take, and these decisions will continue to affect our lives long after the passing of the pandemic itself. It is therefore imperative that we address both these suggestions as carefully as possible.

Counterfactual 1: cure worse than the disease 

If the case casualty rate (deaths/no. of confirmed cases) seems to be around a relatively low 4%, is it worth taking destroying the lives of so many; pushing many into poverty and starvation? A recession also claims lives, and particularly in the case of poorer countries, the toll can be severe and long-lasting. In order to determine if the lockdown is indeed a better policy than no lockdown for the situation we find ourselves in, we need to evaluate the counterfactual. A caveat that must accompany any such evaluation is that we will have to rely on many assumptions and there is no way to know with certainty 'what could have been'. And the uncertainty will increase as the days pass by, making it even more difficult to hazard a guess about what could have been if there was no lockdown. 

Most of the detractors of the lockdown also concede that even without a lockdown it would not have been business as usual. But point out that with the widespread acceptance of some reasonable form of social distancing, the effect of covid19 is not likely to be much worse than a very bad flu season. This implies that hospitals will get a large number of people coming in, but only a small proportion of them will die. In this scenario, even though the number of dead will be quite high, a countrywide lockdown might seem a little excessive given the costs that it imposes. Statistics on the effect of flu from the CDC provide some perspective and lend some credence to this view: each year, in the United States, on average 36,000 people die from flu-related complications and more than 200,000 people are hospitalized from flu-related causes. Even in the 2009 swine flu epidemic which led to almost 60 million infections in the US alone, only 12000 died, and there was no lockdown. Consequently, the economy which was already under tremendous strain did not suffer any significant adverse effects due to the epidemic. 

In order to get a more reasonable estimate of how things would have played out without a lockdown, it is pertinent to check if the numbers underlying this proposition stand up to scrutiny: 

1) Even if we take the proposed 4% as the true case casualty rate, small proportions do not mean small numbers. If the size of the infected population is large enough, the number of people requiring urgent medical attention will be very large. Therefore, the only way to reduce the number of patients requiring urgent care seems to be to reduce the possibility of getting infected. 

2) The comparison of the current outbreak to a very bad flu season misses out a key detail. This virus is not replacing the flu, it is going to supplement it. Increasing the numbers even further. The Swine flu data isn't particularly useful either, as effective antiviral drugs were made available early on leading to far fewer serious cases. 

The possibility of affected patients overwhelming hospitals is a nightmare scenario for a country like India. However, some of the consternation in India, particularly in the light of the migrant labor crisis seems to be driven by a low number and low growth rate of the confirmed infections relative to countries suffering the worst of the pandemic. This needs to be put in the context of the rate of testing. As of 27th March, India has conducted only about 19 tests per million people, one of the lowest in the world and very likely the reason behind low confirmed infections. The US provides a prominent example of numbers rising with numbers of tests. This should be of particular concern to a country like India, which already has a very high disease burden along with a weak public health infrastructure. The state of Jharkhand, for instance, has 1 doctor every 8700 people. Increased demand on this structure by a rapid surge in numbers of Covid19 patients will lead to high mortality from other diseases which will not get the required treatment. This will be made infinitely worse if health care workers get affected, reducing the size of the already small pool of medical professionals available to treat any disease, not just covid19. In all of this, the worst affected will be the people with low access to high-quality health care. 

These are not new arguments, they have formed the core of the recommendation to flatten the curve. Less severe measures than lockdown were tried in many countries: people were asked to maintain social distance, avoid non-essential travel and self isolate in case of recent international travel or if there were any symptoms. The results were not encouraging. Most of the countries that tried the milder measures in the early days swiftly moved to curtail individual choice. The possibility of huge externalities, with the action of one affecting many others and on the evidence of the indiscretions of many people, the only way to stem to tide seemed to severely restrict movement. 

It stands to reason that if the only way that the virus spreads is by people being in close contact, then fewer people being in close contact should slow it down. Yet the numbers of confirmed infections continue to grow. This also implies that in the absence of stringent measures, the virus would have spread even more rapidly. Now, to expect that the economy would have continued to function as it always has in the face of rising infections and possibly deaths is to presume that people have no regard for personal safety. While a few deviants can compromise a large society to the virus, we would need many, many more to keep the wheels of economy running at anywhere close to normal. 

