Subscribe
Bibek Debroy
THE SUBSIDY CORNERSHOP
Rich jump the queue
We live in Vasant Kunj (VK), New Delhi. I read somewhere that it is the largest residential colony in Asia — presumably within the authorised category. VK has always had water problems. But in the last couple of months, things have got worse. This is ascribed to a gigantic mall being constructed in the neighbourhood by the Delhi Development Authority, without consulting the Delhi Jal Board (DJB).
Resident Welfare Associations (RWAs) held a protest march against the mall and the resultant scuffle with the cops got into the newspapers (several media people live in VK). Even before work on the mall started, water shortages had forced VK residents to buy water from private tankers; 50 litres cost Rs 500. The DJB’S tankers, which are supposed to supply water free, rarely materialise. Near the VK police station, there is a squabble every morning: residents of the neighbourhood slum fighting for single buckets of water from tankers. Unlike our RWA protest, that doesn’t get into the newspapers.
Water shortages should not happen in a country such as India. But they do, primarily because organs of the State do not deliver. And let’s make no mistake. Even the most ardent reformer wants the State to do certain things: create physical infrastructure (roads, electricity generation, drinking and irrigation water, sanitation and sewage treatment), provide social infrastructure (school education, primary health care) and establish law and order. In each of these, the Indian State hasn’t delivered. Had that happened, India’s human development record wouldn’t have been worse than Sri Lanka, or Bangladesh, or even several countries in sub- Saharan Africa.
The successful can secede
John Kenneth Galbraith used an expression: secession of the successful. The successful — the relatively rich — can afford to secede. They have the privatisation option — even for law and order. They also know how to manage and beat the system. And, they are actual beneficiaries of subsidies. Central government subsidies (petroleum products, fertiliser and food) amount to Rs 45,000 crore per year. Given in the name of the poor, they rarely reach the intended beneficiaries.
There are other subsidies (power, road transport) at the state government level. Not to speak of questionable government expenditure on interest payments, defence, wages, salaries and pensions of government employees and losses of public sector undertakings. Even public expenditure on ostensibly hallowed goals such as education, health, rural development — or other centrally-sponsored schemes and anti-poverty programmes — has no accountability, zero transparency and little benefit through tangible improvements in outcomes. Leakage, corruption and extremely high administrative costs are rampant.
Payer fatigue
Today, the tax/gross domestic product ratio (including state-level taxes) is around 15 per cent. It needs to touch 18 per cent, if the State can actually do the things it is supposed to do. But unsatisfactory public delivery has led to taxpayer fatigue, deliberate tax evasion and an emphasis on fee-based delivery. How many of the 30 million assessees actually pay income taxes? How many of those that pay taxes actually declare their true income?
But then taxes cannot be written off: except for a few limited areas, fee-based delivery and complete user charges do not work. Besides, should one forget that the relatively poor also pay taxes? They may not pay direct taxes, but certainly pay indirectly through inflation — a regressive form of tax. They pay through opportunities lost because the government doesn’t spend on physical and social infrastructure.
Then the poor also pay by being victims of an oppressive State. More than 95 per cent of undertrials in prisons are poor people, accused of petty offences and in prison (awaiting trial) for terms more than the maximum permissible sentences for petty crimes. Every entrepreneurial activity of the poor is subjected to an inspector raj.
Accountability and democracy don’t simply mean voting once in five years, or even oftener. Through citizens’ charters and right to information acts, civil society has exerted countervailing pressure and made a difference. But not in the parts of India that are truly backward. Part of the reason is cynicism and secession of the educated and the successful. That’s not how a democracy is supposed to work.
Bibek Debroy is with the Rajiv Gandhi Foundation, New Delhi
Harsh Sethi
TO WORK DEMOCRACY
Learn from the marginalised
Far too many of those who matter are dissatisfied with the way our democracy functions. Some even argue that democracy has failed us — or that we are incapable of working out democratic institutions. As proof, they point to the growing criminalisation of politics, the venality of the political class and the anarchy marking our legislatures. No wonder, many from this influential section do not even vote.
