Presentation done by • Rick Rossow, Wadhwani Chair in U.S.-India Policy Studies, CSIS on "Levels and Levers of Economic Impact" at #TheIndiaDialog on February 23 at Stanford University. The #TheIndiaDialog was organised by Institute for Competitiveness and US Asia Technology Management Center at Stanford University.

1. India: Levels & Levers for
Economic Impact
Richard Rossow
Senior Adviser & Chair of U.S.-India Policy Studies

2. India: Center-State Dynamics
Indian Constitution divides governance powers into 3 schedules
• The Union List: National security, nuclear power, foreign affairs, citizenship,
railways, communications, airlines, banking, more.
• The States List: Police, health, agriculture, water, land, gambling, more.
• The Concurrent List: Regulation of factories, labor, electric power, forest
and wildlife management, more.
Modi Government: Early Moves to Devolve Power to States
• Transform Planning Commission into NITI Aayog.
• Allow states to negotiate ODA loans directly.
• 31% jump in Centre revenue given to states.
Also- Empower & Challenge States to do Better
• Drafting model laws for states’ consideration.
• Rank states across multiple domains- including business environment-
“Business Reforms Action Programme”
• National missions to expand access to digital tools, electric power, LPG
cooking cylinders, water.

3. State Governments & Growth Policies
States’ Challenges
• Capacity constraints.
• Lack of transparency.
• Uneven levels of “professionalism” when attempting to lure business.
• Low re-election rates (though- over 50% for last 10 years).
• Often- dramatic policy shifts when state governments change.
• Short tenure for key bureaucrats.
• Little devolution of authority to cities.
• Voter Interests!!!!

4. A Big Need: Municipal Governments
Local
• The 74th amendment to India’s Constitution suggests 18 functions that
local bodies could manage. These include water supply, slum
improvement, roads, and bridges, public health, and sanitation.
• NITI Aayog: India’s cities occupy 3% of the area/ 60% to the country’s GDP.
• Oxford Analytica: noted the 20 cities expected to grow the most by 2035, 17
are in India.
• RBI Report on Muni Finance in 2022, only 9 municipalities have recently
issued bonds.
• Per RBI, “Indian cities are emaciated financially and are far from being able to
generate the resources required for providing good quality infrastructure and
services to their citizens.”

5. State Governments & Growth Policies
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1960 1970 1980 1990 2000 2010 2020 2030 2040 2050 2060
India- Rural vs Urban Population
Rural Urban
When Things Get
Really Interesting!