Feature story

The biggest bang for every buck

The India Consensus project employs rigorous cost-benefit analyses to help state governments pinpoint the most effective social development interventions

All governments have to balance resource allocation and budgetary limitations in their quest to secure social development dividends. That’s simple enough, but there are complexities hidden within the folds.

The people running these governments often focus their attention on development issues that are politically and socially popular. More often, the decisions they take do not benefit from a comparative analysis of the on-ground impact of the programmes being rolled out. It becomes difficult, or worse, then for governments to get the most bang for the public buck.

Students at a madarsa in Tikaitganj in Uttar Pradesh’s Barabanki district; computer-assisted learning can help improve education standards in India

This has been the challenge in making optimal use of the state’s funds, leading to questions about how governments should prioritise issues to derive the greatest social impact. For instance, should education budgets focus on primary, tertiary or skill-based education? Should nutrition initiatives spend more on micronutrients for pregnant women or therapeutic foods for children?

Such questions are critical, and tricky, when a country’s resources are limited and its development needs aplenty. The choices that can be made have to be informed and that’s where India Consensus — a partnership between the Tata Trusts and the Copenhagen Consensus Center (CCC) — plays a crucial role.

CCC is, in its own words, a think tank that researches the smartest solutions for the world’s biggest problems, advising policymakers and philanthropists on how to spend their money most effectively. The Center has global experience in partnering governments to provide rigorous cost-benefit analyses of the potential impact of public spending.

“When governments and decision makers are empowered with information about how much more good they can achieve with every dollar or rupee, they are incredibly excited,” says Bjorn Lomborg, the president of CCC.

Drawing on its global partner’s experience and expertise, India Consensus follows the same systematic, analytical process in the Indian context. This to help answer that most complex of questions: where should an investment be directed to generate the most social benefit?

Khyati Taye, a farmer from Assam’s Dhemaji district; farmers stand to benefit more through increased market access than loan waivers

The India Consensus approach complements the government’s top-down policy planning model. True to its name, the Consensus brings together a wide range of stakeholders, among them governments, nonprofits, public intellectuals, businesses and the general public, to identify the most urgent issues for a particular state. What follows is a meticulous approach in examining each proposed intervention and its larger, long-term impact.

State governments on board

The India Consensus programme was introduced in June 2017, and it began with the signing of agreements with the state governments of Rajasthan and Andhra Pradesh. “The larger plan for India Consensus is to positively influence the additional annual budget across all 29 states,” says Shireen Vakil Miller, head of policy and advocacy at the Tata Trusts.

In Rajasthan and Andhra, the Consensus started out by identifying the priority issues. In Rajasthan, more than 1,200 people from the government, NGOs, academia, think tanks and business identified some 1,000 projects. From these, 79 of the most promising solutions were identified by a panel, which examined more than 1,000 pages of research findings. In Andhra, 77 interventions were shortlisted out of an initial list of 600 issues. The results have helped bring a new level of clarity in policy and decision making to these states.

The Andhra impact research, for instance, shows that improving the teacher-pupil ratio in the state would return 5 worth of social and economic benefits on every rupee invested. On the other hand, computer-assisted learning — the highest priority solution that emerged — would yield a return of 74 for every rupee spent.

In Rajasthan, the findings were similarly enlightening. Improving private sector tuberculosis care would yield benefits worth 179 for each rupee invested. In agriculture, introducing e-mandis (electronic agricultural markets) would deliver a return of 65 on each rupee spent, whereas farm loan waivers would return less than a rupee.

Looking ahead

Going forward, the India Consensus team is looking to concentrate on two states a year. Andhra and Rajasthan aside, the governments of Uttar Pradesh, Karnataka, Assam, Jharkhand and Chhattisgarh have shown interest in the India Consensus approach. NITI Aayog, the central government’s policy think tank, invited the Consensus to conduct a seminar where planning secretaries from all of India’s 29 states were encouraged to adopt the programme’s research-driven system.

Employing the analysis-based approach can have a huge impact, especially in India. Here’s a rough example of how the statistics pan out. Estimates for efficiency gains from priority initiatives under the India Consensus umbrella is 25 for every rupee spent. The combined additional budgetary allocation for 2018-19 for India’s states is about 3,200 billion. If 1% of this were to be utilised a year based on cost-benefit analysis — 32 billion — it could lead to a 25-fold gain in efficiencies, generating impact worth more than 800 billion in effective public policies. Over a five-year term, that works out to 4,000 billion in social impact.

Those are big numbers. Getting the maths right on this is critical for India and its development ambitions.

Getting better at doing good

Aside effect of democracy is that decisions on social development spending are — instead of being grounded on rational impact assessment — often based on which issues will get the most attention, political push or emotional traction.

Bjorn Lomborg, president of the Copenhagen Consensus Center (CCC)

Bjorn Lomborg, president of the Copenhagen Consensus Center (CCC), has been on a relentless mission to change this through improved research and analysis about the costs and benefits of any given solution, thereby ensuring that public funding is prioritised through hard evidence and facts. He speaks here about India Consensus and its work in maximising the impact of spending on social development. Edited excerpts from the interview:

How did the CCC come about, and what were the key triggers for this to happen?

[CCC} was conceived to address a fundamental but overlooked topic in international development: in a world with limited budgets and attention spans, we need to find effective ways to do the most good for the most people.

We first looked at global problems, working with Nobel laureate economists to study and rank development solutions and partnering the Economist news magazine. We continue to look at global challenges but we recognised a need to also work at the national and state levels to help governments, donors and decision makers get better evidence about how to spend wisely.

What is the impact that you hope to see with the Consensus model in the long term?

Our evidence has been used by governments to shape the way billions of dollars have been spent. Our evidence has informed smarter spending across a wide range of areas, from HIV/Aids and malaria through to nutrition and fortification and to government procurement and land digitisation. These impacts have been incredibly powerful and have, literally, improved the welfare of the world, generating value worth billions of dollars.

My vision for what we could achieve is that economic evidence becomes part of every government and organisation’s ‘doing good’ decision-making process.

When we analysed the ‘sustainable development goals’, we established that by following the CCC approach (of focusing on the most phenomenal interventions) the world’s aid budget could achieve four times more good. That’s the same as quadrupling what is spent.

Which are the key areas and locations that CCC is working on? How has the experience been in Bangladesh and Haiti?

We have worked at a global level for 14 years and, more recently, we have taken a deep dive to work at the national level. Haiti is a country with many, many challenges – but also with great potential. Our nutrition research there was taken up by donors and the government. In Bangladesh, we have helped influence smarter spending.

Why and how did the partnership with Tata Trusts for the India Consensus project come about?

The Tata Trusts are integral to India Consensus; they have helped guide and shape the process. CCC brings economic methodology and rich experience in applying this elsewhere. The Trusts help ensure that everything we do here fits the Indian context.