‘Mechanism mapping’ for policy design

I just finished reading a recent working paper by Martin Williams, titled “External validity and policy adaptation: From impact evaluation to policy design”.

In this paper, Martin tackles the question – how will a policymaker apply evidence available to her to design a policy/programme that will fix a particular problem at hand? He first takes us through the ways in which we think of this currently – primarily by attempts to strengthen the external validity of evaluations – and points out the limitations of these approaches. The central critique is that most of this thinking puts the evaluators/researchers at the centre and tries to devise ways in which the evidence generated by their research can be generalised beyond their specific study samples. This is at odds with what a policymaker (in this paper, a public official in a given country) needs in order to make decisions about how to use evidence from elsewhere to design a policy/programme for her specific context.

The answer, Martin suggests, is ‘mechanism mapping’ – a five-step process where the public official lays out:

Step 1: The theory of change (ToC) of the programme that generated the evidence at hand;

Step 2: The context within which the programme ToC worked;

Step 3: The context at the destination – local factors that will affect a potential replication;

Step 4: By doing the above, interrogate the evidence with the new context, and suggest design modifications; and

Step 5: Iterate, until the gaps are plugged.

Sounds reasonably straight-forward, and would seem to function quite well as a way to break it down for a public official who needs inputs into designing programmes. At the same time, introducing a structured way to do this lends a degree of rigour that will benefit the process.

A point made repeatedly in this paper is that a lot of the thinking around research, evaluation and evidence is focused on the researchers/evaluators. As a result, many of these conversations focus on whether (and how) a certain body of evidence that has been generated would apply ‘elsewhere’, without necessarily specifying a destination for this policy design. Thinking about this from the perspective of the public official ensures that the problem is framed as “what tools do public officials need to apply evidence to their specific context” instead of “how can our evidence be applied in the design of public policy elsewhere”. This switch in perspective allows us to do more than just empathise with the constraints that public officials function within. It enables us to think of solutions that focus on the end-user, even if that might mean trade-offs in statistical rigour.

This brings me to an important factor in how this would work – is the availability of information, and the institutional set-up where the mechanism mapping might take place. How well equipped is a public official in a capital city of a developing country to do this? Who should he consult? Will he? How decentralised is policymaking in the said country, and how does that factor in? My first frame of reference is India, so please pardon my concern for size and complexity. It will ultimately boil down to having reasonable limits to such consultation, and to the amount of information that will be fed into such an exercise.

Another factor to consider is the capacity of public officials. At a time when even researchers hardly fully understand (or bother with) complex theories of change, assuming that public officials will do this on their own requires a certain faith in their capacity. Martin’s core experience of bureaucracy and public management comes from Ghana, where he spent two years working within the Ministry of Trade and Industry. This is reflected in what I think is a key characteristic of this paper – Martin’s ability to think like a public official. Working in a stable state with a reasonably functional public sector, as opposed to a nascent or a failing state, shapes one’s perspectives of state and bureaucratic capacity in significant ways. If your canvas is the former, you are more likely to trust that public officials are reasonably able to competently design and implement policies, and that their work lies within a stable policy context. But even so, public officials will need training and support. And researchers will need to be trained to resist the temptation to turn up their noses at these inevitably ‘messy’ exercises.

Below, is an illustration (this is not from the paper) of how a public official might approach this process, beyond going through the ‘mechanism mapping exercise’ – by considering the combinations thrown up by the interaction between “complexity of the ToC” and “complexity of Context”.  For simplicity, I present four scenarios, and in each, the responses a public official might have in order to move ahead with policy design. The top-right quadrant represents a complex programme ToC that needs to be applied to a complex context – a big challenge, where the response has to be a willingness to experiment and iterate. On the other hand, is the quadrant on the bottom-left, which is likely to be satisfied by technical fixes. Note that this figure does not directly mention ‘information gaps’, although a high level of complexity indicates a high probability of information asymmetries on both counts – in the ToC, as well as in the Context.

Capture

Finally, I did not forget to ask myself this – “did we not already know all this?” Like with a lot of the work on ‘adaptive management’ and PDIA, I think the honest answer is that we do, but certainly not enough of it, and not in a systematic manner. Good programmes travel, and policy adaptation is a continuous process – public officials (and other practitioners) learn and adapt continuously. ‘Mechanism mapping’ is a powerful tool to systematise this iterative learning process, and potentially, shorten the learning curve. In a context where the application of evidence to policy design cannot be taken for granted, this paper and its illustration of ‘mechanism mapping’ is an important contribution.