In marked contrast are attitudes of the poor and the marginalised. In a perceptive monograph, the political scientist Javeed Alam argues that an increasing proportion of the poor — dalits, tribals and minorities — are exercising their franchise in recent years. The marginalised continue to believe that political parties matter — despite all their infirmities — and that elections are avenues for making their voice heard. The Indian experience shows that democracy as ‘norm and values’ and ‘institutional practice’ can survive and deepen, even in societies marked by severe poverty and inequality.
Dogmatics galore
At the same time, the debate and thinking on Indian reforms, or more specifically the relative roles of state institutions and the market, has been hegemonised by ideologues of the extremes. On one hand, followers of Fredrich von Hayek and Milton Friedman continue to extol the virtues of the free market, stressing its rationality and efficacy as an allocative mechanism — simultaneously running down any notion of State control, particularly in the production of wealth. On the other hand dogmatic leftists treat the market and private initiatives as evil and strive to stymie any effort at loosening the stranglehold of the State on everyday life. The manoeuvres of the left parties, a crucial component of the ruling United Progressive Alliance (though from the outside), provide ample evidence of why attempts at reforming public institutions are making such slow progress.
A part of the problem lies in continuing to treat the State and private institutions as actors that operate on different and opposing principles — refusing to recognise their complicity and interpenetration. By equating State ownership and control with public purpose and welfare, we only excuse the inefficiency, corruption and sloth that afflict our public institutions. Worse, we remain blind to the fact that, over time, many of these institutions have become self-seeking and often work for private and sectoral interest.
Why is it that despite widespread, formal agreement on the need for reform, specific proposals encounter stiff resistance? Is it because we overvalue theoretical experts over practitioners? So, workers find little space in decision-making structures of trade unions, schoolteachers are rarely consulted in the designing of curricula and textbooks, farmers’ voices find few takers when formulating agriculture or credit policies and so on. A second related problem is our total disinterest in learning from others. We are either too proud of our 5,000-year-old civilisational past or believe that our society is sui generis — so exceptional in its complexity that there is little to learn from the experience of others.
It is distressing that our left-wing ideologues, with their obsessive focus on imperialism and monopoly capital (with more than a touch of xenophobia) refuse to learn even from the experience of their ideological fellow travellers in China and Vietnam. And our enthusiastic privateers turn a blind eye to the introduction, often through legislation, of social responsibility norms for private enterprise, even in their Mecca, the USA.
There is hope
Much can be learnt from our democratic experience, the way ‘people’ attempt to take over and mould elections and electoral institutions to subserve objectives they hold dear. More importantly, those whose lives and survival is at stake cannot and will not wait indefinitely for self-styled experts and policy-makers to institute needed changes.
Rather than debate the fine points of the State and market or advocate received models of publicprivate partnerships, what is needed is sensitive documentation of the myriad ways in which ordinary people, individually or collectively, innovate to expand their space for creative action. Much of this experience remains localised and limited in the absence of more generalised enabling conditions.
Fortunately, we are witnessing increasing pressure on both the State and private capital. The growing popularity of different movements for a right to information, transparency and accountability is a step in the right direction. Possibly then, just as we are trying to redefine democracy, we may also succeed in infusing a new meaning to reform.
Harsh Sethi is editor, The Seminar
Swaminathan s Anklesaria aiyar
ENSURE ACCOUNTABILITY
Ensure public goods to the poor
Even in remote villages, you can find shops providing tea and cigarettes/biris to the satisfaction of local consumers. But there are no schools, roads or drinking water. Now, we will all agree that schools and roads are more important than tea and cigarettes. Why, then, are lower-priority items well provided but not the higher-priority ones?
For two simple reasons. Shopkeepers are accountable to consumers, and suffer if consumers are unhappy and take their custom elsewhere. Second, shopkeepers have an incentive: the more tea and cigarettes they sell, the more they earn. So, the existence of incentives and penalties (sticks and carrots) ensures a satisfactory supply of tea and cigarettes. This is the quintessential reason why, in a competitive environment, the private sector delivers.
