By Swapan Dasgupta
Among the parlour games intellectuals and amateur know-alls tend to play during moments of intense boredom is something called counter-factual history or, better still, "Virtual History"—the title of historian Niall Ferguson's delightful forays into the unknown. In plain language, this involves asking the question "What if?" and then proceeding to let the imagination run riot imagining what God's alternative plan could have been. Bengalis, for example, are prone to endlessly speculating the future of India had their Netaji emerged unscathed from the burning aircraft in Taipei. As a cricket fan, my counter-factual favourite is wondering what could have been Sir Don Bradman's career record had six years of World War II not interrupted his poetic flow.
On a more serious note, there are economic historians who have used counter-factual history to make drive home some features of actual history. It has, for example, been suggested that British national income would have been 10 per cent lower in 1865 had there been no railways. Likewise, in his seminal work published in 1966, Robert Fogel (who subsequently won the Nobel Prize for economics in 1993) asked what would have been the state of the US economy had the railways not been there in the mid-19th century. He concluded that the GDP would have been adversely affected by no more than three per cent.
India is not short of competent economists, some of whom even have an acute sense of history. I would request some of them to engage in a counter-factual exercise, asking a question that has been agitating all public-spirited Indians for many decades: what would be the state of the Indian economy (judged by the necessary statistical parameters) if all the capital expenditure of the government since Independence been optimally utilised, or at least touched a 85 per cent rate of effective utilisation?
It is difficult to anticipate the answers but my casual guess is that India would probably have been in the G-8 club, instead of being a late entry into the G-20 and that too mainly on account of sheer size.
This counter-factual poser comes readily to mind in the context of emerging details of the colossal pilferage and misutilisation of funds set aside for the Commonwealth Games. The skeletal details that have emerged so far, courtesy both the media and the vigilance authorities, suggest two things. First, colossal ineptitude in the preparations for the CWG—failure to meet deadlines, inappropriate construction and a complete insensitivity to the actual requirements of residents of post-CWG Delhi. Secondly, scandalous mismanagement of anything between Rs 30,000 crore and Rs 50,000 crore of money poured into the vanity show. Some of this mismanagement suggests that many of the decision-makers are treading a thin line between incompetence and criminality.
According to the Central Vigilance Commission report which has been imperiously pooh-poohed by the Delhi Chief Minister, "Almost all the organisations executing works for Commonwealth Games have considered inadmissible factors to jack-up the reasonable price to justify award of work at quoted rates citing urgent or emergent circumstances. Despite higher rates, poor site management and delays and quality compromises have been observed." According to a NDTV report, some of the medical equipment for the CWG has been invoiced at nearly seven times their market value, a small indication of the bandit capitalism that has become the norm in government expenditure.
An interesting feature of the huge CWG 'transmission losses' is that the bungling is occurring in full public view. When the roof of a stadium starts leaking at the first hint of rain or, worse, simply collapses, it doesn't require a CVC to tell people that something is horribly wrong. Chief Minister Sheila Dikshit may have successfully co-opted local Opposition leaders, who are uncharacteristically muted in their criticisms, and IOC boss Suresh Kalmadi may have invoked patriotism to prevent the Games from being overshadowed by popular disgust, but their damage limitation skills will be only partially successful. The CWG will forever remain a shining example of the political class' complete inability to comprehend the obligations that come with handling public money.
In an ideal world, the impending CWG fiasco should have nurtured widespread scepticism of the efficiency and effectiveness of public expenditure. If Government works cost seven times more than what it does in a competitive environment, without even ensuring a semblance of quality, there are good reasons to question the high tax and spend approach that has been the hallmark of government policy since Independence.
It has continuously been demonstrated that profligate government expenditure and the exercise of discretionary powers by the executive are the two principal sources of corruption and wastage of taxpayers' money. Yet, just as it has become a Pavlovian response for politicians to demand a CBI inquiry at the faintest whiff of wrongdoing, despite the awareness that the agency is as flexible about its conclusions as plasticine, the view that the quantum of government expenditure decides the commitment to development, persists. Worse, this self-serving assumption runs through the entire political spectrum for the simple reason that government money isn't regulated by normal rules of capitalist accountability. The UPA Government wants to India a country governed by rights and entitlements. What it hasn't elaborated is that the political class naturally regards the state exchequer as an entitlement.
This is why it's important that some economist, incensed by the goings-on at the CWG, undertakes to tell India where it would have been if government expenditure had been wise, efficient and honest. The actual cost of six decades of uninterrupted folly may prompt a rethink. It may even prompt the conclusion that those screaming 'anti-national' at the sceptics should take a closer look at the mirror.