Weekend reading links

1. Ananth and Raghuraman have an excellent article on the promise of inculcating simple management practices into SMEs,

Even a little nudge in the direction of good management — bringing in simple practices related to target setting, establishing incentives and monitoring performance — can bring about substantial improvements in productivity, sales growth and even reduction in product defects of these enterprises. The implication of these findings, for a country where 63 million micro small and medium enterprises (MSMEs) employ more than 110 million people and contribute close to 29 per cent of the economy, are potentially far reaching.

 This is important, in terms of the nature of capacity building trainings,

To put it together, a training intervention for MSME entrepreneurs to be impactful should be relevant and relatable to their business, demonstrate applicability, provide opportunities for entrepreneurs to use their own enterprises for action learning and instil in the entrepreneur’s mind the need to have a destination and the discipline to reach there.

2.  Good summary of NREGS impact related research. Interestingly, while the growth in NREGS allocation have been declining, its share of total expenditures has remained stable.

3. Are direct tax collections going to show negative growth for the first time in two decades? How much has the lowering of corporate taxes contributed to this?

4. Excellent article by Nidheesh MK on a PPP on local government governance with a corporate partnership involving the Anna Group, the maker of Kitex Garments, in  Kizhakkambalam Gram Panchayat in Kerala.

In 2013, after marshalling together a set of welfare schemes, Kitex rolled out a welfare arm fully financed by its corporate social responsibility funds. It was called “Twenty20", symbolizing the aspiration to turn the village into a world-class model by 2020... In 2015, probably for the first time, a corporate house directly entered the electoral arena in India. It was Kitex. Despite a unified opposition, Twenty20’s candidates won 17 of the 19 Kizhakkambalam Grama Panchayat seats, cornering over 70% of the polled votes... Since then, Kitex has gained a virtual monopoly over every aspect of public life in the village—from laying roads to directing the electorate to vote for a particular party in parliamentary elections. Its high form of populism is driving out politics from governance... that is, every strain of politics except that of its founder, Sabu Jacob, who is known simply as “Sir" or “Company Chairman" or the man who built the supermarket. In the corporate utopia he runs, laws are malleable, personal autonomy is, at times, a luxury, and traditional political parties are often compared to polluted rivers. Yet, many inhabitants still love the model, since there are giveaways and goodies, like the heavy discounts at the store.

The experiment is facing its challenge in the forthcoming Panchayat elections, with discontent brewing.

5. Is the UPI going to disrupt the mobile wallet market, thereby questioning the soaring valuation of Paytm? Interestingly, even on UPI, the two dominant apps are foreign, GooglePay and Walmart's PhonePe.

Since early 2015, Paytm has raised nearly $4 billion in capital to lure customers and merchants alike. Most of its spending has gone towards cashbacks and marketing. Clearly, the spending was unsustainable. In recognition, the company has moved to slash spending on cashbacks to bring expenses under control over the past six months. It has even begun to charge customers for processing transactions, a fee that it used to bear earlier.

And these cutbacks will drive more customers into GooglePay and PhonePe which are resorting to the same discounts to attract and retain customers and have deeper pockets.

6. Can state governments provide the fiscal stimulus to revive the Indian economy?

7. Homeowners in the US are apparently relocating to low-tax jurisdictions in response to a federal tax overhaul in 2017, 

The law made it costlier to own a house in many high-price, high-tax areas, reshaping the economics of homeownership in those slices of the U.S. Two years after President Trump signed the tax law, its effects are rippling through local economies and housing markets, pushing some people to move from high-tax states where they have long lived. Parts of Florida, for example, are getting an influx of buyers from states such as New York, New Jersey and Illinois. Many people saw their overall taxes go down after the 2017 law was passed. But the law had two main changes making it tougher to live in high-cost, high-tax states, especially compared with lower-taxed options. It essentially curbed how much homeowners can subtract from their federal taxes for paying local property and income taxes, by capping the state and local tax deduction at $10,000. It also lowered the size of mortgages for which new buyers can deduct the interest, to $750,000 from $1 million. These changes have the biggest impact on a sliver of the population who have high incomes and live in expensive areas. They tend to have white-collar jobs and the ability to pick up and move. Many own their own businesses, work remotely or are nearing retirement.

Clearly the stickiness associated with place of birth or long period of living, being part of a community, and home ownership is losing its effect and a few thousands of dollars in savings is enough to make even the rich migrate.

8. Alex Tabarrok points to this very good video from the Centre for Civil Society on the difficulty of opening a private school in India.