Goodhart’s Law and the Cobra Effect in India’s Policy Making

 

Goodhart’s Law and the Cobra Effect in India’s Policy Making

Public policy in India often suffers from a gap between intention and outcome. At the heart of this paradox lie two concepts from economics and social sciences — Goodhart’s Law and the Cobra Effect. Both capture how well-meaning metrics and incentives can backfire, especially in a diverse democracy where welfare delivery faces challenges of scale, leakages, and local adaptation.

Goodhart’s Law and the Cobra Effect: A Primer

• Goodhart’s Law: “When a measure becomes a target, it ceases to be a good measure.” Once metrics are linked to rewards, people start gaming the system rather than solving the real problem.
• Cobra Effect: Named after colonial India, when the British offered money for every dead cobra to reduce their population. Citizens began breeding cobras to kill and sell for reward. When the policy was scrapped, the cobras were released, worsening the problem.

Both highlight how poorly designed incentives distort behavior and create perverse outcomes.

Case Studies from Indian Policy and Welfare Schemes

1. Learning Outcomes in Education

India’s school education policy historically measured success by enrollment and infrastructure — number of classrooms, midday meals, teacher recruitment. As per Goodhart’s Law, once these became targets, states focused on inflating enrollment and building structures, while learning outcomes stagnated. The ASER reports (2005–2022) consistently showed that even after years of schooling, many children struggled with basic arithmetic and reading.

2. MGNREGA (Mahatma Gandhi National Rural Employment Guarantee Act)

The world’s largest employment guarantee scheme aimed at providing 100 days of work per household. But linking performance to “number of person-days generated” led to inflated work records, ghost workers, and incomplete assets. Instead of durable rural infrastructure, the incentive system sometimes encouraged quantity over quality.

3. Janani Suraksha Yojana (Maternal Health)

Cash incentives to institutionalize deliveries reduced home births dramatically. But in several cases, women were rushed into hospitals for monetary reasons without adequate facilities or postnatal care. The target — numbers of institutional deliveries — became more important than the quality of maternal and infant health services.

4. Toilet Construction under Swachh Bharat Mission

The ambitious mission reported near-total household toilet coverage by 2019. However, several surveys revealed issues of toilet functionality, water access, and behavioral usage. The rush to meet construction targets often overlooked sustainability — showing the classic Goodhart’s Law trade-off between numbers vs. actual sanitation outcomes.

5. Fertilizer and Subsidy Policies

Incentives to increase foodgrain production during the Green Revolution led to overuse of urea subsidies, distorting soil health and groundwater tables. Farmers optimized to maximize subsidies and yields, not long-term sustainability — an unintended “cobra effect” that still burdens Indian agriculture today.

Why These Effects Persist in India

1. Target-driven bureaucracy — Officers are evaluated on achieving measurable outputs, not nuanced outcomes.
2. Political pressures — Short-term results look better in electoral cycles.
3. Scale of welfare schemes — With hundreds of millions of beneficiaries, central monitoring relies heavily on metrics.
4. Weak feedback loops — Ground-level realities are often masked by inflated reporting.
5. Resource constraints — Quantity becomes easier to track than quality.

The Way Forward: Designing Better Policies

1. Focus on outcomes, not just outputs — Eg. measuring literacy and numeracy skills instead of only school enrollments.
2. Build feedback loops — Independent social audits, community scorecards, and civil society participation.
3. Use technology smartly — Aadhaar-linked DBTs, geotagging assets, real-time dashboards to reduce gaming.
4. Align incentives with behavior change — Example: moving Swachh Bharat from construction to sustained usage through campaigns.
5. Flexibility and local adaptation — One-size-fits-all metrics often fail; decentralization can ensure context-specific outcomes.

Conclusion

India’s welfare architecture is massive and ambitious, but the lessons of Goodhart’s Law and the Cobra Effect remind us that badly designed metrics can derail even the best policies. True success lies not in ticking boxes but in improving lived realities — healthy mothers, educated children, sustainable agriculture, and dignified rural employment.

As India moves towards becoming the world’s third-largest economy, its governance must also mature from counting numbers to measuring impact.

 

India’s 35 Million–Strong Diaspora: Pride Without Power?