Here is the policy memo. What we need next is a training module for public officials – I hear its coming soon, to a website near you…

Advertisements

In 2016, Narendra Modi expanded the remit of the coercive state

Towards the end of 2015, reflecting on what determines the size of the state, I came up with these three broad categories. At the end of 2016, with a hindsight view of ‘demonetisation gone wrong’, I revisit that concept. These three categories describe the nature of engagement the state seeks with particular areas of policy. They are:

  • Coercive: These comprise areas where the state has the power to mandate and enforce compliance. Security, and law and order are obvious examples; as are taxation, and some kinds of regulatory power, such as determining food safety standards would fall under this category.
  • Prescriptive: There are areas where the state has the power to prescribe remedies. It sets standards and is at times able to employ some of its regulatory powers to enforce compliance. Mostly though, the role of the state here is to encourage the adoption of state-promoted guidelines. Managing education, by prescribing school standards and determining the curriculum, would be a suitable example.
  • Advisory: In this category, are areas where the state’s power to influence real outcomes is limited and the role of the state is mostly ‘advisory’ in nature, with little real power of enforcement. An easy example would be the efforts to inspire hygiene and cleanliness through a nation-wide mission to achieve sanitation. Innovation and flexibility are vital for a successful intervention.

A citizen-friendly state would keep its coercive powers to the bare minimum and expand the last category – the advisory function – through cultivating and strengthening norms that guide individual and public behavior. On the other hand, a state with authoritarian tendencies would be seen to be moving in the reverse direction by steadily expanding the scope of its coercive precepts.

On the 8th of November 2016, when the Government of India embarked on its demonetization exercise, it effectively expanded the realm of its ‘coercive’ powers. In its endeavor to seize currency notes from the hands of citizens and force them to deposit that money in the banks, India demonstrated a willingness to reach into a citizen’s private space and dictate what one could do with their money. By further restricting (indefinitely, it appears at the moment) the amount of money that one can withdraw, the state further compromised basic rights that were hitherto, guaranteed.

This is in line with Prime Minister Narendra Modi’s favoured development model. As a nation, we have been taught to want progress, modernity and comforts, but within the framework of a statist model, as opposed to that of a liberal democracy. In other words, we want to be a China, and not a Denmark. The government is continuously seeking ways to preserve and expand their power over the lives of people. That is the reason why an increasingly coercive state is their delivery mechanism of choice.

The latest spin in the demonetization narrative is the goal of going cashless – again, using essentially coercive power by inhibiting the size and nature of transactions one can carry out in costs, or by imposing costs to penalize cash transactions. This too, is one that would best fit within the state’s ‘advisory’ remit, but instead, has now moved into the ‘coercive’ category. The mode of payment one chooses for a transaction should be a matter of personal choice. We cannot claim to be a modern society if we are literally coercing people to adopt cashless methods. Technological advances are great, and they matter. But they are no substitute for state capability and intent, which must seek to deploy that technology to expand the choices available to people, not to constrain them.

Narendra Modi’s government has demonstrated its statist streak all along – from increasing the extent to which they meddled in universities and higher education and research institutes of repute, to launching government schemes to encourage start-ups. And with this final blow of seizing currency notes en masse, Modi has outdone himself.

A coercive state also fits a model of chauvinistic nationalism that the RSS seeks to promote. Attributes such as discipline (defined as not questioning the state) are essential building blocks of this project. No surprise then that in his New Year’s Eve speech, Modi repeatedly invoked the apparent sacrifice of citizens in complying with the rules and standing in queues during this demonetization drive. The attempt all along, is to turn the perceived inconvenience of citizens into a contribution towards a greater common cause.

2016 was thus the year when Narendra Modi’s statist tendencies were thoroughly exposed as he expanded the coercive nature of the state he controlled. In this narrative, critics are turned into caricatures who are against the nation’s progress. Patriotism too has become something that has to be coerced out of citizens. In the new year, this demands of us – citizens – to be ever so more vigilant, and willing to fight to preserve our rights. Our ability to resist the creeping expansion of the coercive state will determine the health of our democracy in 2017.

