The four horsemen of Indian policy analysis

Economic Times, 19 June 2013

Liberal democracy requires an interplay between ideas and action in shaping policy. In India, the failures of the universities have brought think tanks to prominence in public policy. The four key think tanks of Delhi have finished a generation change in leadership, and are now a lab where new processes for academic institutions will arise. Their process innovations will matter for the quality of economic policy reform, and will exert a positive influence upon the organisation of research in India more broadly.

Four think tanks in Delhi matter disproportionately:

With the problems of universities in India, and the low impact of think tanks outside Delhi, these four institutions loom large in shaping the climate of opinion, and the technical capabilities in Indian economic policy.

In the days to come, the role of think tanks in the policy process will go up, for two reasons:

  1. As India veers into middle income, the complexity of economic policy has risen sharply. In previous decades, achieving progress was relatively straightforward, it was about finding the rule that was holding the economy back and repealing it. Now, making progress requires a constructive agenda of designing laws and institutions, which requires much more knowledge.
  2. Alongside this, the capacity constraints of the Indian government have worsened.

Both these factors have led to an increased role for think tanks, not just in envisioning the future but also in operationalising it. The think tanks are facing a surge of requests for work and are scrambling to strengthen their HR and other processes in order to achieve commensurate ability.

In recent years, all four major Delhi think tanks have finished one major task: handing over to the next generation. NCAER is headed by Shekhar Shah; CPR is headed by Pratap Bhanu Mehta; ICRIER is headed by Rajat Kathuria and NIPFP is headed by Rathin Roy. In a country which ordinarily reveres the old, we have a striking change in scenery with an average age of the four directors of 50. It is reminiscent of CEO recruitment in the private sector, where the sweet spot is the age from 40 to 50. This handover represents an important generation change in the intellectual life of economics and economic policy in India.

While these four institutions are good by Indian standards, they are weak by global standards. As an example, RepEc has a ranking of the top institutions of Asia by academic output. In April 2013, NIPFP was at rank 41 and NCAER was at rank 87. One challenge for the four leaders will be to modify internal policies and procedures so as to improve this rank. The ultimate objective of a think tank is to exercise leadership in ideas on public policy, and to participate in policy reform. However, when a think tank renders policy advice, this should be grounded in high quality and state of the art knowledge, which is significantly measured by the RepEc rank.

In the international discourse, there is an emerging consensus about the six principles which are required for achieving intellectual excellence (link, link):

  1. There should be no government approval required for the budget; budget-making should happen at the institution only.
  2. There should be a reduced government role in core funding.
  3. There should be high inequality of wages: two staffpersons of the same seniority and rank should get different wages.
  4. There should be complete flexibility in recruitment of students.
  5. There should be a big role for competitive processes for gaining funding for research.
  6. It helps if the head of the institution has strong intellectual accomplishments.

The disproportionate impact of the four think tanks of Delhi stems from their greater compliance with these rules. The impact of the new leadership of these institutions will be primarily about the extent to which they are able to push further in these six directions.

The modifications of process design in the four Delhi think tanks matters for other academic institutions in India. Institutions across India that seek to improve themselves look at process design that is used at the four Delhi think tanks. In addition, improvements in the four will help kick off competitive dynamics.

Universities in India have floundered under the burden of awful constraints and process deficiencies. In the long run, India needs a more normal arrangement of society where universities are the crucible of new thinking. When the leadership of universities in India starts trying to do better, they will find a valuable pool of process knowledge, and human capital, in the four Delhi think tanks.

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