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THE ECONOMIC SURVEY: CHAPTER 12

India on the Move and Churning: New Evidence

India on the Move The popular impression is an India where labour flows are relatively low. •  ES finds high levels of internal work-related migration in India.

•  An annual inter-state migration of about 5-6.5 million between 2001 and 2011. •  Railway passenger data analysis suggests an annual inter-state migration flow of close

to 9 million since 2011. •  Rising growth has led to an acceleration of labour migration flows

•  As the rewards of better economic opportunities have overcome the costs of moving. •  Language does not seem to be a serious barrier to internal economic

integration. •  The striking findings of this chapter and the one on trade is deeply puzzling. •  Across India, income and consumption outcomes are diverging

•  In the face of the equalizing forces of rapid internal integration of goods, people and capital

Importance of Migration • Historically, migration of people for work and education

has been a phenomenon that accompanies the structural transformation of economies •  And has paved the way for the release of “surplus labour” •  From relatively low-productive agricultural activities to sectors

enjoying higher productivity.

•  The resulting remittance flows increase household spending in the receiving regions •  And further the economic development of less-developed regions.

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Findings •  The pattern of flows of people are broadly consistent with

popular conception: •  - less affluent states see more people migrating out while the most

affluent states are the largest recipients of migrants.

•  The cost of moving for people is about twice as much as it is for goods

3 Findings There are three noteworthy findings that emerge. 1.  First, India is increasingly on the move – and so are Indians.

•  6-9 mil = significantly greater than the annual average number of about 3.3 million •  Suggested by successive Censuses and higher than previously estimated by any

study

2.  Second, migration is accelerating. •  In the period 2001-11, according to Census estimates, the annual rate of

growth of labour migrants nearly doubled relative to the previous decade 3.  Third, is that while internal political borders impede the flow

of people, language does not seem to be a demonstrable barrier to the flow of people

The Puzzle • All these interesting results throw up a deep puzzle as to

why greater internal integration has not led to a narrowing of income and consumption gaps across states

•  The co-existence of diverging incomes and consumption alongside the equalizing forces of internal integration of goods, people and capital is a mystery waiting to be deciphered.

Patterns •  The largest recipient was the Delhi region, which accounted for

more than half of migration in 2015-16 •  While Uttar Pradesh and Bihar taken together account for half

of total out-migrants. •  Maharashtra, Goa and Tamil Nadu had major net in-migration •  While Jharkhand and Madhya Pradesh had major net out-migration.

•  Out migration is a significant share of the working age population, both in the smaller states (Goa, Puducherry, Nagaland, Chandigarh) and largest states (UP, Bihar, Jharkhand, MP).

•  For India as a whole the annual net flows amount to about 1 per cent of the working age population.

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Measures Needed •  This acceleration has taken place in the backdrop of

discouraging incentives: •  Such as domicile provisions for working in different states, lack of

portability of benefits, legal and other entitlements upon relocation.

•  To sustain this churn, however, these policy hurdles have to be overcome.

• Portability of food security benefits, healthcare, and a basic social security framework for the migrant are crucial •  – potentially through an interstate self registration process.

Measures Needed •  While there do currently exist multiple schemes that address

migrant welfare, they are implemented at the state level •  And hence require inter state coordination of fiscal costs of migration.

•  The domestic remittances market, estimated to exceed Rs. 1.5 lakh crores, can also be leveraged to enhance financial inclusion for migrant workers and their families in the source region.

•  Such measures would vastly enhance the welfare gains of migration and encourage even greater integration of labour markets in India.

THE ECONOMIC SURVEY: CHAPTER 13

The ‘Other Indias’

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Aid = Growth? ES examines whether the pathologies associated (?) with foreign aid and natural resources internationally also afflict the Indian states. •  It calculates redistributive resource transfers (RRT) from the Centre and

revenue from natural resources for Indian states. •  There is no evidence of a positive relationship between these transfers and various

state outcomes •  Including per capita consumption, GDP growth, development of manufacturing, own tax

revenue effort, and institutional quality. •  In the case of RRT, there is even suggestive evidence of a negative relationship.