Judith Tendler, and learning from ‘good government’

On 24th July 2016, Judith Tendler, former Professor at the Department of Urban studies and Planning at the Massachusetts Institute of Technology (MIT), Boston, passed away. She was 77. A Ph.D from Columbia University, Judith Tendler spent several years at the United States Agency for International Development (USAID), before a long career as a Professor in MIT. A significant share of Prof. Tendler’s work focused on the Americas, but she also studied South Asia and parts of Africa over her long career.

Prof Tendler’s book: ‘Good Government in the Tropics’ (1997) is one of the most influential books in the field of international development — an essential reading for students of governance and public policy studies. In the book, Prof Tendler and her research associates studied four cases of successful government in Ceara, a relatively poor state in north-eastern Brazil. In each of the cases, the government at different levels played an effective role, facilitating and brokering relationships, and submitting itself to mechanisms which could be used to hold themselves accountable. Those were rare, but rich, examples of ‘good government’.

These cases highlighting the achievements of ‘good governments’ challenged the dominant pessimistic thinking about governance in the so-called ‘third world’. Prof Tendler argued that much of the advice from international development agencies to developing countries was based on an analysis of poor performance of the public sector and governments. This resulted in a tendency to ‘import’ good practices from the successful developed countries, as well as a resistance to looking deeply into poor countries to identify variations in performance. In many ways. Prof Tendler consistently challenged the pre-suppositions that development agencies and policy advisors nurtured and which, as a result, shaped the advice they dispensed into narrow straitjackets often unfit for the context in which they were to be applied.

One of the interesting, if surprising, conclusions of Prof Tendler’s research for the book is that local governments (or non-government organisations, for that matter) were not inherently any better at service delivery. In the 1990s, the push for decentralised governance was very strong, and several countries, including India, made significant progress in decentralising power to tiers of government closer to its citizens. At the same time, policymakers and advocates were locked in debates over whether decentralisation led to positive outcomes. In this context, a call to look beyond established models of decentralisation and look for variations in implementation in different contexts was highly valuable.

The researchers found that service delivery improved in Ceara not because the central government got out of the way and allowed the local governments and civic action a free hand, but because it involved itself in a self-interested fashion, monitoring delivery by local governments, and playing an active role in civic education. This was quite unlike the conventional thinking around decentralisation at the time, and we are better off for it. In the book, Prof Tendler does not argue that her cases represented the norm. Instead, her point was simply that the politics of implementation merit far more attention than it had so far received. More and more now, researchers studying public policy are expected to focus on ‘implementation’ — looking beyond ‘what works’ to the ‘why’ and ‘how’. The learning agenda that is fast gaining currency too has been enriched by this focus on implementation, as it takes organisations into reflecting deeper on how to make change happen.

The questions Prof Tendler posed about an uncritical belief in the merits of decentralisation, the ability of civil society as an agent to hold the government accountable, or the fatalism that prevails regarding the commitment of public sector employees, are highly relevant today in India. It has been clear for some time now that the model of decentralised governance in India will look different in each state, and rightly so. A single framework for analysis therefore, will not work. Similarly, hybrid forms of civic action continue to thrive, as there is increasing pressure to work with government, and yet retain its independence. Finally, implementation capacity of the state remains a challenge, as the state attempts to restore credibility. The experiments with technology-enabled solutions and motivational messages directed at the bureaucracy are efforts in that direction.

As we analyse public sector reforms, the work of Prof Tendler will remain a great source of insight: there is no silver bullet, other than incremental improvement, and evidence-based iteration.

Sue Unsworth’s ‘upside down’ view

Sue Unsworth’s work provides us a wealth of knowledge on governance and institutional change, stemming largely from her ‘upside down’ view of the conventional reality of the aid world. Here is a quick peek into some of her work – particularly, insights into how donor-approaches should evolve to engage successfully with politics.

Sue’s work with David Booth – captured in this paper, Politically smart, locally led development – presents seven case studies of problem-driven approaches that provide important lessons to donors, as well as a clear message that merely using new terminology without actually changing the ‘ways of working will not yield results. The authors suggest that chasing ‘international best practices’ often lead to imagined solutions that do not address the problem at hand.

