Never mind Europe, worry about India

By Tyler Cowen in New York Times -

Why is India’s economic growth slowing? The causes are varied. They include a less than optimal attitude toward foreign business and investment: recall the Indian government’s reversal of its previous willingness to let Wal-Mart enter the retailing sector. The government also has been assessing retroactive taxation on foreign businesses years after incomes are earned and reported. Another problem is the country’s energy infrastructure, which has not geared up to meet industrial demand. Coal mining is dominated by an inefficient state-owned company and there are various price controls on both coal and natural gas. Over all, the country does not seem headed toward further liberalization and market-oriented reforms.

These problems can be solved. More troubling are the causes that have no easy fix.

Agriculture employs about half of India’s work force, for example, yet the agricultural revolution that flourished in the 1970s has slowed. Crop yields remain stubbornly low, transport and water infrastructure is poor, and the legal system is hostile to foreign investment in basic agriculture and to modern agribusiness. Note that the earlier general growth bursts of Japan, South Korea and Taiwan were all preceded by significant gains in agricultural productivity.

Central Bureau of Investigation (CBI) pending cases

10,022

10,022 is the total number of CBI cases pending in courts till December 31, 2011.

2 years old	1984
2 to 5 years old	2801
5 to 10 years old	2922
10 to 15 years old	664
Over 20 years old	355

From Hindustan Times

Most likely, this inventory of unresolved cases would only rise with time.

I am afraid the new Lokpal legislation would result in a similar piling up of cases, may be even more.

I wonder how we can fix inadequate governance by more of the same governance. Its difficult to fix governance, not just in India but anywhere because of the inherent problems of incentives and ownership. So, I think, what we need is fewer layers of government and not one more layer, which would be created by the new Lokpal.

Such a build up of pending cases is absolutely natural given the limited capacity of any investigative organization and other debilitating constraints.