Decision Making as Output and Bounded Rationality

  The classical economics theories proceed on the assumption of rational agents. Rationality implies the economic agents undertake actions or exercise choices based on the cost-benefit analysis they undertake. The assumption further posits that there exists no information asymmetry and thus the agent is aware of all the costs and benefits associated with the choice he or she has exercised. The behavioral school contested the decision stating the decisions in practice are often irrational. Implied there is a continuous departure from rationality. Rationality in the views of the behavioral school is more an exception to the norm rather a rule. The past posts have discussed the limitations of this view by the behavioral school. Economics has often posited rationality in the context in which the choices are exercised rather than theoretical abstract view of rational action. Rational action in theory seems to be grounded in zero restraint situation yet in practice, there are numerous restra

Decoding the Cabinet Reshuffle

 

It was hardly a routine cabinet reshuffle. The reshuffle coming almost in the middle of the term was essentially a reset of the government in the run up to the elections of 2024. It was equally about those were dropped as much as it was about those who were inducted or promoted. At one level, it is a step towards elimination of independent charges being handed to ministers of state. At the same time it was about the performance being the absolute parameter with reputations hardly counting anything. It would not save some senior figures while it would induct quite a number of relatively young parliamentarians perhaps giving them a chance to prove themselves. There were some losers and few gainers as usual but the unmistakable signs of PM’s footprint was visible throughout. There appeared to be strong homework with respect to the competencies and the castes. The ministry was not about competency alone but an integration of the same with the caste and regions. In other words every region and caste would have something to cheer about. It was about a signal to the allies and the prospective allies and the opposition alike. If JD-U or Apna Dal have to climb down from their earlier hardcore stance, it was equally about sending signals to estranged allies like Shiv Sena or Akalis that they might no longer be welcome. In choosing a 77 member ministry, it is evident that hardly any space exists for expansion.

 

At the outset, it would be perhaps bad for Harshvardhan who had to take the blame for the second wave of the Chinese pandemic. The heads had to roll and it was Harshvardhan despite his very good handling of the first wave. The fact that Sadananda Gowda had to quit also had to do with the aftereffects of the second wave with serious shortages of medicines all over. It is different matter that Gowda had Damocle’s sword hanging over him since 2014 when he faced often the routine downgrading of his portfolios. It is different matter that his junior Mansukh Mandaviya has been elevated to take charge of both Health and Chemical and Fertilizers. Ramesh Pokhriyal had to go on health reasons though he had done some good work in the New Education Policy. A few junior ministers were expectedly asked to leave. Santosh Gangwar’s exit might be little puzzling but age might be against him. The decisions on Bengal were expected given the poor performance in the state elections.

 

Yet what turned out to be the story of the day was the dropping of senior ministers like Ravi Shankar Prasad and Prakash Javadekar. The social media vibes might have gone against them yet they would be merely one factor in the decision. To Prasad, the Twitter fiasco might have gone against him despite his relative success in law ministry. The assertion of judiciary yet again also seems to have gone against him. To Javadekar, it was his failure as I&B Minister in government communication in the second wave that might have sealed his fate. His work in the environment ministry might not have been strong enough to compensate for his shortcomings in I&B Ministry. The signal however is strong enough that no minister however senior he or she might be can take their place for granted.

 

There have been new inductions. At one level, Modi might have fallen back on Gujarat as evident in the case of the Health Ministry. Hardeep Puri has been suitably rewarded. The glamour lies in the railways were a technocrat in Ashwini Vaishnav having been given the charge. To Vaishnav, there is the additional charge of the IT and Communications. Dharmendra Pradhan goes into education, a sort of promotion despite his failure in containing oil prices, something now being in the domain of Hardeep Puri. It will require the diplomatic finesse of Puri to negotiate with his Arab interlocutors. Piyush Goyal has Railways taken away from him but handed over Textiles. Smriti Irani is left with Women and Child Development. Though it might sound unpopular, there is somewhere a signal, her administrative skills are not top notch and therefore she is been offered or continued with lesser known portfolios.

 

Narayan Rane’s induction was no surprise given his power base as also BJP’s desire to expand aggressively into the Konkan. Jyotiraditya Scindia was rewarded, a compensation for his efforts to dislodge the Congress government in MP in 2020. Sarbananda Sonowal was inducted something expected after he relinquished his CM-ship to Himanta Biswa Sarma a couple of months ago. There have been four inductions in Bengal and one would wait and watch their performance and the impact it has on Bengal electoral fortunes. Tripura gets its first minister at the Centre while Manipur makes it appearance after around 20 years. Kiren Rijuju becomes the only second from the North East (excluding Assam) to become a Cabinet rank Minister after PA Sangma. Bhupendra Yadav gets rewarded after his good work in the party. There are a few who get into the ministry after being parliamentarians for a fairly long time.

 

There has been an attempt to reinvigorate certain ministries like skill development. These are basically lackluster shows but have a potential of being game changers. One would wait and see how this would turn out. The fact that Narendra Tomar is retained in Agriculture demonstrates the PM’s faith in him the view of farmer protests over the last few months. There is a task of privatization in different streams of railways. Similarly there is a task of reforms and privatization in ports and shipping. There is a need to revitalize the small and the medium sector. The labour reforms have to be notified and brought into force. There is question of India’s recovery as one begins to build life afresh after the second wave while the sword of the third wave is hanging all over the heads. Therefore the task of the Health Ministry becomes even more critical. There is also the necessity of reviving industries and thus it too poses a challenge. The bigger ministries have remained untouched however, there would be greater expectations as many challenges have to be counter-acted with. On the whole, it has been a good exercise but the work has just begun.

 

 

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