…for politically smart, locally led approaches to become the norm, a more radical shift is needed in the way donors conceive development challenges and their role in addressing them. They need to abandon oversimplified concepts of ‘ownership’ and ‘partnership’, and unrealistic assumptions about the scope for outsiders to lead transformational change

This resonates with the PDIA community (Matt Andrews and co) who advocate problem-driven entry strategies, arguing that successful efforts at building capabilities require an unwavering focus on solving a specific ‘problem’.

Another important document was An Upside Down View of Governance, published in 2010 by the Centre for the Future State at Institute of Development Studies (IDS). (Here is an useful 15-page summary). The authors are clear about what the lessons for donors are:

progressive change can happen when people start to see that they have common interests in cooperating to create collective goods. There can be productive bargaining between public and private actors that results in positive sum outcomes (improved security, peaceful resolution of conflicts, more productive private investment, better public financial management, more inclusive public services). Moreover the processes of bargaining between state and society can themselves strengthen opportunities and incentives for collective action (including action by or on behalf of poor people) as well as the capacity of the state to respond.

Upside Down relied primarily on examples of (mostly) home-grown success stories from around the developing world – building a narrative around how one should view governance in these countries – in many ways, similar to Judith Tendler’s ‘Good Government in the Tropics‘ that focused on good government practices that made key sectors work in Ceara, Brazil.

Staying on donor strategies, there was another interesting piece, co-authored with Mick Moore in openDemocracy, that proposes the following set of questions to shape donor strategies, and operating in politically-informed and responsive ways:

  • What is shaping the interests of political elites?
  • What is shaping relations between politicians and investors, and might they have common interests in supporting productive investment? 
  • What might stimulate and sustain collective action by social groups to demand better services? 
  • What informal local institutions are at work, and how are they shaping development outcomes? 
  • Where does government revenue come from, and how is that shaping its relations with citizens?

Much of this has now become close-to-mainstream thinking, especially in donors such as DFID. Case studies of politically smart, problem-driven, adaptive approaches abound – from many parts of the developing world. Obviously, a lot still remains to be done in making this altered view a part of mainstream practice.   

Many of these ideas are beginning to inform donor approaches, particularly in fragile states. But adopting them as mainstream practice would imply a big shift in how donors see their role: from being experts with responsibility for “delivering” on the millennium development goals, to being much more effective facilitators of locally driven change.

But ‘doing development differently’ is not easy. There are several obstacles – rigid project structures, business cases, impatient donor desk officer, a weary community (of “beneficiaries” and on-lookers), etc. Only the brave donor desk officer will take on the bureaucracy of her own organisation. Donors, especially bilaterals, remain under pressure to deliver quantifiable outputs, and this leads to a perpetuation of business of usual models of delivery, driven by standard assumptions of ‘participation’ and ‘ownership’.

Perhaps the most interesting aspect of Sue’s work has been her insistence that none of her insights are in themselves, ‘remarkable’ or particularly innovative. And it is true. ‘Politics matters’ is a truism. What really matters is what we do with this realisation, and how we integrate it into our work. Watch her, in this ODI video, speaking on how ‘thinking and working politically’ can be operationalised in day-to-day operations of donors

Sue Unsworth will truly be missed. Here’s hoping that we can make her ideas continue to prosper.

The state is reclaiming power over tribal communities

Indigenous tribes constitute about 8% of India’s population–about 100 million people. Two superbly progressive pieces of legislation—the Forest Rights Act (2006) and the Panchayats (Extension to Scheduled Areas) Act (1996)—established a framework for local self-governance in demarcated (or “scheduled”) areas. The FRA clarified further that these communities had the sole right to sell proceeds from forests.

This has been the subject of an ongoing tussle between Maharashtra’s Forest Department and the Union ministry of tribal affairs. A recent Business Standard report covered this episode, illustrating how the tribal affairs ministry agreed to hand over control of forest management to the state’s forest department, after having initially insisted that tribal communities had exclusive rights over trade in forest produce. This is yet another instance that highlights how the implementation of PESA and FRA have been fraught with challenges–many of them genuine and yet many others a consequence of bureaucratic and political inertia, incompetence and malice.

