#84 Factions Are Natural

This newsletter is really a weekly public policy&#160;thought-letter. While excellent newsletters on specific themes within public policy already exist, this thought-letter is about frameworks, mental models, and key ideas that will hopefully help you think about any public policy problem in imaginative ways. It seeks to answer just one question:&#160;how do I think about a particular public policy problem/solution?<br/><br/>PS: If you enjoy listening instead of reading, we have this edition available as an audio narration courtesy the good folks at&#160;<a href="https://www.ad-auris.com/">Ad-Auris</a>. If you have any feedback, please send it to us.<br/><br/>India Policy Watch: The Indian State &#8212; Too Big or Too Small?<br/><br/>Insights on burning policy issues in India<br/><br/>&#8212; Pranay Kotasthane<br/><br/>In <a href="https://publicpolicy.substack.com/p/23-how-to-think-about-the-indian">edition #23</a>, we tried to answer this question: how to think about the Indian state? Closely related is another question: is the Indian State too big or too small? And as it holds true for many other phenomena in India, the answer is both. <br/><br/>I&#8217;m sure most readers of this newsletter feel that the Indian state is bloated, overbearing, and huge. Is that really the case? Let&#8217;s look at four important parameters.<br/><br/>Size Measured by Government Expenditure: Relatively Small<br/><br/>A government has three instruments at its disposal in any policy issue-area: produce, finance, and regulate. All three instruments require government expenditure. So, one way to judge government size is to measure public expenditure as a proportion of overall economic activity. The higher this parameter, the bigger the government.<br/><br/>In 2018, India&#8217;s overall public expenditure as a proportion of its GDP stood at 27%. The US was at ~38%; Russia was at ~36% GDP; Sweden was at ~49%, and Pakistan was at ~21%. Clearly, the Indian state is no outlier on this measure. Have a look at how some selected countries at