But the people — most of the poor — also need public goods. These have to be financed, if not directly provided, by the State. But it chooses to provide public goods like schools, roads, and primary health through an unsackable, unaccountable bureaucracy. These service providers are not accountable to the people they serve: even in theory they are accountable only to a minister in a distant state capital, who in practice has no inclination to take on any trade union, or discipline staff. Second, these bureaucrats have no incentive to deliver services efficiently: their income and prospects are in no way linked to their service delivery. Not surprisingly, they fail to deliver.
The solution is obvious. Make government staff accountable not to some state capital but to the people they serve. In China, teachers are hired on three-year contracts by counties, which can give them double promotions or sack them for incompetence. A less radical reform would be to empower panchayats to withhold the salaries of teachers who are absent from work. In Kerala, panchayats have been empowered to withhold the salaries of absentee veterinarians, but not of absentee teachers. So, animals are more empowered than schoolchildren! Alas, not even supposed champions of empowerment like Amartya Sen are willing to empower parent associations to discipline teachers, let alone hire and fire them (as was done very successfully in El Salvador’s Educo programme, where communities got funds for education from the government).
What empowerment requires
Empowerment also requires a justice system that works. If nobody can ever be convicted before appeals are exhausted, if people die of old age before appeals are exhausted (Harshad Mehta, Lakhubhai Pathak), then no bureaucrat or politician has an incentive to obey the rules or serve the people. One path to reform is to have an independent police commission, autonomous like the Election Commission, which deals with all crime detection and prosecution. This will take power away from home ministers (who protect thugs within their own party) and kick-start the decriminalisation of politics. This scheme implies splitting the police in every state into two. One section, dealing with maintenance of public order and terrorism, will continue to report to the home minister.
But the second section, dealing with crime detection and prosecution, will report to the independent police commission. This will be a good starting point for judicial-police reform, but much more will be needed.
A more radical approach to accountability is to have legally mandated sacking of the worst 10 per cent of all government staff every year. Jack Welch, under whom General Electric, USA became known as one of the best managed companies in the world, decided that good management required the sacking of 10 per cent of his officers every year. He instituted this not as a punishment but as an incentive for high standards. General Electric developed such a reputation for good staff that those sacked were immediately hired by other companies. Many politicians and trade unions will be outraged by this suggestion. But note that neither seems concerned at all by the collapse of service delivery.
I could make many other suggestions, but I will stop here. We need radical change, not tinkering at the margins. Once civil servants are accountable to consumers and have incentives to deliver, we will suddenly find that schools and roads are as easily available in villages as tea and cigarettes.
Swaminathan S Anklesaria Aiyar is consulting editor, The Times of India. This is an extract from a forthcoming article in The Times of India
L C Jain
LIBERATED
The State, from the Constitution
We have to distinguish between the ‘State’ and ‘state of the State’. What has been said so far in this debate refers mainly to the latter, which though necessary is secondary. The primary issue is the State itself. It is not free to do or undo what it likes; it is a creature of our Constitution — which in turn is the product of the freedom struggle whose vision is embodied in the Directive Principles of State Policy.
These principles (Articles 38 to 51) spell out purposes, which are to be protected by the State. These include “securing a social order for the promotion of welfare of the people”, ensuring “adequate means of livelihood” and according “protection to the environment”. The Directive Principles also enjoin the State to ensure that “the ownership and control of the material resources of the community are so distributed as best to subserve the common good” and also that “the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment”. Further, governance has to be furbished at the base with “units of self-government” in each village (Article 40).
