Friday, April 26, 2013
A MODEL APPROACH - What is needed is sustained focus on efficient governance
By Swapan Dasgupta
On November 16, 1905, two days before he left India for the last time—and in controversial circumstances—Viceroy Lord Curzon delivered a remarkable speech at the Byculla Club in Bombay. The popular expectations from a Viceroy, he suggested, were unbearably exacting: “He must be prepared to speak about everything, and often about nothing. He is expected to preserve temples, to keep the currency steady, to satisfy third-class passengers, to patronise race meetings, to make Bombay and Calcutta each think that it is the Capital city of India, and to purify the police…If he does not reform everything that is wrong, he is told that he is doing too little; if he reforms anything at all, that he is doing too much.”
Arguably, Curzon was protesting too much. As an unapologetic advocate of “one-man supervision” (to be distinguished from one-man rule) which he viewed as the best alternative to bureaucratic government—“the most mechanical and lifeless of all forms of administration”—this most “superior” of all Viceroys revelled in micro-management. Predictably, this insistence on the Viceroy being the fountainhead of governance and policy-making led to a clash with the India Office and forced his premature return to the far less glamorous world of domestic politics in Britain.
There is some merit in re-reading Curzon’s Byculla Club speech in the age of 24x7 news channels. Over the past few years, there has been an engaging debate over the role of government and governance in India. For many, the rapes in Delhi, the mushrooming of pornographic clips on mobile phones, the cheating of small investors by suspect chit funds and the persistence of malnutrition among children point to the need for more government and, perhaps, more intrusive governance. Conversely, the suggestion of cronyism in the allotment of telecom licences and coal blocks, the sheer incompetence of state electricity boards and the leakages identified by the Comptroller and Auditor General’s report on the workings of the Mahatma Gandhi National Rural Employment Guarantee Act (MNREGA) has prompted the conclusion that the Indian state is not merely bloated but incompetent and venal.
A remarkable feature of this fierce debate that rages incessantly on TV screens, Parliament and other public forums is that they are invariably case study based. Those who are demanding the censure of the Government for depriving the public exchequer of rentier income in the sale of spectrum and allotment of coal blocks may well be those who were earlier in the year resentful of the controls the state sought to exercise on the social media. The middle classes are outraged that the Right to Education Act has resulted in state-sponsored hiccups in the admission procedures of schools. Yet the same middle classes pillory the West Bengal Government for doing too little to stop the proliferation of shady chit funds that invariably end up cheating small investors. In Punjab, farmers often seek an end to regulations that prevent the free movement of grain and other crops, but are active in their insistence that fertilisers be subsidised and electricity for farming be provided free of charge. And, finally, there are companies that have made a fortune from what passes for Information Technology—outsourcing and body shopping—that seek to combine complete deregulation with subsidised land to build sprawling campuses.
Given these contradictory and flexible impulses, it is small wonder that political leaders have consciously avoided elevating the debate to arrive at a meaningful conclusion on the role of the state in a market-oriented economy. There is incessant chatter about ‘good governance’ but relatively little concern over the ideal reach of the state.
Perhaps Gujarat Chief Minister Narendra Modi may the odd man out. Unlike his colleagues in the Bharatiya Janata Party who have desisted from elevating their natural misgivings over an over-regulated economy and society into a coherent philosophy, Modi has actually tried to address the core issue. What has over-simplistically come to be described as the “Gujarat model” has, in Modi own words, come to mean “less government and more governance”. Whether this approach corresponds to the late Margaret Thatcher’s motto of a “small state but effective state” is an issue that will no doubt surface nearer the general election, but the common refrain of the editorial and chattering classes has boiled down to a simple assertion: ‘Gujarat isn’t India’.
That this is a truism is undeniable. The so-called ‘Gujarat model’ is an over-simplified journalistic invention that in popular parlance has come to imply a single-minded focus on growth and, by implication, a relative neglect of what is called ‘human development’. The extent to which there has been a conscious diversion of resources from ‘human development’ to infrastructure is debatable. Economist Bibek Debroy, for example, has suggested that this facile conclusion is the consequence of an inability to get the most up-to-date figures. The overall improvement in the quality of life in Gujarat, he maintains, has kept pace with its sustained double-digit GDP growth.
Regardless of the political debate over the nature of Gujarati capitalism, some tentative conclusions are in order. First, Gujarat operates under the same set of laws and regulatory regimes that in vogue in the rest of India. The Dholera Special Investment Region, for example, has been created out of an enabling legislation that is available to all Indian states, including West Bengal. Why, it may well be asked, has only Gujarat chosen to avail of the opportunities?
Secondly, there has been no discernible rollback of the state in Gujarat. Where Modi has succeeded is in transforming loss-making public sector units into relatively more efficient entities that show modest profits. The Gujarat State Electricity Board is a case of a PSU that has shown good results without having to travel down the privatisation route. Modi, for example, has been inflexible on the issue of reasonable user charges as the price for uninterrupted domestic power to both cities and villages—a price the consumers have been more than willing to pay. Power subsidies for agriculture haven’t been done away with. Instead, there has been a rigorous drive to segregate power for agriculture from ordinary domestic and commercial usage. In short, the subsidy regime has been sharply targeted.
Thirdly, there has been a conscious attempt to remove small irritants in the path of entrepreneurship. The scale of Inspector Raj—a problem that plagues traders in, say, Uttar Pradesh—has been reduced quite dramatically and there is a greater emphasis on self-regulation.
Fourthly, there has been a stress on bureaucratic accountability and a sharp reduction in the discretionary powers available to the state machinery. The process of transfers and postings that preoccupy so many of India’s politicians has been made transparent and almost entirely rule-based. Bureaucrats have also been given relative security of tenure as the price for accountability and efficiency. Likewise, the use of IT to access government records has improved the quality of service in areas that involve the interaction of citizens with the state. Add to these the small innovations such as the introduction of evening courts which have yielded dramatic results.
Finally, and this is important, the profound changes that have reshaped Gujarat in the past decade have been effected without the creation of a new, ‘committed’ bureaucracy. It’s the same set of people who have proved slothful and venal elsewhere who have delivered wholesome governance in Gujarat.
The debate over the role of the state, it is clear, has been overstated. A rollback of the state remains a difficult proposition considering the unevenness of India’s development. What is more relevant is a sustained focus on the efficiency of governance. Politics, after all, is the art of the possible.