•  The question is whether RRT can be tied more strictly to fiscal and governance efforts on the part of the states as provided for by the Thirteenth Finance Commission.

•  Another idea that merits discussion is providing a universal basic income (UBI) directly to households in states receiving large RRT and reliant on natural resource revenues.

Two Indias •  The Ocean States—Gujarat, Maharashtra, Tamil Nadu,

Karnataka, Kerala, and Andhra Pradesh •  —have indeed grown faster and advanced more rapidly

economically

•  ‘Other Indias’: These states include not just hinterland India (the India of rivers) but also the India of forests, of natural resources, and of ‘Special Category’ status.

•  This chapter is devoted to those states that have not been at the mainstream of India’s development narrative

Peninsular Models Successful Peninsular India has offered three interesting and different models of development: 1.  The traditional East Asian mode of escape from

development based on manufacturing (Gujarat and Tamil Nadu)

2.  The remittance-reliant mode of development exemplified by Kerala

3.  And the distinctive, “Precocious India” model based on specializing in skilled services (Karnataka, Andhra Pradesh and Tamil Nadu

Other Models? This chapter studies two other less successful models of development: 1.  Those based on “aid” or special status 2.  And those based on natural resources.

•  The definition of natural resources includes coal, onshore oil and natural gas, major and minor minerals but excludes forest cover.

•  Large forest covers can also lead to a “forest curse” but is not analysed in this chapter.

•  The “aid” model is most applicable to the erstwhile ‘Special Category’ states: includes North-eastern states and Jammu and Kashmir

•  The natural resources model to: Jharkhand, Chhattisgarh, Odisha, Gujarat and Rajasthan.

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Impact of Redistributive Resources •  Earlier view of development: developing countries were poor because

they lacked capital. •  And they were unable to overcome this problem themselves, because their people

were too poor to save and hence I •  So the key to development, the only way to solve the conundrum, was foreign aid.

•  There was only one possible exception to this rule. •  Countries with vast amounts of mineral resources mine and sell them •  Allowing the proceeds to be invested in physical or human capital

•  Research has found it difficult to identify a robust positive relationship between aid and growth

•  India accepted aid, but tried to rely on its resources as much as possible, with the aim of winding down its aid dependence as quickly as possible.

•  This strategy has proved successful.

Why so? • One hypothesis is that aid perpetuates resource

dependency •  In the sense that since revenues flow in from outside, recipient

countries may fail to develop their own tax bases or their institutions more generally.

• And it is institutions, tax revenues, and incentives that have been found to be critical for growth, much more than overall resource availability.

• Another potential downside of aid is that it could trigger “Dutch disease”,

Dutch Disease? •  Named after the impact that discovery of natural gas in the

North Sea had on the domestic economy in the Netherlands. •  This windfall caused the real exchange rate to appreciate as

the extra income was spent domestically •  Pushing up the price of non-tradeables, such as services geared to the

local economy. •  The higher prices for services then eroded profitability in export

and import-competing industries •  De-industrialising the economy, with the share of manufacturing in the

economy falling •  Similar effects have occurred in Canada, Australia, Russia, and Africa.

Internal Aid? Despite these international examples and the lessons of India’s own experience with foreign aid, when it comes to development within India, the country has followed the path prescribed by the first development economists. •  It has provided extensive transfers to certain poorer states in

an attempt to spur their development. •  Has this strategy succeeded where others have failed? •  If not, what are the alternatives? •  ES examines the record of Indian states, to try to find an

answer – in part so that it can inform the process of reforming the architecture of fund disbursal by the Centre.

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“Aid” in the Indian Internal Context. Redistributive Resource Transfers: Evidence from Indian States •  State governments up to now have received funds from the

Centre via different channels: •  (i) a share of central taxes, as stipulated by Finance

Commissions •  (ii) plan and non-plan grants •  (iii) plan and non-plan loans and advances. •  These funds constitute “gross devolution to states” and the

entire amount is not “aid”.

