Friday, 27 May, 2022
HomeOpinionIndian govt can't introduce quality reforms because it's ignoring these three issues

Indian govt can’t introduce quality reforms because it’s ignoring these three issues

The basic structure of the Indian State and governance have remained the same as the British colonial administration in 1947.

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The key challenge to governance in a modern State is the handling of complexity, which also changes form and colour with rapidity. Complexity arises from a variety of sources. There is the impact of technology, the globalisation of our economies, the disruptions in our societies and the unfamiliar pressures on our individual psyches. The familiar anchors on which governance is based are no longer stable. The structures of a traditional State, its institutions, processes and capacities are unable to deal with complexity. The agility required to keep abreast of change is also missing.

The State may try to cope through recourse to some new instruments enabled by modern technology, such as introducing digital delivery of State support to citizens, promoting digital payments and digitising government records to facilitate access to government services. They are welcome but remain at the margins of governance. The basic structure of the Indian State and its mechanisms of governance have remained mostly the same as inherited from the British colonial administration in 1947. The State consists of an aggregation of vertical hierarchies, which sometimes coordinate but rarely collaborate.

Most of the challenges countries confront today are cross-domain in character. State intervention through one hierarchy may either reinforce or even cancel out an intervention in another domain through feedback loops. For example, in order to deliver food security, the State may encourage the use of chemical fertilisers and pesticides. But this has adverse health consequences for the farming population which is constantly exposed to their toxic after-effects. The gain in one domain may result in losses in another. The current State structure has no mechanism to deal with such feedback loops. These examples can be multiplied.


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Collect accurate data first

A few critical governance reforms for a modern State are vital. One, decision-making must be based on accurate data, careful analysis and evaluating outcomes against objectives. The professional reputation and credibility of India’s statistical agencies have been diminished. Even if data is reliable, it is not made available in a timely fashion. This may serve some short-term political purpose but does serious damage to effective policy-making.

While there is a considerable data flow on economic issues, there is the neglect of social sectors, resource endowments and use and most spheres of governmental activity. Any policy decision requires getting the facts right. This, in turn, requires the setting up of a first-rate data collection, collation and analysis system, which is free of governmental interference.

Data collected through such a system and data generated by government ministries and agencies should be treated as public goods to which the general public must have full and easy access. National security exceptions should be limited and justified if they are adduced. This would enable public scrutiny. Several ministries and government agencies routinely label data generated by them as confidential. On occasion, one has found that this label is used to hide either sloppy or even non-existent data collection by them.

Data collection and analysis are critical in evaluating the efficacy of government schemes, such as the National Rural Employment Guarantee scheme, the Food Security Bill, the Rural Health Mission and the more recent and laudable initiatives, such as the eradication of open defecation. These are all well-intentioned and involve large financial outlays.

However, there are few in-depth and regular surveys to gauge their impact, whether their administrative and regulatory requirements have been met optimally and the ways in which their effectiveness may be improved. In India, the practice is to first launch a scheme and then go about working on its institutional and regulatory requirements, through essentially a hit-and-miss process. This is a huge waste.


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Avoid arbitrage economy

Two, policy decisions should be careful not to create an ‘arbitrage economy’, which distorts risks and returns in economic activity. Before imposing any control on prices or on any economic activity, the State must consider whether it has the capacity and the legal and regulatory instruments available to achieve the objectives of the control. If businessmen find that they can garner greater profits, with fewer risks, through preferential pricing decisions or subsidised land and other resource allocations by the government, there will be little incentive to make investment decisions that require entrepreneurial ability and risk-taking.

Such controls or subsidies must have an early sunset clause since they tend to become virtually permanent and give rise to strong vested interests. The government has been unable to introduce much-needed reform in agriculture as a result of such vested interests. Despite the fact that the current cropping pattern in Punjab, Haryana and western UP has led to mountains of rotting grain in government warehouses and out in the open, it is proving politically difficult to do away with the MSP regime which has given rise to it.

Aim better

Three, effective governance must be based on setting high standards and pursuing excellence in every sphere of government activity. The pursuit of excellence should not be sacrificed for reasons of social equity; the latter should be ensured through appropriate affirmative policies. Egalitarianism should aim at raising standards to the highest level achievable rather than seeking the lowest common denominator. This is particularly important in an era of complexity, rapid technological change and the rising demand for professionally qualified and well-trained personnel in virtually every domain of government.

Let us hope that in this new year, these more fundamental questions are at least acknowledged so that we may begin to adapt our governance system to the complex challenges confronting us.

Shyam Saran is a former Foreign Secretary and a Senior Fellow CPR. Views are personal.

This article was originally published in The Tribune and has been republished here with permission.

(Edited by Humra Laeeq)

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