As a columnist in The Hindu wrote last year, the process of documenting tribal claims is not an easy one, involving democratically constituted gram sabhas (village assemblies) as per the provisions of the 73rd constitutional amendment on panchayati raj and PESA. This is compounded by the ongoing power struggle between the bureaucracy and tribal communities–one that the latter is likely to lose unless there is robust political intervention on their behalf. One of the manifestations of this has been a limited interpretation of the acts, with governments recognising only individual property and not community ownership of land. This is sometimes attributed to a lack of evidence on the ground for the stated joint ownership. But that is mostly an excuse. From physical land surveys to mobile apps that harness satellite technology, there are solutions easily available to the tribal departments if they wanted to recognise and register community land.

Not recognising common property resources that tribes collectively manage and live off is not only economic injustice, but also breaks the (in many senses, highly evolved) traditional order of tribal societies. The assault on tribal lifestyles and livelihoods has been incessant–and is not tied to the ideology of any particular political party in power. It is no secret that states with a large proportion of tribals would like to be free from central regulations that restrict them from exploiting the resource-rich catchments that lie within their territory. But the union government has also been doing its bit.

Last year, the Hindustan Times reported how the Ministry of Environment and Forests (MoEF) had changed the law to throw open up to 40% of the country’s (ostensibly only degraded) forests to private sector management. First of all, ‘degraded’ forests are not as expendable as the MoEF makes them out to be. A former director of the Indian Institute of Forest Management, Bhopal, argues that, “Even the most degraded natural forests have 50-100 species of trees per hectare. For their end products, industries would hardly plant one or two species.” Allowing the private sector to use these lands for monoculture could have a ruinous impact on the ecosystem. Further, as reported in the same column, those guidelines also stated that tribal communities could access forest produce in only 10-15% of the land proposed to be leased out to private players. If implemented, this would be in contravention of the FRA that (as mentioned above) recognised tribal communities as the owners and managers of their forests.

Finally, here are my thoughts on these instances of the state reclaiming its powers over tribal communities, and their lands:

  • The government has largely struggled to make local governance work in tribal areas. When funds are allocated for local bodies in tribal areas, they are often not accompanied by the requisite hand-holding and capacity building to utilise funds and execute projects. This has been the case even in states like Kerala that are considerably ahead of others when it comes to local governance. Without better infrastructure such as roads and markets, these communities will continue to struggle to make good use of their forest resources.
  • While the eventual outcome (for the moment) in Maharashtra is disheartening, it is encouraging that the ministry of tribal affairs seems to have campaigned quite hard to protect the rights of tribal communities. Irrespective of the current decision, it leaves behind a paper trail that can be used by officials and activists in future. This is yet another reminder that the ‘state’ is not a monolith, and understanding that enables us to work much better with the state.
  • As mentioned above, political support is key; and in this instance, the dice was loaded heavily against tribal communities. With that in mind, we must lament the fact that while the minister for tribal affairs is a member of the union cabinet, he, just like the minister of panchayati raj, and drinking water and sanitation (other departments that are mandated to address issues critical to social welfare), is a relative political lightweight. What are the chances they will win a political tussle with heavyweight cabinet colleagues like Nitin Gadkari and Prakash Javadekar?

Governance in tribal areas suffers from many of the same problems that panchayati raj suffers from, and then some. There is an understandable degree of natural friction between the “development” priorities of the state and the “development” priorities of tribal communities, with a third perspective of the “development” priorities of civil society that is working to improve tribal welfare. Between these competing priorities, the state remains the behemoth, with an ability to invoke its power of eminent domain – part of which it had ceded through PESA and FRA. If the state today is seen to be reclaiming those powers, one must be very vigilant and hold it to account on what it does next.

***

This is my latest livemint column

What determines the size of the Indian state?

This is my latest livemint column

***

I want to clarify right at the beginning that I am not making the value judgement that this question might imply to some readers. I do not think small is beautiful, and certainly not so in the context of a state. There are circumstances in which the state should expand—both in breadth (scope) and depth (reach). Equally, there are circumstances where the state should contract, ceding space to private action.

Private action itself should stand for a wide range of possibilities – an individual’s efforts, joint citizens’ action, or organized enterprises. It is also misleading to think of the state’s role as being essential in contexts where the problem is daunting in its scale and implication. Constructing roads may be an area where the state should expand its footprint; managing schools and colleges are probably not.

