The Historical Lens for Policy Analysis
Updated: Nov 10, 2022
The Bengal Development Collective held a Policy Symposium with two important themes surrounding West Bengal's policy space. The first theme, "The Past and Future of Bengal's Development" had a panel of eminent professionals, whose feedback encouraged and guided the student presenters at the conference.
Dr. Lekha Chakraborty, an economist and professor at the National Institute of Public Finance and Policy, was the final speaker for this panel. This article is a summarization of her live address at the Symposium by our editor Malisa Ghosh, and has been approved for publication by the speaker.
Framework to analyse policy
Addressing the students and young professionals, Dr. Chakraborty emphasized the importance of hysteresis in forming policy. While analysing policies, in addition to data and trends, we should also focus on historical context and their relative successes or failures. Often, the answers lie in examining the political economy narratives surrounding the demographics, regions, etc. To discuss policy recommendations in all respects, an analytical framework is needed which interprets contemporary history as a major factor.
Speaking about the past and present is an art where the history of the past and the chronicle of the present have to converge very subtly. Amidst many things that are happening, it is important to capture the significant events which could have value in the ideas of the future. The dependence of an economy on history is significant to analyze, by choosing the appropriate lens to examine it.
The case of West Bengal
What could be the analytical framework to understand the past and present of West Bengal?
We should prioritize economic convergence as an essential goal for the development of the state. Thus, considering this goal, we need to answer the question - why equality in the processes is not leading to equality in outcomes?
We can say that we are not biased as politicians or policymakers and that we are performing well, based on an equal opportunity paradigm. For instance, schools and hospitals are being built based on the belief that equal opportunity to access will bring about logical equality of access among the people. But when you can’t remove the unfreedoms of the vulnerable population, this does not work. When the Leave No One Behind (LNOB) strategy is not applied, equality in processes will not translate to equality in outcomes.
According to studies in Access (In)Equality Index (2021), West Bengal holds a medium position among all the states in terms of access to healthcare, education, basic amenities, socioeconomic security and justice. While the country struggles as a whole to bridge the gap between urban and rural access, West Bengal has a composite index of 0.35 (compared to the highest score of 0.67).
Figure 1: Access to Basic Amenities (Source: Access (In)Equality Index 2021)
Figure 2: Access to Healthcare by states (Source: Access (In)Equality Index 2021)
The index is constructed through the successive aggregation of scores. Scores for individual indicators are aggregated to create the five sub-indices: access to basic amenities, health care, education, socio-economic security and justice, which are further aggregated to arrive at the final composite index score. Minimum and maximum values are set in order to transform the indicators expressed in different units into indices between 0 and 1.
This is the exact purpose of public policy - we have to remove the unfreedoms of people to get them to access the market or participate in the economy. So, we need to approach many complementary fiscal policies with the belief that equality in processes will not lead to equality in outcomes. We need to emphasize certain other elements in public policy which can remove the entry barriers of vulnerable people to access what the government provides.
The political economy of development
The political regime changes in the state will help us understand the contemporary and historical context behind policy changes. The surge of new thinking protests against land requisitions, minorities and youth activism are the non-economic factors contributing to the state's growth. We need to look into the fiscal policy and output gap, incorporating political economy variables in the model.
For example, big fiscal decisions were taken in 1977, after the revolutionary period from 1967-77, which contributed to the development in terms of poverty eradication, expansion of primary education, employment scheme, land reforms, and the implementation of the Panchayati Raj- the fiscal decentralisation. The principle of subsidiarity is becoming a crucial policy strategy. In order to take decisions closer to the people, we need to give more importance to decentralised democratic governance.
Hence, with LNOB as the prior policy objective, followed by economic convergence, we need to look at the broad regime changes to understand the economic growth process. Otherwise, if we don’t include these political economy variables and hysteresis, the macroeconomic factors, on which economic growth depends, might show only a partial picture.
Hysteresis is the dependence of the current state of a system on its history.
Economic convergence refers to development in rural regions reaching the level of development in the urban parts.