In 1998, onions brought down a government. The price of the humble vegetable soared across north India, touching levels that seemed extraordinary at the time. Households complained, newspapers carried daily stories, and political opponents found an easy rallying point. When Delhi voted later that year, the BJP suffered a decisive defeat. Economists could have pointed out that onions accounted for only a tiny fraction of GDP and a modest share of household expenditure. Yet that was beside the point. Voters were not responding to an economic model. They were responding to an everyday experience. Onion prices had become a visible symbol of a government’s competence.

A few years later, Rajat Gupta and his colleagues at McKinsey presented an ambitious blueprint to Prime Minister Atal Bihari Vajpayee on how India could accelerate economic growth. The recommendations were comprehensive and technically sound. After listening patiently, Vajpayee reportedly asked a simple question: “Ye sab to theek hai Guptaji, magar ye sab hoga kaise?” The remark captured a truth that many policy discussions continue to overlook. Identifying what should be done is often the easiest part of policy-making. The harder task is understanding how change actually occurs.

At first glance, the onion crisis and Vajpayee’s response to a management consultant appear unrelated. In reality, they highlight the same blind spot. The first showed that societies do not react to economic variables in the neat manner assumed by textbooks. The second showed........

© The Financial Express