Gross devolution Gross devolution entails a strong redistributive element. •  The 'Special Category' states have been heavily dependent on such

flows for their developmental needs vis-à-vis other states. •  However, redistributed resources from the Centre differ from

traditional “aid” in two important aspects. •  First, these are intra-country transfers and do not augment overall national

disposable income like foreign aid does •  Second, the donor-recipient relationship is also very different because states

benefiting from transfers are part of national governance structures that determine them.

•  Transfer of resources to states are done to avert regional inequalities and correct fiscal imbalances and are therefore extremely crucial.

•  The objective of the chapter is not to argue for the replacement of such transfers, but to examine their effects.

‘Redistributive Resource Transfers’ (RRT) •  RRT to a state is defined as gross devolution to the state

adjusted for the respective state’s share in aggregate gross domestic product •  Thus RRT is not identical to gross devolution. •  This adjustment is made to ensure that only the portion of resources

devolved to the states over and above their contribution to Gross Domestic Product is included as RRT.

•  ES shows the ranking of states, in 2015, in the descending order of RRT received in per capita terms and also per-capita gross devolution. •  The top 10 recipients are: Sikkim, Arunachal Pradesh, Mizoram,

Nagaland, Manipur, Meghalaya, Tripura, Jammu and Kashmir, Himachal Pradesh and Assam (all 'Special Category' states).

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Has RRT helped states perform better? •  ES plots the levels of per capita GSDP and monthly per capita

expenditure (as reported in the 68th round of the National Sample Survey Office [NSSO],2011-12) against RRT: •  Poorer states receive the highest transfers, exactly as one would

expect. •  However, despite such flows over the past few decades most of the

high RRT recipient states are at lower levels of percapita GSDP. •  Some of these states have significant catch-up to do vis-à-vis the

average •  These states also spend less on average on consumption. •  There are some notable exceptions.

ES also plots RRT against: •  Per capita GSDP growth, share of manufacturing in GSDP, and fiscal effort

(defined as a share of own tax revenue [OTR] in GSDP).

Governance? What about the quality of overall governance? •  This can be seen by relating RRT flows to a suitable indicator

of the quality of governance. •  Transmission and distribution (T&D) losses in the distribution of power

can be taken as a reasonably robust indicator of governance. •  Such losses reflect the quality of both infrastructure and institutions in

a given state. •  Again it emerges that the highest RRT recipient states have

lagged behind on overall governance •  All of this suggests there might be an “RRT curse”.

Impact of Natural Resources •  Initially, economists also saw natural resources as a way

out of the low saving-low capital development trap. •  But it has become clear that economies with abundant natural

resources have actually tended to grow less rapidly than resource scarce economies.

• Economic geographer Richard Auty coined the phrase “resource curse” in 1993 to describe this phenomenon

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Reason? Three possible channels of causation have been identified: 1.  First, the exploitation of natural resources generates

rents •  Which lead to rapacious rent-seeking (the voracity effect) and increased

corruption.

2.  Second, natural resource ownership exposes countries to commodity price volatility, which can destabilise GDP growth.

3.  Finally, natural resource ownership – like foreign aid -- makes countries susceptible to “Dutch Disease”.

In India? •  Some Indian states were bifurcated in 2000

•  – Chhattisgarh was split off from Madhya Pradesh, Uttarakhand from Uttar Pradesh, and Jharkhand from Bihar.

•  In this process, mineral wealth was reallocated in favour of the newly created states (nearly all of Bihar’s mineral wealth going to Jharkhand, for example

•  Creating a natural experiment that can be studied profitably J •  ES tries to discern the impact, if any, of the "resource curse" on

the new states (Jharkhand, Chhattisgarh and Uttarakhand). •  For this analysis the key variables are the same as identified in

the earlier section on RRT

Mineral Rich States •  The value of minerals is the sum total of:

•  fuels (coal, lignite, crude petroleum [onshore only] and natural gas) •  All metallic minerals •  Non-metallic minerals as well as other minor minerals.