Every January, we celebrate Pravasi Bharatiya Diwas with pomp and pride. Politicians beam about the 35 million Indians abroad, often calling them “India’s ambassadors to the world.” We highlight the parade of Indian-origin CEOs — Sundar Pichai, Satya Nadella, Arvind Krishna — as proof that Indian talent dominates global boardrooms. We’ve even sweetened the deal with OCI cards, allowing them to keep a foot in the Indian door.

And yet, when it comes to protecting India’s core economic interests, this vast network has been silent — sometimes uncomfortably so.

The Test Case: US Tariffs

When the United States imposed tariffs affecting Indian goods — steel, aluminium, and later other sectors — New Delhi expected that the strong Indian-American presence, especially in policy circles and corporate corridors, might help soften the blow. After all, this is the same diaspora that India celebrates at every opportunity.

But there was no organized lobbying, no public campaign, no high-profile voices condemning the move. The Indian-American community, despite its political clout and economic influence, remained on the sidelines.

Why the Silence?

1. National Loyalty vs. Cultural Roots
   Most diaspora members, especially those in positions of power, are now citizens of their adopted countries. When push comes to shove, their legal and political obligations lie there, not here.
2. Corporate Priorities Over National Affection
   A CEO’s primary responsibility is to shareholders, not to the land of their birth. Supporting India against their own government’s trade policy is simply not in their job description.
3. Fear of Political Backlash
   Openly lobbying against a domestic policy of their host country can invite suspicion, accusations of dual loyalty, and professional risk.

The Harsh Reality

We love to imagine that the Indian diaspora is a geopolitical asset, ready to rally for India in times of need. The truth is more sobering: diaspora influence is circumstantial. It can shine in cultural promotion, philanthropy, and bilateral business ties — but when a direct clash of interests arises, their loyalties will align with their passports.

This isn’t betrayal. It’s simply the reality of migration and assimilation.

Rethinking Our Approach

India must recognize that diaspora goodwill ≠ diaspora activism. We can still take pride in their achievements, but we must stop assuming they are a dependable lobbying force for India’s political battles. Instead:

• Build our own institutional lobbying capacity abroad.
• Strengthen government-to-government channels rather than relying on soft power alone.
• Appreciate diaspora contributions where they are effective, but not confuse sentiment with strategy.

Conclusion

Our 35 million–strong diaspora is a source of pride, culture, and connection — but not a shield in economic warfare. They have built lives elsewhere, and when forced to choose, they will side with the nations that now claim their allegiance.

India can celebrate Pravasi Bharatiya Diwas, hand out OCI cards, and beam at the success of Indian-origin leaders. But let’s also accept the reality: in the moments of geopolitical friction, we stand alone.

 

Why Modi’s “standing with farmers” rhetoric misses the mark: The real sectors taking the hit

Modi’s emphasis on protecting farmers from US tariffs is politically savvy but economically misleading — agriculture represents only ~6% of India’s $79 billion exports to the US, while far larger non-agricultural sectors are bearing the brunt of Trump’s tariffs.

The sectors actually getting hammered (far bigger than agriculture):

Electronics/IT Hardware: $12.3 billion (largest single category)

• Smartphones, semiconductors, IT equipment
• Employs millions in urban manufacturing hubs
• Currently exempted but vulnerable to policy shifts

Gems & Jewelry: $9.15 billion

• Cut diamonds, precious stones, gold jewelry
• Faces 52% total tariff, among the highest
• 30% of sector’s global sales go to US
• Heavily concentrated in Gujarat, Mumbai

Pharmaceuticals: $8.7 billion

• Generic drugs, APIs, formulations
• Currently exempted due to US healthcare dependence
• Employs educated middle-class workforce

Machinery/Engineering: $6.48 billion

• Auto components, industrial equipment
• 65%+ US market dependency in some sub-sectors
• Major employer in manufacturing states

Textiles/Apparel: $2.9 billion

• Faces 59–64% total tariffs (highest of all sectors)
• Labor-intensive but much smaller than other hit sectors
• Already declining before tariffs

Why the farmer rhetoric is misleading:

Agricultural exports to US: ~$4–5 billion (including marine products)

• Rice, spices, marine products make up bulk
• Many agricultural items already duty-free or low-tariff
• Sector employs many but contributes relatively small export value

The real impact hierarchy:

1. Urban manufacturing workers (electronics, pharma, engineering) — highest skilled, highest paid
2. Diamond/jewelry artisans (Gujarat/Mumbai) — traditional but high-value
3. Textile workers (Tamil Nadu, Karnataka) — labor-intensive but smaller scale
4. Farmers/fishermen — large numbers but smaller dollar impact