An Indian media house recently framed the debate as one between lives and livelihoods, this seems to suggest that the choice is between an economic recession and saving lives. However, if there are no lives, there are can be no livelihoods, if lives are lost, livelihoods will eventually be lost, one way or another. The counterfactual to a lockdown, on the basis of the evidence we have coming in from Italy, Spain and other worst-affected countries, seems to be an economy which might have trudged on for a few weeks before collapsing to a position very close to one it is likely to be in right now, with all its concomitant effects. The economic impact of this non-lockdown slowdown will still be disproportionately high for the underprivileged, with a body count that will likely be much higher. 

Counterfactual 2: cure should have been better administered

Pictures of hundreds of thousands of migrant workers from across India have led many to question the urgency with which the shutdown and the subsequent curfew measures were imposed. How is it that despite having had the information for many weeks, the central government went from requesting a self-imposed 'people's curfew' to full lockdown in a matter of 3 days. If the process was more spread out, people were given prior warning we would not have the situation that we face today.  Migrants would have made arrangements to either travel to their native states or have explored ways and means of surviving where they were residing. 

The urgency of the move, whether stemming from incompetence or other more sinister motives, seems particularly baffling as India did not really have an obvious Wuhan like epicenter of the infection that needed to be insulated from the rest of the country. Further, if so many are in standing and cheek by jowl, did the outcome not beat the purpose of the lockdown. Both of these propositions require careful consideration, particularly because this tragedy is playing out as we speak while the threat of the Coronavirus is still in the future. And if the lockdown is going to be longer than currently stated, similar questions will arise again, very soon. 

In order to evaluate these concerns, let us consider a counterfactual in which the shutdown on March 22nd would have been announced 7 days in advance on March 15th. The news would have taken time to trickle down, but in a few days, it is likely that buses and trains would be bursting at their seams. If the mass exodus of migrant labor to (mostly) eastern states around the festivals Diwali/Chhath is anything to go by, 7 days would be inadequate. But these are extraordinary times and maybe arrangements could be made for additional trains and buses to take people to their destination of choice. In this best-case scenario, maybe we would not have had the current crisis. However, even this is not without serious problems:

1) The most obvious problem is the rush in the trains and buses would also provide fertile grounds for the spread of the virus. This seems to suggest that a mere preponement would not have addressed the problem of large numbers of people being in very close contact. In fact, it is possible that in this scenario more people would have chosen to return 'home' due to trains and buses being available. At the moment, it is quite likely that only the most desperate are taking the perilous route home

2) While it is true that India does not have a Wuhan like epicenter, the virus was imported into the country via people returning from other countries. International travel is limited to certain sections of Indian society and is likely to be highly concentrated in large cities or certain prosperous states. Most of the internal migrants would be traveling from these very prosperous parts of the country to poorer parts with weaker health infrastructure. If it is going to be tough for Maharashtra to deal with the surge of Covid cases, it is going to be almost impossible for Bihar. Facilitating travel to the hinterland would spread the infection to the poorest parts of the country and with more people traveling the spread would be faster. 

3) In times of rapid change, it would be unreasonable to expect that all information would be available to all decision-makers. It is very likely that many who did not choose to travel in the 7 day moratorium period will subsequently change their minds. Driven either by the continual decrease in economic activity or simply by the desire to be home, around near and dear ones in this time of great danger. 

This alternative scenario does not seem to be leading to outcomes that are any better than the one that is currently playing out. Further, the economic impact of the lockdown would not be any less severe in the counterfactual than it currently is. The sight of people cramming into trains might not be as heart-rending as the visual of people walking across state boundaries, but it is not clear that prior intimation of the lockdown would have alleviated the problems we face today. In fact, it might have made things worse. The option to call off the lockdown or to not have had one in the first place would have also likely disproportionately affected the people that are currently suffering the most. 

What now? 

While historical hypotheticals are useful in guiding future policy decisions, and there will be a time very soon when these questions will have to be asked again. But very rarely can the clock be turned back and insights gained be used to address the problem at hand. What might still help address the current problem, if the argument in favor of lockdown is persuasive enough, is setting up temporary camps with provisions of food and water and more importantly, testing. Once it is established that the person carries no risk, arrangements for travel can be made via trains to the capitals of their respective states. These arrangements must be made by the central government to avoid any inter-state haggling. Once in their state capitals, state governments can make arrangements for people to get back home. 