How have we done on these grounds? Dismally. Many of the maladies highlighted in the debate have arisen because the State has liberated itself from the Constitution. The first casualty has been the system of self-government that was to embrace every single village and municipal entity — where people were to be assigned the responsibility and authority for tasks best performed at the local level. In reality, the system of governance — which has evolved in absence of institutions of selfgovernment at the base — has become excessively Centre-ridden, with all its known suffocating implications. A dangerous implication of this has been the muting of the voice of masses — and that in a society of one billion people plus. As a result, ‘development’ has become a captive of the administrative machinery and ceased to be the exciting endeavour of the people, by the people and for the people. What passes in the name of ‘development’ is a travesty of the word. The poor are always regarded as dispensable. Their sources of livelihood sucked dry with nothing to replace them. No wonder poverty persists and disparities widen.
Second, the political leadership has ignored the warning given by Gandhiji about mindless resort to police. When communal riots rocked Bombay in 1946, Gandhiji advised Morarji Desai (then Bombay province’s home minister) that the political leadership should “Go to the middle of the conflagration under the sole protection of god, perish in the flames if necessary, but not to use the police.” Desai did the very opposite. And no political leader since has followed Gandhiji’s advice.
The police is summoned at every minor case of conflict, while commandos are called to shield politicians. The result: our structure of governance has become unduly bureaucratic and insensitive to public opinion. In fact, it has hardened and developed a nexus with criminals Unless these distortions are reversed, we cannot hope to restore the primacy of Directive Principles. There is no barring the State from globalising the economy or privatising water supply.
We want some things to be done by the State, others not to be done by it. The government can make these choices provided it is first shown to the public that the chosen policies as well as their likely consequences are consistent with the letter and spirit of the Directive Principles.
L C Jain is former vice-chairperson, World Commission of Dams and former member, Planning Commission, India
A Vaidyanathan
SCARCE: RESOURCES
More scarce: public systems
The sad state of public systems is the result of several, interrelated factors. Scarcity of resources, the most widely cited explanation, is an exaggerated alibi. Of course, the resources mobilised by the State are inadequate to meet costs of government and development expenditures (including maintenance and improvement of social services and infrastructure). But this is in good part a reflection of the failure to collect tax and non-tax revenues due under existing laws. It also indicates inefficient expenditure on both nondevelopmental and developmental activities.
The malaise is greatly aggravated by the propensity of governments, irrespective of party affiliation, to use subsidised public services. In fact, the public sector irrigation and electricity undertakings were able to cover at least operating costs till the early 1970s. Thereafter, shortsighted and competitive populism took root. Governments everywhere have kept user charges more or less unchanged, or changed them too little and too infrequently, even as costs were rising. The assessment and recovery machineries have become increasingly lax. Both encouraged unauthorised and imprudent use of canal water, over-exploitation of groundwater and electricity theft.
Burgeoning losses of these public systems made it impossible to maintain even existing facilities in good repair, not to mention expanding capacity and improving service quality. The situation is not beyond repair. Elimination, or at least significant reduction, in subsidies can release substantial amount of resources for providing wider and better basic services like free elementary and secondary education, and basic healthcare and safe drinking water to all. There is hardly any justification to subsidise higher education, tertiary medical care in public hospitals and public water supply to the better-off.
The quality of services can be vastly improved by placing schools and public health clinics under user communities’ supervision. Experience shows that this brings significant improvement in their efficiency and ensures greater accountability. State governments should focus much more on regulatory and supervision functions (framing curricula, training, inspections, and conducting exams).
These improvements cannot take place so long as all functions — design and appraisal of projects, maintenance and water allocation management, pricing and collection of dues, and dispute settlement — are vested with the government’s executive arm. Creation of autonomous and financially self-reliant organisations for managing water and electricity, subject to review of finance and pricing by regulatory authority independent of government, are essential pre-conditions. Management of canals should be vested with elected representatives of users and of professionals at all levels (from the tertiary outlets to the main reservoir). These representatives should be empowered to determine and enforce rules and schedules of allocation.
This is very different from ‘privatisation’, that is, handing over these activities to wholly or largely privately-owned enterprises. All this calls for changes in the way public systems are organised and function. Government policies are often made with inadequate and/or unreliable data and analyses. This, inspite of the fact that substantial provisions for ‘research’ are in fact made in budgets of various departments and agencies. The tragedy is that very little of it is actually used to support independent research. This is not to pitch for research for its own sake. It is only a plea for investing in knowledge.