• As per this definition the mineral resource rich states are: Jharkhand, Chhattisgarh, Odisha, Rajasthan and surprisingly Gujarat

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Success? •  At first blush, the mineral-rich states seem relatively successful. •  Their poverty ratio fell by around 31 percentage points over

nearly two decades •  Compared with 28.5 percentage points in the other states.

•  Viewed from a different perspective, however, the mineral states seem less successful.

•  The gains were not passed on equally to all sections of the population. •  In particular, the Scheduled Tribes (ST) population of the mineral-rich

states, which actually forms the predominant population in these areas, saw only a 17 percentage point decline in poverty •  Smaller than the 22 percentage points fall in the other states

Success? •  It is clear that resource-rich states, especially Jharkhand,

Chhattisgarh and Odisha (with the exception of Gujarat) are at low levels of per-capita GSDP, with low levels of monthly per-capita expenditure.

•  The negative relationship is being driven by the top four mineral rich states Jharkhand, Odisha, Chhattisgarh and Rajasthan.

In Sum •  But overall there seems to be no concrete evidence either in

favour or against a "resource curse" in the context of Indian states. •  The results are, however, relatively strong for levels of per capita

GSDP and consumption. •  With regards to manufacturing share and governance - no negative

correlation, •  But there is no strong positive relation either.

•  This implies that the resource rich states need to bolster efforts to counter any possible downsides of a "resource curse" that may emerge in the future.

Infrastructure and Connectivity: •  It is possible, that the "RRT curse" and "natural resource curse”

could be a result of poor connectivity •  in particular and poor infrastructure - physical, financial, and digital in

general that most of these states suffer from. •  This is clearly true of the north-east but also true of many parts of

resource-rich India. •  Enhancing connectivity - financial and physical- on a warfooting

will have a moderating effect. •  As the government has attempted for financial inclusion with the

Pradhan Mantri Jan Dhan Yojana (PMJDY), expediting the optical fibre network, etc.

•  However, despite the above observations some simple but important policy recommendations can be considered.

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Policy Recommendations 1. Redistributive Resource Transfers •  “Aid Curse” = dispense with RRT altogether? •  No - since in a federal system the Centre must play a

redistributive role: •  It will always have to redirect resources to under-developed states.

•  Rather, the Centre will need to find ways of ensuring that the resources it redistributes are used more productively.

•  There are, in fact, a number of factors that can be taken in the account while determining the quantum and architecture of redistributive resource flows to the states. For example:

Factors for RRT 1.  Redirecting flows to households:

•  One possibility would be to redirect a certain portion of RRT and channel the resources directly to households as part of a Universal Basic Income (UBI) scheme. (chapter 9)

2.  Conditioning transfers on fiscal performance: •  Perhaps future Finance Commissions could revert to the practice of the 13th

FC of conditioning transfers on the tax effort of states. 3.  Making governance- contingent transfers:

•  Given that some high RRT recipient states have performed better than others, it is possible that the capacity of states to utilize funds optimally plays an important role.

•  To encourage better governance and sound institutional practices, the fund transfer mechanism could explicitly include a few monitorable institutional indicators as criteria for receiving transfers.

Policy Recommendations 2. Natural Resource Revenues •  There is little evidence to suggest that a "resource curse"

exists in India • But equally there is no evidence to suggest that mineral

wealth has been a boon •  This suggests that there is a need to improve governance,

to ensure a more productive use of the resources, especially in the states that are relying so heavily on them

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Resource Revenue Administration •  The structure of revenue administration as it stands today

is such that the government receives royalty from the mining of mineral resources.

• However, in the present system there is further scope to bolster citizen engagement in sharing the fruits of resource extraction. •  To act as a constraint on large scale corruption and over-

exploitation of resources.