The hurried decision on behalf of some state governments to arrange for buses without adequate measure to test the ones traveling might come back to haunt the government. But it is not without cause, for most of us the pictures and videos are heartbreaking, for elected politicians they can be career-ending. In fact, as the crisis unfolds, the central government seems to be withdrawing many of its initial curbs. Apart from the lack of administrative capacity, it is tough to understand this worst of both worlds approach: we suffer the worst of the lockdown, as the virus continues to spread and will eventually bring more hardships, economic and otherwise. An oft-repeated statement is recent times is that in the fight against Coronavirus, a society is only as strong as its weakest link. The way forward is to strengthen the weakest link and try as best we can to fortify them against starvation and the risk of being infected.     

A friend recently pointed out that societies tend to pass down stories of past calamities to make sure that the next generation is prepared. In government, that institutional memory is codified in the idiom; look back, move forward. In the face of any abnormal circumstances, find previous instances of similar problems and draw on the experience of people who lived through times. In the present crisis, I believe our collective societal memory has failed us. Governments and citizens alike are ill-equipped and ill-prepared to deal with this crisis. In times like these, it is best to remember that there no good outcomes, only bad and very bad ones. Winston Churchill, after leading the UK to victory in WWII, lost the subsequent election. In this global war against an unseen enemy, the leader who leads their people to victory may not end up being the most popular one, history though, will remember.    

Thoughts and Predictions from March 18th, 2020

On Decision Making in a Global Pandemic

Until January 2020, anthropogenic climate change was the most clear and present danger facing human civilization. We were told we had to act soon and we had to act collectively to avoid the worst effects of increasing global temperatures, and by all accounts, we still have to. All the concerns around decision making at different levels, from individual to inter-governmental, that have fuelled the climate change debate have been brought into sharper focus by the unfolding Corona Virus pandemic. The questions are similar, but the timeline is much more compressed. 

What you or your government does or does not do today has an impact today, not 25 years into the future. Predictions can be substantiated or be shown to be worthless in a matter of days. And the decisions which rely on and simultaneously impact these predictions have to be made in an environment that is constantly evolving. Uncertainty abounds and the need to establish paradigms of sound decision making has scarcely ever been as urgent as it is today. This makes it imperative to revisit the basic, time tested principles of incentives and tradeoffs that underlie the choices we make. 

Context

As recently as a week ago, Coronavirus seemed a distant concern that only paranoid bothered with. 

In fact, on the 18th of March, I had received an email from an American colleague with the subject line: "While the world panics, India seems to be doing just fine. Yes?". And it did indeed look like we were doing fine. The confirmed case numbers were very low, governments had not taken any directed measures and while the university I work at had suspended classes, there was more of a holiday mood all around. But to anyone looking at the numbers more carefully, the prognosis was not very bright. I had responded to my colleague's question with a doom and gloom prediction (which I do not think it would be wise to share at this point in time) half hoping for some directives from the government. 

On 20th March we got the first clear sign of government action. The Prime Minister asked all Indians to observe a 'people's curfew' on 22nd March from 0700 hrs to 2100 hrs. He also asked everyone to engage in a collective show of solidarity with the women and men at the frontline of the crisis by clapping or clanging plates for 5 mins at 1700 hrs. Many praised the PM's initiative to unite the country and rekindle the spirit of lending a hand like the wars of 65 and 71. Many others lamented the gesture as a case of too little, too late, with particular consternation at the over-enthusiastic groups of people who took their show of solidarity to the streets or worse, celebrated their contribution to the nation's cause by having a post-curfew party. 

On the day of the people's curfew, many state governments announced lockdowns, taking many by surprise. Since then a nation-wide 21 days curfew has been declared and the government machinery which until then seemed intent on avoiding panic sprung into action. Though it still seemed incapable of grasping the magnitude of the challenge before them, possibly handicapped by the old dictum of the British system of bureaucracy: lots of things should be done, but nothing should be done for the first time.   

Individual's decision problem

As a species that evolved to survive the African savanna, we tend to seek comfort in groups. This instinct serves us well in times of danger. But congregating in groups is exactly what we have been asked no to do in order to limit the spread of the virus. So before we get into the nitty-gritty of the tough decisions that individuals have to make it is important to concede that the present crisis challenges ingrained habits and the road ahead is going to be very difficult. 

The WHO guidelines on what is expected of individuals are pretty clear, however, they are not straightforward to adhere to. For instance, it is almost impossible to not touch your face or keep away from surfaces that might have been touched by others. Hence, we had more the more severe, but easier to implement measure of quarantining people. The severity of the quarantine was sequentially increased from being initially restricted to high-risk cases to a generalized lockdown. The increase in severity of the measures has at least partly driven by the inability or unwillingness of individuals to adhere by the less severe ones.    