Political calculation behind farmer focus:

• Vote bank arithmetic: Farmers are 40%+ of workforce vs. industrial workers ~25%
• Emotional resonance: “Annadata” (food provider) narrative plays better than “export manufacturer”
• Deflection strategy: Easier to blame external tariffs than address domestic industrial competitiveness
• State politics: Key agricultural states (UP, Punjab, Haryana) more electorally critical than industrial centers

What Modi isn’t saying:

The real economic damage is to India’s high-value manufacturing and services sectors that employ educated urban workers, generate higher per-capita income, and drive technology transfer — precisely the sectors needed for India’s “developed nation” aspirations.

Bottom line: Modi’s farmer-centric messaging obscures that urban industrial workers in electronics, pharma, gems, and engineering — not farmers — are taking the biggest economic hit from US tariffs. It’s classic political theater: appeal to the numerically larger but economically smaller constituency while the higher-value sectors suffer quietly.

Brain Drain Isn’t the Villain You Think It Is

If you’ve been on social media lately, you’ve probably seen every group in India come up with its own pet theory on why people are leaving the country.

• Caste-focused commentators insist it’s because of reservations.
• Wealthy elites think it’s because the government “wastes” resources on freebies for the poor.
• Middle-class warriors are convinced it’s all about potholes and bad roads.

Each narrative conveniently fits their worldview, but all miss the elephant in the room.

The uncomfortable truth? When $1 equals ₹86, the economic pull is irresistible. Even if Indian roads matched German autobahns tomorrow, skilled professionals would still emigrate. The wage arbitrage is simply too powerful to ignore — a software engineer earning $120,000 in Silicon Valley versus ₹12 lakhs in Bangalore faces a lifestyle differential that transcends policy grievances.

But here’s what the doomsday crowd won’t tell you: brain drain isn’t economic suicide for India.

The Numbers That Matter

Over 630,000 Indians emigrated in 2024 alone, contributing to the world’s largest diaspora of 35.4 million people spread across 180 countries. Yet this “loss” generates India’s biggest economic win: $135.46 billion in remittances in FY25 — a 14% jump from the previous year and the highest globally.

To put this in perspective:

• India’s remittances are nearly double Mexico’s $68 billion (second place)
• They offset 47% of India’s $287 billion trade deficit
• Remittances have more than doubled from $61 billion in 2016–17
• They exceed India’s total FDI inflows, making them the most stable source of external financing

18.5 million overseas Indians now work in advanced economies, sending money that sustains millions of households back home. The US alone contributes 27.7% of these flows, followed by Gulf countries at 38% collectively.

Beyond Money: Cultural Soft Power

The diaspora has transformed into India’s most effective cultural ambassadors. Diwali is now celebrated in New York’s Times Square thanks to Indian-Americans. London’s Southall, Toronto’s Little India, and Sydney’s Harris Park showcase Indian festivals, cuisine, and traditions to global audiences.

This isn’t just feel-good multiculturalism — it’s strategic soft power that:

• Builds bilateral diplomatic ties through people-to-people connections
• Attracts tourism and investment to India through positive branding
• Creates business networks that facilitate trade and technology transfer
• Influences policy in host countries favorable to India’s interests

The Brain Circulation Reality

Modern migration isn’t one-way hemorrhaging — it’s brain circulation. Many emigrants eventually return with global experience, capital, and networks. Even those who stay permanently often:

• Invest in Indian startups and real estate
• Collaborate with Indian institutions on research and innovation
• Mentor Indian entrepreneurs through accelerator programs
• Bridge technology gaps between India and developed markets

The Real Conversation We’re Avoiding

Yes, India loses talent. But focusing only on the loss while ignoring the ₹11+ lakh crore annual remittance inflow is economic myopia. The question isn’t how to stop emigration — it’s how to maximize the benefits while building domestic opportunities that eventually attract global talent, including our own, back home.

Countries like Ireland, South Korea, and China leveraged their diasporas as economic engines during their development phases. India is already doing this unconsciously — now it needs to do it strategically.

The brain drain debate needs nuance, not nationalist hand-wringing. When 630,000 Indians leave but 35 million Indians abroad send home $135 billion, maybe it’s time to reframe emigration from pure loss to complex opportunity.

Bottom line: Brain drain hurts, but diaspora dividends help — and the numbers prove the latter outweighs the former.