Resource Revenue Administration • With the intention of ensuring that the revenue from

minerals are utilized for the development and welfare of the citizens of the concerned states, the Mines and Minerals (Development and Regulation) Amendment Act, 2015 included the following in the Act: •  Establishment of a trust, to be called the District Mineral

Foundation (DMF) for districts affected by mining related operations.

•  The composition and functions of DMF are to be prescribed by the respective State governments.

•  The foundation shall work for the benefit and interest of persons affected by mining related operations.

A Mining Fund? •  One way to increase citizens’ participation is via creation of a

dedicated Fund to which all mining revenue must accrue. •  The assumption here is that minerals are part of the commons, owned

by the state as trustee for the people – including future generations. •  Therefore, the revenue from the natural resources should be saved in

a non-wasting asset- in a Permanent Fund. •  The real income accrued by the Fund can be redistributed to

citizens affected by and having a stake in the extraction of the resource.

•  An alternative structure would be to redistribute the gains from resource use directly into the accounts of the concerned citizens as part of a UBI.

In Sum •  In sum, large bounties-either in the form of redistributed

resources or natural resources- can create surprising pathologies, even in democratic India.

• Recognizing and responding to them creatively will be important to avoid making the errors of history.

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THE ECONOMIC SURVEY: CHAPTER 14

From Competitive Federalism to Competitive Sub-Federalism: Cities as Dynamos

Importance of ULBs •  Strong correlation between the capacities–resource and

people–of urban local bodies (ULBs) and their service delivery. •  ULBs could clearly raise more resources even allowing for

constraints that straitjacket them. •  Technology, especially satellite imagery, can play an important role.

•  Empowering cities will be critical but the political economy challenges from state governments are considerable, raising interesting questions for Finance Commissions. •  It may well be that a few successful models will provide the impetus for

wider change. •  Cities, like states, must compete with each other to unleash

dynamism. •  To competitive federalism India must add competitive sub-

federalism.

Urbanization & India • Urbanization is rapidly on the rise. • As recently as 1991, there were only 220 million Indians

living in cities, equivalent to about one-quarter of the population.

• By 2011, there were no less than 380 million, living in around 8,000 cities/towns •  At least 53 of which were home to over 1 million people.

• Urban Indians now form about one-third of the population •  – and they produce more than three-fifths of the country’s

GDP.

Challenges of Urbanization Urbanization will define the trajectory of Indian development. •  The exodus of rural Indians into the cities over the coming

decades will pose tremendous challenges for government •  Particularly the municipalities who will be primarily responsible for

providing the services that the new migrants – and established residents – will need.

• Success in overcoming these challenges will be vital if the nation is to seize the opportunities that migration to the centres of economic activity can create.

• But how have Indian Urban Local Bodies (ULBs) performed and what are the tools needed for them to succeed? ES attempts a preliminary assessment.

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Competitive Sub-Federalism •  Just as with competition between states is becoming a

powerful dynamic of change and progress •  That dynamic must extend to competition between states

and cities, and between cities. • Cities that are entrusted with responsibilities, empowered

with resources, and encumbered by accountability can become effective vehicles for unleashing dynamism •  So that to competitive federalism India can add, and rely on,

competitive sub-federalism.

Zipf's Law •  Contrary to perception, India and China have had very similar

trends of urbanization. •  But, If the magnitude of Indian urbanization is not special, the

patterns of urban size seem to be, in the sense of not adhering to Zipf's Law. •  The law claims that the city with the largest population in any country is

generally twice as large as the next-biggest; three times the size of the third biggest, and so on.

•  In other words, the nth ranked city would be 1/nth the size of the largest city.

•  This has been shown to hold true for many countries but not so for India.

•  Many of the smaller cities are unusually small (they lie below the line of best fit in Figure 3c). And contrary to what one might think, so are the bigger ones.

Small Cities? There are many reasons why the large cities are unusually small. 1.  One explanation might be that their infrastructure is

overburdened. 2.  Another is that India is land-scarce relative to most countries,

discouraging migration particularly because distorted land markets render rents unaffordable.

