Year: 2008

Killing the Infant Industry Argument

We already saw the slaying of the “tariffs are good when you are growing!” argument last week.  Today it is time to link to an explanation of why the “Infant Industry” argument is bogus. The job has been expertly done by Tim Harford in Forbes.  Governments aren’t good at identifying which industries will turn out as winners in the global market place. The incentives that drive government officials drive them towards protecting aging industries, not growing ones.

Build Roads

I had once decided that if asked to write one of those schoolboy-type essays titled “If I became Prime Minister”, I would say that my agenda as the Premier would have just two items – reform the judiciary and build roads. It is but a slight exaggeration to say that every thing else will follow from that. Swaminathan Aiyar reports in today’s Swaminomics
that the second item of my agenda is indeed as important as I think it is. Ten lakh rupees spent on building good roads bring 335 people out of poverty, more than any comparable spending.

I had thought that if the NREGA had one redeeming feature, it was that infrastructure, specifically roads, would be built as a result. Alas, that is not to be:

For decades, rural roads in India were neglected by most states. Besides, rural employment schemes, starting with Maharashtra’s Employment Gurantee Scheme in the 1970s, created the illusion that durable rural roads could be built with labour-intensive techniques. In practice labour-intensive roads proved not durable at all, and those built in the dry season vanished in the monsoons.

This finally changed with the Pradhan Mantri Gram Sadak Yojana (PMGSY) launched in 2000. This, for the first time, ordained mechanised techniques to provide high-quality, all-weather roads to 1.6 lakh rural habitations without pucca roads. It also upgraded roads that had collapsed. Panchayats were made responsible for maintenance. Conversations with experts suggest that this is one of the best-functioning programmes in rural development.

In 2004, the UPA government launched Bharat Nirman, an ambitious infrastructure programme for rural areas. It aims to provide connectivity by having a pucca road, electricity, telecom and drinking water in every village of over 1,000 people. This overlapped with the PMGSY. Progress on Bharat Nirman has been spotty. But rural connectivity has at last become a high government priority, and this bodes well for the future.

The Undersea Cables

Wired has a good roundup of the news related to the two fibre optic undersea cables snapping. There is also a link to a rather long article on the history of undersea cables written by one of my favourite writers – Neal Stephenson – when the first cable was laid.

And does anyone know why I am not affected at all sitting here in Hyderabad? Neither my home nor my office connection is affected. Office connection I can understand, but home?

On the Eggs

Jai Choorakkot wants to know whether my attack on Dilip D’Souza amounts to a defence of reforms. That is a fair question to ask.  One of my pet peeves is that people believe that a successful counter-attack amounts to a defence of their own position. I’ve myself come down quite sharply on people whose defence of Mao amounted to saying that I am a hypocrite because I supposedly support Kissinger (or Pinochet – it was not clear who) So let’s accept that my attack on Dilip was an attack on Dilip, and move on to the question of reforms.

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The Only Workable Way

Dilip D’Souza, 29 January 2008:

Among other interesting jobs he held in the Indian bureaucracy, my late father was Mumbai’s municipal commissioner – the equivalent of a mayor – from 1969 to 1970. Low-cost housing was always his great interest, and for the last 14 years of his life, he ran a low-cost project in Mumbai’s northern suburbs founded on the cross-subsidy principle. It has about 5,000 subsidized flats, plus about 1,100 others and commercial space for sale at market rates.

My father died last September, but the project goes on. Why does it work? Because the subsidy is small, so residents pay close to market rates for their little flats, and because it has taken so long to complete – nearly 25 years. The slow progress troubled my father and his colleagues greatly. But they understood that in the convoluted world of Mumbai, this remains the only workable way to provide livable, sustainable housing for the poor.

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