This column does not offer a conclusive answer to the question of what the ideal size of the Indian state is. Rather, it focuses on the determinants of size. The discussion over the size of the state subsumes an assessment of state capacity (or its fitness), in terms of both the classical definition of the ability of a government to administer its physical territory, as well as its ability to maximize welfare for its citizens. On both these aspects, therefore, we should be examining the Indian state, looking at decisions and events that influence its size.

In order to do so, I introduce three broad categories.

1. Coercive: These comprise areas where the state has the power to mandate and enforce compliance. Security and law and order are obvious examples, as are taxation, and some kinds of regulatory power, such as determining food safety standards, would fall under this category. For the state to excel in this category, it needs effective organizational powers.

2. Prescriptive: There are areas where the state has the power to prescribe remedies. It sets standards and is at times able to employ some of its regulatory powers to enforce compliance. Mostly though, the role of the state here is to encourage the adoption of idealized rules and norms. Managing education, by prescribing school standards and determining the curriculum, would be a suitable example.

3. Advisory: In this category are areas where the state’s power to influence real outcomes is limited and the role of the state is mostly advisory in nature, with little real power of enforcement. An easy example would be the efforts to inspire hygiene and cleanliness through a nation-wide mission to achieve sanitation. Innovation and flexibility are vital for a successful intervention.

Thus, these categories map quite closely to the definitions of power – the power to coerce, control the agenda and determine underlying norms – and therefore, could be understood as the categories of state power.

What does this categorization imply for how we understand the size of the state? For starters, in terms of the size the state needs to be to discharge its duties, the coercive state is quite inelastic, while, the prescriptive and advisory areas are highly elastic.

Given the broad characterization of the state’s powers in these categories, the levels of accountability expected of the state also vary. While the state is expected to maintain law and order at all costs, it is seldom realistically expected to be always successful in ensuring that no one urinates in the open in our cities. Also, the categories above do not necessarily reflect the order of priorities a country faces. For example, security of its territorial borders is a fundamental priority of a nation-state. However, the fact is that not only are there specialized institutions that handle this, but also that the good governance agenda suggests improving service delivery and creating more just inclusive societies are key to maximizing general welfare. This, however, does not necessarily involve an expansion of the state itself.

The way I see it, the second category comprises the largest and the most complex of challenges that the state faces, not in the least due to the conceptual mixture of a part-coercive and part-advisory nature of powers that the state enjoys over the areas in this category. Take public health and education, for instance. The state enjoys coercive regulatory power in some aspects of these public services, but is usually unable to enforce them to the satisfaction of its citizens. A combination of institutional handicaps and societal behaviour present a challenge that the state is usually unable to surmount.

Finally, this approach reveals the risk that the state might choose to focus on one category at the expense of another. This could be because it is difficult to simultaneously strengthen all institutions to intervene effectively in all three categories. The complexity of focusing on all three categories of issues may be better explained with an example of elections.

The Indian state is by and large able to enforce that every citizen has the right to cast a single vote; it is less successful in encouraging more people to vote; and even less so, in making people vote for the right considerations. The state may well decide that it is fulfilling its duty as long as it ensures that there is no fraudulent voting, thereby fulfilling its contract with its citizens. But having established mechanisms to maintain status quo in its coercive functions, the state should target the idealized goal of deepening democracy. This and enhanced levels of citizen-led deliberation are ideals that would lead to a truly fair election. Not achieving this would mean failing to meet the rising expectations of an enlightened citizenry.

In conclusion, I briefly introduce the role of local governments. Pursuing its goals in the advisory category requires an expansion of the state. Instead of increasing its physical presence and reach through bureaucratic expansion, it could opt for an enhanced role for citizens in these areas through genuinely participatory mechanisms. Local governments – that offer a democratic framework for organizing grassroots citizen action – represent an expansion of the state, but also a break from its conventional forms. This raises several interesting questions regarding the expansion of state, both in size and its fitness. A detailed exposition will have to be left for another column.

Cash as a response to humanitarian distress

In the context of the subsidies regime in India, there is an ongoing debate on the suitability of cash transfers. With the much talked about JAM trinity – the Jan Dhan zero-balance bank accounts, Aadhar and mobile phones, it certainly appears that the state-sponsored welfare system is set to see a significant shift. While this shift may well fall short of being transformative, we could still expect an improvement in how benefits are delivered with reduced leakages to recipients. The use of the JAM model to extend the welfare net and to improve its efficiency implies a decisive move towards cash transfers, and therefore, one may be closer to settling the debate, at least in terms of favoured government policy.