A Vaidyanathan is president, Indian Society of Agricultural Economics
K N Govindacharya
UNHEALTHY HIATUS
The relation between State and society
India has been enduring a tragedy for the past 250 years: government structures incongruous with the essential character of our traditional society, our samaaj, have been imposed on us. And this power of the State has only increased. That’s why we see that the government machinery is incapable of delivering basic services. At the same time, the society hasn’t created a system that is more suitable.
Prime minister Manmohan Singh’s statement in his Independence Day speech (that “governments cannot be wished away”) is an acceptance that the government — not just his party’s government but the entire government structure — has lost respect. Former prime minister Rajiv Gandhi expressed a similar realisation when he stated that of every rupee that the government spends, only 15 paise reach the people. The government either doesn’t exist beyond the tehsil level or its role is limited to exploitation. As for generating knowledge for the people, the State’s research institutions need to reorient completely. We have research being conducted on the state of labour in California after the demise of industry there. But these researchers have no clue why the weavers of our districts are driving auto-rickshaws today.
The State started abdicating its role in the last 12-14 years or so, and today this withdrawal has got internalised. The magnitude of the government’s failure has increasingly become unbearable over the years. The current prime minister’s statement is an admission of his helplessness. But such an admission is also a signal that a change has to come.
I believe that society doesn’t feel as helpless as the government. It retains its tenacity for it is in touch with the traditions that sustained it. That’s why India didn’t collapse like the Soviet Union or got destroyed like countries in Africa. I see a lot of social effort to bring about positive change in India, but the government can’t recognise and use this. This is because the State is totally cut off from the people, and hence its insensitivity. Which is why the positive lessons from social movements — both creative and confrontationist — remain limited to the micro-level.
Taking these lessons to the macro-level depends on politics. India hasn’t been able to create such a politics. Partisan politics does not suit this at all. For example, consider the law that members of legislative assemblies have to vote openly in the presence of the party whip. How can a democracy function without the secret ballot, be it the voter or the elected representative? Members of legislative bodies today represent parties, not their voters. For today’s political parties, India comprises only 300 million people. The remaining 700 million is completely out of their comprehension. The political parties have completely lost channels for feedback from the masses. Take the case of the Communist Party of India (Marxist, CPI-M). They have well-coordinated trade unions in the organised labour sector, and they manage to raise good funds through these. But they don’t have any presence at all in the unorganised labour sector. The CPI-M is also limited to the 300 million. At the same time, there are some radical Leftist groups who are committed to the 700 million, though they resort to violence. Besides, there are thousands of young people who feel connected to the 700 million, their ideologies inspired by Hedgewar or Gandhi or Lohia or Marx. This is what my travels have shown me. I see hope in them. Even as farmers are committing suicide, lots of small groups are trying to develop more sustainable agriculture models.
A major movement requires leadership at different levels, that is respected, as well as a nationwide chain of people with a common understanding of this need. When these two things happen, a positive change starts taking shape. I saw this happen during the Bihar Andolan of the 1970s. Of course, that movement petered out after the change of government. Jai Prakash Narayan’s health was failing and a middle-rank leadership was absent. But let’s not forget, the students’ movement of the 1970s had a lot of potential — the students were driven and willing to take risks. For a new administrative structure, we need new politics. This need is now being felt widely.
There is a feeling that the system is grinding to a halt. Social movements as well as armed resistance from radical groups are signs of that. The need for a new politics is getting more compelling. Here’s a sign: the villagers of Plachimada in Kerala getting the Coca-Cola plant to shut down.
How long will it take for a new politics to take shape? In the next three-four years. I don’t believe in taking the long view all the time. I see things happening in the short and the middle term. I see signs of a critical mass building up. Changes of this scale happen once in 25 years or so. I see signs similar to what I saw in the early 1970s. _
Former Bharatiya Janata Party ideologue, K N Govindacharya now likes to call himself a social and political activist