3.  Further mobility in India is limited by strong place-based preferences embedded in deep social networks in India

•  In the coming years, India’s urbanization rate should begin to converge with those in similar emerging markets, rising to 40 per cent by 2030. •  And much of this urban growth is likely to take place in the bigger

cities, possibly bringing the country in line with Zipf ’s Law. •  This will create opportunities – and risks.

Key Challenges •  The primary responsibility for development of urban areas

lies with the state governments •  And the municipal corporations, municipalities and nagar

panchayats, commonly known as urban local bodies (ULBs).

•  These levels of government face major and inextricably linked problems: poor governance capacities, large infrastructure deficits and inadequate finances.

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Fragmentation • ULBs face a governance challenge: Cities do not have a

single city government or a local self-government, leading to functional overlap.

•  There is a significant fragmentation of responsibilities and service delivery across a gamut of institutions: the municipality, state departments (Police, PWD, Health, Education, Housing), and parastatal agencies or civic agencies reporting directly to the state government.

•  There are also transparency/ accountability issues, as even the most basic information on ULBs finances and quality of basic services is lacking in many cities •  In part because implementation of the eGovernance initiative has

not been uniform.

The Infrastructure Deficit Challenge The second challenge is the infrastructure deficit. • Productive and healthy urbanization requires efficient

public services delivery. •  But every Indian city faces serious challenges related to water and

power supply, waste management, public transport, education, healthcare, safety, and pollution.

•  As against the Millennium Development Goal (MDG) target of 77 per cent, India has managed to provide access to sanitation to only 63 per cent of the population by 2015.

• As per the ranking of global cities based on urban infrastructure (State of World Cities 2012/13), New Delhi and Mumbai are placed at 47th and 50th positions, respectively

Expenses • According to the High Powered Expert Committee (HPEC)

appointed by the Ministry of Urban Development (MoUD), about $ 39 lakh crore (at 2009-10 prices) was required for creation of urban infrastructure over the next 20 years.

• Out of this total, about $ 17 lakh crore (44 per cent) was needed for roads and $ 8 lakh crore (20 per cent) for services such as water supply, sewerage, solid waste management and storm water drains.

•  In addition to these investments, the requirement for operation and maintenance (O&M) was separately estimated to be $ 20 lakh crore.

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Resources? Addressing this infrastructure deficit will require resources, some of which could come from the Centre and the states. •  The Fourteenth Finance Commission (FFC) has

recommended a grant •  ~ $ 87,000 crore to the municipalities for the period 2015-20 •  Constituting assistance of around $ 500 per capita per annum on

average.

•  The rest of the required funds would have to come from local resources.

Raising Resources But raising sufficient resources has not proved easy. •  The 74th Constitutional Amendment Act of 1992 provides for

the ULBs as the third tier of government •  And ‛recommends’ that state governments assign them a set of 18

functions under the Twelfth Schedule. •  The amendment, however, leaves it to the discretion of state

legislatures to devolve finances so that ULBs can fulfil these functions. •  Twenty-five years on, there are glaring inter-state disparities in

terms of devolution of functional and financial powers to the ULBs. •  Some states have not even allowed the municipalities to levy property

taxes. •  Either states are not devolving adequate financial resources to

ULBs or ULBs are not raising these resources on their own

Execution •  Moreover, even when powers have been devolved, exercising

them has proved difficult. •  Municipal own income comes from taxes; user fees; and

domestic borrowing: •  While property tax is the most important constituent of own revenues,

there are problems of low coverage, low rates, low collection efficiency, and lack of indexation of property values, making it a non-buoyant source of revenue..

•  ULBs by and large have not been able to levy adequate user charges to cover even the operation and maintenance costs.

•  Issuing municipal bonds has been challenging owing to the poor state of ULB finances and governance.

