“Data-driven and purposeful action will get us there”: Prof. Karthik Muralidharan

The Tata Chancellor’s UCSD Professor delivers guest lecture on ‘India's State Capacity: Accelerating growth, improving health and more’ at IIMB, offering valuable insights into economics and governance

31 July, 2024, Bengaluru: Prof. Karthik Muralidharan, Tata Chancellor's Professor of Economics at the University of California San Diego (UCSD), delivered a guest lecture on ‘India's State Capacity: Accelerating growth, improving health and more’, at IIM Bangalore on 31 July 2024. The talk, open to Bangaloreans, was part of the ‘Healthcare Economics: Theory and Practice’ course, a Term 4 Elective offered by IIMB faculty of the Public Policy area, Prof. Allen P Ugargol and Prof. Arnab Mukherji, Chairperson, Post Graduate Programme in Public Policy and Management (PGPPM). 

Prof. Muralidharan, whose work has been published in reputed Economics journals and who has been an active contributor to discussions and debates on policy in India, including in the areas of health policy and education policy, focused his talk on enhancing state capacity with an emphasis on the health sector. He drew references from his recent book, ‘Accelerating India's Development: A State-Led Roadmap for Effective Governance’ which delves into the pivotal role of state capacity in unlocking economic potential nationwide, offering the audience valuable insights in the areas of economics and governance. The book systematically analyzes India’s governance challenges, especially in delivering essential public services, and highlights how these are limiting India’s development. Drawing on a wealth of research and practical insight, it provides actionable, evidence-based strategies, emphasizing state-level reforms, which are critical for India’s advancement. “The main motivator for the book is the imperative of state capacity, where the key actors are the politicians and bureaucrats”, he explained.

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“India is doing reasonably well, now the question is how we can do even better making the country achieve its full potential”, he said, while discussing the crucial role of state capacity and effective governance for economic growth, across multiple sectors and for the entire nation, using examples from the health sector. He listed the key challenges in the health and healthcare sectors in India as asymmetric information between providers and patients; inability of patients to negotiate prices during health emergencies, and behavioral biases away from preventive towards cure, which he said gets reflected in policy, leading to poverty trap. “Weak state capacity is a critical constraint in improving population health”, he lamented. “Government spending on health is relatively low – both in preventive public health and the curative systems; there are high rates of malnutrition and stunting, and air and water pollution result in critical health challenges. But remember, the most effective interventions may be outside the health ministry, like improved roads, broadband and market access, improving water and other resources, etc.”

Other than the health sector, he also discussed education, child development, farmer welfare, filling judicial vacancies, etc., using data from his own and other studies. “Better human development is a critical enabler, but it is constrained by weak state effectiveness in delivering essential public goods and services”, he pointed out.

While talking about the evolving role of state from before the 18th century to transforming into industrial in the 18th and 19th centuries, to the current welfare avatar of the 20th century with progressive taxation, social insurance, food security, healthcare, pension, unemployment insurance, etc., he observed, “The nature of state is highly correlated to the extent of democracy. Policies of the modern welfare state like PDS, school midday meal, etc. could be considered as moral triumph for the poor, but could also lead to challenges in public finance and political economy.”

He also touched upon the key elements of building an effective state, including data and outcome measurement; personnel management; public finance (expenditure and revenue); federalism and decentralization, and the state and the market. He also discussed ways to accelerate India’s development through education and skills; health and nutrition; public safety; courts and justice, social protection and welfare, and jobs, productivity and economic growth – and also how to make all this actually happen. 

Thereafter, the discussion focused on strategies for strengthening state capacity to improve outcomes in diverse sectors. “We need to think systematically and resolve the existing challenges. We have better technology now, more access to data, there is exponential rise in knowledge. Creation of new knowledge, transmission of that knowledge and acting on that knowledge, would be crucial. In the global landscape, India’s advantages are in terms of its size, demographics, democracy, diaspora, growth, macro stability, and a lot more. We already have a plethora of key health outcomes which are positive, in the areas of infant mortality, life expectancy, etc. Now, we need to prioritize preventive public health over curative private health. Policies need to be made to work better and quality of public expenditure needs to be improved. Budget allocation and its direction need to be looked into.” Terming his optimism as realistic optimism, he concluded by saying, “Data-driven and purposeful action will get us there.”

Earlier in the evening, Prof. Arnab Mukherji delivered the welcome address offering an overview of the session and introduced the guest speaker. About the book, Prof. Mukherji said, “While most other books on related topics talk about why development stagnates, Prof. Karthik Muralidharan’s book gives us a roadmap for development and what it takes for humankind to do better. It talks about actionable ideas and how to move forward.” Prof. Mukherji also moderated the Q&A session which followed the talk and delivered the vote of thanks.

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