A GST for India: Now Comes the Hard Part

A decade-and-a-half in the making, last week both houses of Parliament overwhelmingly passed a bill that amends the Indian Constitution to create a Goods and Services Tax (GST), bringing India closer than ever before to functioning as a common market.

I have a new essay in Foreign Affairs that looks at what the GST means for India–and the hard road ahead when it comes to implementation. Here’s a taste of the challenges that await:

Even assuming speedy legislative action and a reasonable compromise on the GST rate, the path ahead is riddled with landmines. Businesses will have to incur costs to adjust to the new regime, which will be especially high for smaller firms that have never paid taxes or lack the technology and expertise to adapt. The government will have to train new tax collectors and implement a massive new online tax system. In fact, leading economists suspect that there could be adverse consequences to both growth and inflation in the short term until these teething pains subside. To further muddy the waters, legal experts are already warning of future lawsuits over the constitutionality of the GST, since it alters the basic federal–state structure outlined in India’s founding document by reallocating taxation powers.

You can read the full piece here.

 

 

Election Surveys in India

The terrific Indian journal, Seminar, has a special issue focused on the ins and outs of election surveys in India. The essays are gated until September 1, but for now you can read the introductory essay by Rahul Verma (the guest editor) here.

Election surveys have something of a checkered past in India. The essays in this special issue look at the problems, suggest solutions, and examine how surveys work in other democracies. To quote Rahul, the issue tries to address three questions:

First, is polling an imperfect science? Second, what is an ideal time to conduct a poll that proposes to study the political behaviour of citizens? And third, what would be the academic cost of not conducting polls at the time of elections?

Neelanjan Sircar and I have a piece on how to better leverage surveys in India from a research perspective. You can read that one here.

Reddit #AUA on India with C. Raja Mohan + me

On Tuesday, May 31st C. Raja Mohan, Director of Carnegie India, and I are doing a Reddit #AUA (Ask Us Anything) on U.S.-India relations timed to coincide with Prime Minister Narendra Modi’s trip to Washington, D.C. in early June as well as the Modi Government’s two-year anniversary.

We will be answering questions between at 9 a.m. and 3 p.m. EST. If you are interested in joining the conversation, the link is here. Here’s the moderator’s description:

We have the honor to announce on May 31st /r/Geopolitics will be hosting the first ever reddit AUA by Carnegie India, the newest addition to the Carnegie Endowment for International Peace family. The AUA will be posted at 8 am EST to allow for 1 hour of questions-only beforehand. Dr. C. Raja Mohan and Dr. Milan Vaishnav will be answering questions about the US-India relationship and Indian foreign policy from 9 am – 3 pm EST.

**UPDATE** The transcript from our Reddit AUA can be found here.

How are elections in India financed?

In recent weeks, there has been renewed interest in how elections in India are financed. This is, in part, a reflection of recent events in Tamil Nadu, whose voters cast their ballots today for a new state assembly. Tamil Nadu has long been reputed as one of the most expensive states in which to contest elections in India.

The Hindu reports that the Election Commission of India postponed elections in two constituencies, Aravakurichi and Thanjavur, until “the vitiating effect of the money power created by the distribution of money and gifts to electors loses its intensity and a more congenial atmosphere conducive to the conduct of free and fair election is created.”

It just so happens that E. Sridharan and I recently authored a chapter on the financing of Indian elections that is part of a broader comparative analysis of election financing in democracies around the world. The book, Checkbook Elections, can be ordered here. I have posted a pre-print of our chapter on India here. A policy version of the book’s main findings, including summaries of all the chapters, is posted here.

Here is one of our central takeaways:

Despite the vibrancy of its democracy, India has struggled mightily to regulate political finance in ways that would both contain the costs of elections and curb impropriety in their funding. India does not suffer a dearth of reform ideas; innumerable government sponsored commissions and independent analyses have outlined potential solutions that would improve the credibility of India’s system of regulation. Rather, India’s political finance reform has been stymied by two major factors: a lack of political will for reform, and an economy in which the state exerts a heavy hand, thus incentivizing illicit funding.

 

 

Pre-order “When Crime Pays”

At long last, you can now pre-order my forthcoming book, When Crime Pays: Money and Muscle in Indian Politics, on Amazon. The book will be published by Yale University Press in the US and UK and by HarperCollins India in South Asia.

Here’s a brief description:

In India, the world’s largest democracy, the symbiotic relationship between crime and politics raises complex questions. For instance, how can free and fair democratic processes exist alongside rampant criminality? Why do political parties recruit candidates with reputations for wrongdoing? Why are one-third of state and national legislators elected—and often re-elected—in spite of criminal charges pending against them? In this eye-opening study, political scientist Milan Vaishnav mines a rich array of sources, including fieldwork on political campaigns and interviews with candidates, party workers, and voters, large surveys, and an original database on politicians’ backgrounds to offer the first comprehensive study of an issue that has implications for the study of democracy both within and beyond India’s borders.

More details to come in the weeks and months ahead.

Can India Ever Become a Great Power?

This week, I had the chance to moderate a fascinating discussion about India’s role in the world. The focal point of the discussion was a new paper by my colleague, Ashley J. Tellis, on whether India can become–in the words of Prime Minister Narendra Modi–a “leading power.”

Here’s a summary of Ashley’s paper:

Prime Minister Narendra Modi’s call for India to become a leading power represents a change in how the country’s top political leadership conceives of its role in international politics. In Modi’s vision, a leading power is essentially a great power. However, India will only acquire this status when its economic foundations, its state institutions, and its military capabilities are truly robust. It will take concerted effort to reach this pinnacle.

The debate featured Ashley, Arvind Subramanian (the chief economic adviser to the Government of India) and Devesh Kapur (a frequent collaborator and the director of the Center for the Advanced Study of India at the University of Pennsylvania).

You can watch full video of the event here.

Pre-order Checkbook Elections

In May, Oxford University Press is releasing a new volume that offers a fresh look at how campaign finance rules work (or don’t work) across around the world. The book is titled Checkbook Elections? Political Finance in Comparative Perspective and is edited by Pippa Norris of the Harvard Kennedy School and Andrea Abel van Es of the University of Sydney.

E. Sridharan of UPIASI and I have a chapter looking at the Indian experience. Once the book is out, I’ll post the chapter here. In the meantime, here’s a short summary of the book:

Money is essential to the functioning of electoral politics, yet regulating its appropriate use raises complex and controversial challenges in countries around the world. Both long-established democracies and emerging economies have been continually plagued by problems of financial malfeasance, graft, corruption, and cronyism. To throw new light on these important challenges, this book addresses three related questions: (1) what types of public policies are commonly used in attempts to regulate the role of money in politics?, (2) what triggers landmark finance reforms? and, (3) above all, what works, what fails, and why – when countries implement reforms? Checkbook Elections? presents an original theory for understanding policies regulating political finance, reflecting the degree to which laws are laissez-faire or guided by state intervention. Each chapter is written by an area specialist and collectively cover long-established democracies as well as hybrid regimes, affluent post-industrial societies (Sweden, the United States, Britain, and Japan), major emerging economies (Russia, Brazil, and South Africa) and developing societies (India and Indonesia).

You can pre-order the book here. An executive summary of the book, intended for a policymaking audience, is already out here.