Hey readers,
A lot of economic policies begin with a simple objective.
Reduce oil imports.
Bring more dollars into the country.
Help small businesses grow.
Simple enough.
But once these policies start interacting with the real world – farmers, workers, environment, markets, and regulations – the story becomes far more complicated than the original objective. It sometimes creates more problems, and to solve those problems, we end up creating a web of rules and policies.
This week was all about that.
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Take ethanol blending. It is usually presented as a clean-energy success story. It has, to some extent, reduced crude imports, supported farmers, and reduced pollution. But the more you dig, the more you understand that the system is messier.
Feedstock is a basic input. It could be sugarcane, maize or rice. The problem is that it keeps changing, and with each change, it creates ripple effects elsewhere. Moving to maize has impacted animal-feed markets and increased dependence on imported oilseeds. Older vehicles are facing mileage and maintenance issues under E20 fuel. Last month, we saw how water consumption during ethanol production drew all attention. But this piece will tell you that Ethanol Blending Isn’t Just A Water Debate.
India received a record $137 billion in remittances last year. For millions of families, that money pays school fees, hospital bills, EMIs, and everyday expenses. It also helps India’s external balance and cushions the rupee.
But economics rarely gives free lunches. Large and sustained foreign inflows slowly reshape incentives inside local economies. Housing, construction, retail, and services boom, while manufacturing often gets left behind. Kerala is perhaps the clearest example. This phenomenon is called the ‘Dutch Disease’. In the piece titled Not All Dollars Coming Home Are Equal, I have explained how this works.
We often hear that India’s informal sector is “unproductive.” The latest Annual Survey of Unincorporated Sector Enterprises (ASUSE) data shows the story is much more nuanced.
ALSO READ: India’s Productivity Journey Is More Complicated Than We Think | The Reason Why
Small businesses actually become meaningfully more productive as they grow. But many businesses hit a wall around the 10-worker mark – exactly where compliance requirements start increasing. It raises important questions on whether policies restrict the productivity of India’s labour working in smaller firms. You will get a detailed analysis with a colourful chart in the piece: India’s Productivity Journey Is More Complicated Than We Think.
One thing connects all three stories. The first layer often looks successful. The fuel gets blended. The dollars arrive. The business hires workers.
But the deeper second-order effects become visible later. And usually, that’s where the more interesting story begins.
That’s the week.
If you made it this far, I’d love to hear from you.
Which of these stories stayed with you? What stories can you share around these topics?
And more importantly, what should I dig into next?
An everyday object, a policy, a price that suddenly changed, a trend that’s growing around… send it my way. Just hit reply. I read everything.
See you next Saturday.
Cheers,
Swapnil
Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article
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