•  As a result of these challenges, cities face grave difficulties in securing sufficient revenues. •  Own revenue as a share of total expenditure is low. •  Per capita expenditure is too low in most of the ULBs

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Property Taxes Better service delivery requires more resources - where can they be found? •  Immediate scope for revenue comes from the property tax.

•  Property tax as a share of own revenue is above 50 per cent in Kanpur and Lucknow, but it is less than 15 per cent in Bhopal and Ranchi

•  So, the problem is not necessarily that ULBs cannot raise resources because they are prevented from doing so.

•  The major factors contributing to poor realisation from property tax are: •  The poor assessment rate •  weak collection efficiency •  flawed methods for property valuation •  loss on account of exemptions •  and poor enforcement.

Potential of Property Taxes •  In an exercise done for the Survey an attempt has been

made to assess the property tax potential of Bengaluru and Jaipur using the latest satellite-based imagery. •  The results estimate that currently Bengaluru and Jaipur are

collecting no more than 5 to 20 per cent of the property tax potential (Box 2).

•  Put differently, cities could increase their resources five to twenty fold.

• All efforts must be directed at realizing potential of property taxes.

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Conclusion Urbanization will pose considerable challenges for municipalities over the coming decades. •  But these challenges can be – indeed, must be – overcome •  ES has pointed out priority areas:

•  The first task is empowering ULBs financially. •  The analysis shows that municipalities that have generated more resources have been

able to deliver more basic services. •  The states should, therefore, empower cities to levy all feasible taxes. •  Municipalities also need to make the most of their existing tax bases. •  There is a need to adopt the latest satellite based techniques to map urban properties.

•  The Government should leverage the Indian Space Research Organization (ISRO)/ National Remote Sensing Agency (NRSA) to assist ULBs in implementing GIS mapping of all properties in the area of a ULB.

•  Property tax potential is large and can be tapped to generate additional revenue at city level.

Finance Commissions ULBs need to be empowered

•  But the political economy challenges—higher level bodies (state governments) needing to cede power and sharing resources--are daunting.

•  The big question here is whether Finance Commissions should take cognizance of this political economy challenge and allocate even more resources to ULBs

•  Or whether to respect the sovereignty of states and hope that they will themselves be forthcoming in decentralizing down – fiscally and goverance wise – commensurate with the needs of urbanization.

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Transparency Finally, data and transparency can play an important role here. •  MoUD should give greater priority to compile and publish

comprehensive data on ULBs and urban sector. •  Perhaps, grants to ULBs should be more tightly linked to

comprehensive and updated data disclosure and transparency by ULBs.

•  NITI Aayog should compile comparative indices of municipalities’ performance annually •  Based on the actual accountability and administrative capacity to

deliver the core public services.

Competition! • Competition between states is becoming a powerful

dynamic of change and progress, and that dynamic must extend to competition between states and cities and between cities.

• Cities that are entrusted with responsibilities, empowered with resources, and encumbered by accountability can become effective vehicles for competitive federalism and, indeed, competitive sub-federalism to be unleashed.

List of Chapters SECTION I: THE PERSPECTIVE 1. Economic Outlook and Policy Challenges 2. The Economic Vision for Precocious, Cleavaged India SECTION II: THE PROXIMATE 3. Demonetization: To Deify or Demonize? 4. The Festering Twin Balance Sheet Problem 5. Fiscal Framework: The World is Changing, Should India Change Too? 6. Fiscal Rules: Lessons from the States 7. Clothes and Shoes: Can India Reclaim Low Skill Manufacturing? 8. Review of Economic Developments 9. Universal Basic Income: A Conversation With and Within the Mahatma SECTION III: THE PERSISTENT 10. Income, Health and Fertility: Convergence Puzzles 11. One Economic India: For Goods and in the Eyes of the Constitution 12. India on the Move and Churning: New Evidence 13. The 'Other Indias': Two Analytical Narratives (Redistributive and Natural Resources)on States' Development 14. From Competitive Federalism to Competitive Sub-Federalism: Cities as Dynamos

• End of Lecture 5 • End of Economic Survey Module