But the argument in favour of cash is not new. I recently came across a 1986 UNU WIDER paper by Amartya Sen where he elegantly outlines five arguments in favour of direct distribution of cash in times of food crises. In this paper Food, Economics and Entitlements (Sen, 1986: UNU Wider WP 1), Sen tackles this question in the context of a famine. First Sen demonstrates how even in contexts where aggregate food output is plentiful, the ability of the poor to acquire this food is a whole different matter. Localised food shortages and famine-like situations can arise due to various reasons – at times when the prices of staples rise sharply, or when the prices of products the poor sell fall sharply. However, this isn’t obvious to policymakers as long as they view food sufficiency through the lens of per-capita food production alone.

When famines manifest themselves, there could be multiple policy response options. Sen talks of direct food distribution as the favoured method in those times. Three decades down the line, food relief continues to be popular in times of distress, even as direct cash transfers (as described above) are gaining ground as a favoured instrument of social welfare policy. Policy responses in these times is meant to enhance the ability of those affected, to ‘acquire’ more food. Both market-based solutions that begin with greater availability of cash, and direct distribution are potential paths to this end.

In this column, I summarise some of Sen’s key arguments, and restrict myself to one side of the debate. From the paper, here are the five advantages in distributing cash in contexts of famine, according to Sen:

  1. First, where state capacity is either weak or misdirected, and as a result, cannot be relied upon to distribute food efficiently, in Sen’s opinion, cash may work better by stimulating markets. In dire humanitarian contexts, resource-strapped governments (national or sub-national) may be resource strapped and not have the ability to organise the task of aggregating, transporting and distributing food.
  2. Second, Sen provides examples of famines (Wollo, 1973; Bangladesh, 1984; Irish famines of the 1840s) where even when food was locally available to begin with, it moved out to other areas due to a fall in local demand. Direct distribution of cash in such contexts will help enhance local demand and therefore, counter-act the external flow of food.
  3. Third, Sen’s claim is that cash distribution could increase demand for local trade and transport, which can set the local economy on the path towards long-term regeneration.
  4. The fourth point, related to the one above, is that people can use cash for productive investment that can stimulate the local economy.
  5. Finally, Sen makes the point that if the affected families received cash transfers, the disruption to their normal economic activities could be minimised. This would help in speedy rehabilitation of households, once the spell of economic distress blows over.

Taken together, this is a compelling argument from Sen on the advantages of using cash transfers in contexts of humanitarian distress that holds true even today. One must question the exact mechanisms through which cash transfers might lead to productive investments, especially in public goods like roads, schools or clinics. But in terms of responding to humanitarian crises, cash transfers should grow to become a prominent response strategy.

Globally, the extent of humanitarian distress continues to mount. According to the UN Refugee Agency (UNHCR), in 2014 there were 60 million people forcibly displaced due to conflict, who required humanitarian assistance. International aid budgets are stretched and there is an urgent need for more efficient policy interventions. A recent report of a high-level panel organised by the London-based think-tank Overseas Development Institute (ODI) makes a strong case for cash transfers in tackling humanitarian disasters. They advocate for every humanitarian intervention to be benchmarked against cash transfers, thereby having to answer the questions ‘why not cash?’ and ‘if not now, when?’

This argument is also salient for India where a large part of the population continues to depend on agriculture, even as agricultural productivity and its share of national income continues to fall. By many accounts, small and marginal holders constitute 85% of India’s farmers. As a previous Mint column pointed out, the only sustainable solution to rural distress over the long run is job creation in manufacturing and services, and barring that, the largely poor and marginalised agrarian population will continue to face periods of economic distress. As Sen reminds us, a hunger crisis can occur even with our steadily increasing agricultural production and our record stockpile of food-grains, as long as our social welfare policy suffers from blind-spots of localised distress.

Cash transfers definitely have their place in the design of effective safety nets for the poor. They are probably neither miracle nor mirage, but should be seen as a work in progress. The political economy of social welfare policies mean that key questions around targeting and the levels of assistance need to be worked out and iteratively modified to suit the emerging context. Ultimately, what we should look forward to is a model of inclusive social policy that can truly operationalise the slogan of ‘sabka saath, sabka vikaas’.