Public money and public policy

Discussions in Parliament and elsewhere often revolve around allocation of limited public money.

While this is important, this approach often misses the elephant in the room, which is the more general public policy. This column considers one instance of the role of public money vis-a-vis public policy.

Many Indian cities are becoming denser by the day. There is a pressing need for a somewhat ongoing heavy spending on improving the city infrastructure. This includes, inter alia, many new wider roads, flyovers, bypass roads, underpasses, overbridges, elevated roads, sea-link bridges, and metro lines. All these have massive costs. So, the focus and the needed spending on other important causes such as education and health are often compromised.

There is indeed a trade-off in the allocation of public money. But public policy can help.

There is an increasingly pressing need to decongest many existing cities. So, let us revisit the 2014 plan for 100 new cities in India, which soon became a mission of 100 mostly existing cities that would be made smart. All said and done, effectively the original plan has been shelved. Why? It has been a challenge to meaningfully develop just the new GIFT City (or even Amaravati). This is despite the large subsidies, reduced taxes, and direct public spending on development of the city. This model based on public money and state capacity is indeed not meaningfully scalable.