Why is it that even in the face of a demonstrable threat, people have not taken adequate precautions: violated quarantine, traveled long-distance, even partied? The choice boils down to the individual perception of the opportunity cost of being locked indoors. For instance, if none of my friends have to go to the office, more people can join my party, increasing its payoff and consequently increasing the opportunity cost of maintaining quarantine. On the other hand, the opportunity cost of partying is the increase in the probability of the individual getting infected with a deadly virus due to attending a party. But before we pontificate on the obviousness of choosing to avoid a party in these times, consider that on average 10 people die every day on the railway tracks of Mumbai's suburban railway. Our subjective perception is not very well tuned into evaluating the probability of our own mortality, leading to many flawed decisions. We will revisit this problem of errors in estimation in the next section. 

   

Further, it is obvious that the impact of the decisions made by individuals is not limited to the decision-makers. If a person had increased their risk of infection, they have joined the chain of infection, becoming a potential vector that increases the probability of others being infected. This (negative) externality whereby the choices of an individual affect others; complicates decision even more as the social cost of an action, say organizing a party, is much higher than its personal cost. The standard prediction of an introduction to economics course in such a scenario would be that people will over-engage in such activities. Climate activists have been pointing out a similar problem, where individuals consume more fossil fuel than is socially optimal as the cost they pay individually does not reflect the cost their decision imposes on the entire society.  

So, the deck is stacked against us (1) we need to do things that go against our basic instincts (2) we seem to have limited ability to gauge the cost of an activity in terms of probability of mortality (3) even if we can take our own mortality into consideration, our decisions impose costs on society that are difficult to estimate. It is for these reasons that governments across the world, given the urgency of the situation have now started introducing the extraneous cost of fines and/or punishment to get people to comply. From the UK to Germany to India, law enforcement agencies are being empowered to make sure that people comply with lockdowns. We have forfeited our freedom to make independent decisions and in the process demonstrated our inability to deal with immediate and urgent threats as individuals. 

The way forward

France has its army policing the streets of Paris and this might very soon be a reality for the big cities in India. But while their presence will be deterrent, it will not completely eliminate the possibility of individuals violating the lockdown. They are not omnipresent and there will be opportunities that can be exploited by sufficient motivated individuals: those for whom the opportunity cost of social isolation is very high. 

Now, particularly in a poor country like India, there is going to be a very large group of daily wage earners for whom the cost of a lockdown is going to be very extreme. As we get deeper into the lockdown, even people with monetary resources will start running out of food. The arrangements that governments are making might help some, but if the initial reports are anything to go by, there is insufficient state capacity to provide food materials to millions of people. If the lockdown extends for any longer than the current 21 days, well, we might be getting too ahead of ourselves with that hypothetical. But if the choice is between increasing the probability of getting infected and starvation, it is not too difficult to imagine what even the most level headed amongst us would choose to do.  

For now, it is imperative to recognize the failings in decision making that led us to this situation and make amends, to the extent that we can. Our estimations of incentives and tradeoffs depend on the assumptions we about the repercussions of a decision, so it is relevant to identify the ways in which they can go wrong. Consider the following situation: person A is in a cave, A's decision to leave the case depends on whether there is a tiger outside the cave. There are two possible kinds of errors that A can make: (1) assume that there is a tiger outside the cave when there isn't one (2) assume that there is no tiger when there is one. A reasonable argument can be made that error (2) is far more dangerous.  And therefore it is very likely that we evolved to avoid making the (2) type of error, erring more on the side of being cautious than cavalier. While that may be true of the species generally, in our tendency to commit (2) errors, we are likely distributed over a spectrum ranging from extreme paranoia to extreme risk-taking. This is why even under normal everyday circumstances we observe a disparate range of responses to the same situation. The same tendency that makes someone a risk-taking entrepreneur, also makes them take more risky decisions in times like these. 

In addition to the extreme risk-takers, there is also the fact that modern civilization has created an environment in which (2) type errors are not as risky as they would have been in times gone by. This is not a critique the advances that we have made in modern medicine, engineering, and governance structures, it is merely to point out that by reducing the cost of errors we have made people more likely to make errors even in times when the cost is likely to be very high. And while this is more true in the richer countries, the well off in the global south has not been immune to these changes. In the last few days, there were exhortations by the ones in the know to their near and dear ones to buy basic food items. But in times of Amazon pantry and Bigbasket, it is so difficult for people to imagine food shortages, that many ignored the advice, only to find themselves in a perilous situation with the implementation of the lockdown. It seems that paradoxically, the progress of human civilization might have created an environment that endangered its further progress. 

How do we address this? Possibly the best way forward is to at least in the current scenario: (a) try to consciously move toward the paranoid end of the scale (b) try to maximize considerations of social costs of your actions by thinking of people around you who your actions might immediately impact. Listen to interviews of experts who have been shouting their lungs out for the last 2 months (an example: https://www.youtube.com/watch?v=dcJDpV-igjs). With the proliferation of the internet, there seems to have been a growing distaste for experts, people who have dedicated many years to understanding and addressing a particular problem. Now may not be the best time to undermine the importance and relevance of knowledge accumulated by the experts. Listen to the stories coming in from Italy and Spain imploring the rest of the world to not make the kind of mistake they made. 

Can the experts be wrong? Of course, the increasing temperatures might yet drive the virus away or maybe the threat was overstated. While no one can guarantee with absolute certainty that the experts have not committed an error of type (1): they have said there is a tiger, when there isn't. And if that is the case, we will find out soon enough. But, if they are right and we commit an error of type (2), the consequences might be too catastrophic to consider. 

Stay at home, stay safe. 

On the Gift of Time

Masroof zamana kyun mujhpe,

Waqt apna barbaad kare?

-Kabhi Kabhi (1976)

(Why should this busy world waste its time on me?)

Premise

24 hours in a day, 7 days in a week and 52 weeks in a year. In a world increasingly beset by inequalities, time is an equal opportunity provider. It does not care if you are rich or poor, party-animal or recluse, slacker or workaholic. Warren Buffet, Elon Musk and I, all get the same amount of time. There is no new technology, no app, that can (yet?) increase the time available to us. There is however plenty that modern technology has done to place increasing demands on our time. The choice of things to do available to anyone with a smart phone is enormous: from playing candy crush to writing a book; offering almost endless possibilities to amuse and entertain ourselves. All these possibilities make it very difficult to value time.

A commonly used measure of value is money. The money value of time suggests that the time of a high-flying corporate executive is much more valuable than of a retiree. But the retiree could spend his time watching a movie instead of indulging his/her grandchild. To the extent that our individual valuations are affected by options available, in recent times the premium on everyones time has gone through the roof. There is always something 'better' that we could be doing, learning, being more productive, watching a movie, playing a game, browsing Facebook. 15 years ago, if there was no good show on TV at 6pm in the evening, the most common way to pass-time was to go meet friends (real people, not the show). Today, they could just look up re-runs of friends (the show).

People and Time

Spending time with people is messy business. In some case the complaints never seem to end, in others unbounded enthusiasm and zest for living seem to be based on distorted sense of reality. Either experience may trigger a negative evaluations of our own lives. People can also be terribly boring, not all of them funny and almost no one seems to get the idea that timing is the essence of humor. Then there are the troubles of trying to figure out what is appropriate and what is not, leading to many an awkward silence. There are those insufferable know-it-alls, the ones who just cannot stop arguing over trivial matters, the ideologues and if you have spent any time in the US recently, those who cant stop talking about trump. People also seem to have this tendency to impose negative externalities; shrill voice, second hand smoke, body odor, farts, grumbling stomach sounds. Spending time with people also imposes compromises. Its Tuesday and the special at this Chinese place is always great, but no one else seems to like it and so the Thai place it is.

All of this is made infinitely worse by the possibilities offered by a computer. The comic timing of all the characters in (your show/movie/game of choice) is always spot on. They do not bore you with their problems in life and even when they do, the drama is exquisitely scripted. You can eat anything you like (and can pay for) while watching them and there are no awkward silences. And if a show is too preachy, or a movie is too slow or a game is not engaging enough, its not much effort to change to a different one. You could also choose to be productive instead, why bother with characters when you can gorge on knowledge. Sate your curiosity with something that places no demands on you. You can still eat anything you like (and can pay for), zone out as frequently as you like and wikipedia still lets you click your way through millions of pages of information. Better still you could use the time to make sure that you do better at your job, write a better academic paper, get your PhD quicker. In fact, given how difficult and frustrating it is to spend some time with another human-being compared to the alternatives, it is astonishing to think that we evolved as social creatures.

The gift of time

By now this may seem like another bleak prognosis of the impact of technology on human society. But I am trying to address a much more important question: What is a good valentine's day gift? Is a bouquet of roses the best expression of your love? Or if you are the sort who does not restrict their celebration of valentines day to romantic love, how expensive should a greeting card for your mother be to adequately convey your love for her? Maybe it should it a sari this time, given that you have started earning. Or maybe given your recent wanderlust, a package tour to (fill in a fun/interesting place). How about your friends? A message on the Whatsapp group should be enough. To the really special ones, maybe a pm on Facebook, maybe even an email if its been a while.

In fact these concerns are not specific to valentine's day. We frequently struggle with the general problem of valuing relationships. How do we convey to someone that we value them and conversely, how to we figure out how much others values us? My contention is that only reasonable way to convey how much we value a relationship is with time. No amount of money or hard-work will make 1 hour of time less than 1 hour of time. This is specially true today when there is so much else that we could be doing with our time. Every moment spent talking to someone is time that could have been spent watching your favorite show or learning how to program better or working towards that big promotion.

A rich/spendthrift partner or spouse maybe able to splurge on trip. Does that mean that they value you more that someone who is poorer/stingier? Is the friend who gets you a job a better friend than the one who is struggling to hold onto his own? On the other hand; we all have time, we all have fixed amounts of it and it has become more valuable to everyone given the choices that we have today. Time offers a better way to both convey how much we value someone and to figure out how much someone values us.

The uncle who spent hours indulging you, the mother who gets up an hour early to make the breakfast you like, the father who spends his evening teaching you how to play cricket properly, the friend who finds time for a call, the sibling who suffers your long stories are the people who are more likely to value you and the relationship you share with them. We are all difficult people to spend time with and its tempting to sit by your computer browsing through valentines day catalogs to find gifts to give away. But this valentine's day gift some time to the people you love, see how that goes.

PS: In fact sometimes how much we value a relationship maybe determined by the time we spend on it. Like any precious resource, there is always risks related to investment of time. But the payoffs maybe high, how much of risk taker are you?

On the weak Indian state and Demonetization

In recent times, the current Indian PM seems to have become a proxy for the state for both his supporters and detractors. While such a simplification might be useful for the rhetoric used by both the sides, it does little to hide the fact that despite being used often, the concept of the ‘state' remains nebulous in India. When negotiating compensation for acquired land, PSU officials (even those from private firms in some instances) are presumed to be state actors. While on the other hand, our movies have been telling us for years that the ineffectiveness of our police is down to the ‘system’ (a common pseudonym for the state) being flawed, implying that the police is somehow separate from the state.

The many discussions on what the state is, its constituent elements and the many forces and counter-forces within it, can at times obfuscate the reality of the Indian state being very weak. The limitations of state capacity are apparent in its inability to ensure that teachers turn up at government schools and that doctors are present at health care centers. The state struggles to provide basic amenities like roads and electricity despite spending huge amounts of money on grandiose projects. This sorry state of affairs in the country has far too often been blamed on the lack of willingness of behalf of the state. But as I have argued before (refer On Tolerance: Intention and Verification), assuming mal-intent where ineptitude is more obvious is more an indulgence for our love of gossip than an exercise of our logical faculties.    

If the state lacks the capacity to implement, what good are policies, irrespective of the intent behind them. This creates a conundrum for a government democratically elected on the promises of better governance and crackdown against corruption. Corruption is endemic due to poor governance structures and governance is poor due to corruption.  A vicious circle ensues, which (even if the government has good intentions) is almost impossible to break. In this vacuum of policy options before the government, enter demonetization. 

Fiat currency works purely on trust. I accept a Rs. 100 note because I am certain that when I give it to someone else, he/she too will accept and value it at Rs. 100. The problems of counterfeiting aside, this system of trust works because the state (central bank) provides a guarantee that even if no one else honors a currency note, the central bank will. Therefore, if the state revokes this guarantee for some currency denominations, the trust that underpins its acceptance breaks down. Therefore demonetization offers a the government with a policy alternative which does not rely on the state’s enforcement capacity. The act of announcing the strategy (withdrawing the central bank guarantee) ensures that it will be enforced (at least in the medium run). 

Does any of this imply that demonetization is a good policy initiative? No, it does not, that’s an empirical question. This article merely offers a view on how this could be one of the few enforceable/implementable policy decisions that are available to a weak state. As for whether it will achieve its stated goals, or if it will cause more harm than good, that is a discussion for another day.