The “real” reforms no one is talking about
The nation is going through a tough debate on the merits of a new pension scheme versus the old scheme that offered defined benefits to retirees. There is much pull for reservation and quotas for newer groups based on various criteria. And the government faced serious opposition for reworking the scheme for hiring jawans on short tenures. In each of these, and many other similar situations, the tension is about a cash-strapped government being asked to hand out solutions and salaries on an unending basis, harking back to the days when governments were looked up to as providers rather than enablers.
Why do we think economic reforms, version 2.0, will deliver when the first round under an experienced economist like Dr. Manmohan Singh fell short?
‘Competitive Populism’ is over taking ‘Fiscal Prudence’. The economic reforms were supposed to have changed that but they clearly didn’t, given the way our reforms have panned out. So now, we hear of “second generation” reforms – more opening up, more withdrawal of government from services and more dependence on private players under liberalised frameworks. But the root question that remains unasked is simple: Why do we think economic reforms, version 2.0, will deliver when the first round under an experienced economist like Dr. Manmohan Singh fell short?
Here, we need to turn the focus to bigger questions – on the readiness and robustness of our institutions, the quality of our governance systems and the mindsets with which these systems operate to deliver to the common man and to cut out the rent seekers that abound in the system. It is time to the look at the biggest of these systems and reorient or fix them, before we can unleash any new round of reforms. Good governance after all is at the root of any system that thrives to the benefit of all its members, and this is as much true for small groups as it is for a large society or a nation state. Today, there are many questions on our governance standards, leading to the big question of the day: Have we met the promises with which India became a free nation 75 years ago and constituted itself into a sovereign, socialist, secular, democratic republic?
Delivery of justice is expensive and is getting more so, excluding the vast population of low economic means to approach the system and demand justice, let alone secure it
As Dr. Babasaheb Ambedkar had pointed out right in the Constituent Assembly, “… however good a Constitution may be, it is sure to turn out bad because those who are called to work it, happen to be a bad lot. However bad a Constitution may be, it may turn out to be good if those who are called to work it, happen to be a good lot.” In the same speech, he warned against “hero worship”, and [the “grammar of anarchy”, and of the dangers of equality written down in the Constitution but the reality of all-pervading inequality in social and economic life.
How have we stood up to these threats over the years? Are our governance standards being strengthened or are they falling behind and failing us? It might be useful to undertake a comprehensive and dispassionate review of where the nation stands after 75 years of independence in terms of delivering justice, liberty, equality and fraternity – the watchwords of our Constitution.
It is clear that the ‘haves’ garner disproportionate resources and opportunities and the ‘have-nots’ have to struggle to be treated equally. This applies to providing of social infrastructure like water, sanitation, health, education et al as also for pursuing a vocation and profession
The most important institutions for the efficacious delivery of those egalitarian values are the judiciary, the civic administration and the law & order system in the country. Take the judiciary. The dictum, “justice delayed is justice denied,” appears true in a significant number of cases in India. Delivery of justice is expensive and is getting more so, excluding the vast population of low economic means to approach the system and demand justice, let alone secure it. The National Judicial Data Grid has a dashboard of pending cases; it shows a pendency of 42.7 million cases, over 70% of them over a year old as of March 2023.
Consider the civic administration, which facilitates the quality of life, living and opportunity. The common man is aggrieved by the functioning of the civic administration. It is clear that the ‘haves’ garner disproportionate resources and opportunities and the ‘have-nots’ have to struggle to be treated equally. This applies to providing of social infrastructure like water, sanitation, health, education et al as also for pursuing a vocation and profession. We see an imbalance of facilities between slum and non-slum populations even in glitzy urban centres like Mumbai. The poor suffer, visibly and in many other invisible ways, with lack of adequate services in water, sanitation, cleanliness, access roads etc.
Lack of accountability has made rent-seeking widespread and freewheeling
Similarly, the treatment of the common man by the police administration to ensure the safety of life, liberty and property are unequal. People with means and manoeuvrability often get away with misdemeanours, even heinous ones, and the ordinary person is subjected ill-treatment and harassment. Violence against citizens is deeply embedded in the police system. Any institutional framework that authorises and delegates power creates opportunities for rent seeking. Lack of transparency, accountability and cognisance of inefficacious conduct become facilitators and promoters of such conduct.
A broad analysis of the functioning of these institutions suggests two fundamental constrictions. First, the design of these institutions is an inheritance of the colonial era. Over the decades, demands on these institutions have multiplied and varied. The marginal tweaking in the design and the functioning of these institutions undertaken so far are wholly inadequate to deliver the expected outcomes. Secondly, most of those with authority and delegated power at the outposts have become centres of rent-seeking. Lack of accountability has made rent-seeking widespread and freewheeling. There is no gainsaying that the setting is used by the people of means with unrestrained zeal to benefit themselves or work with impunity in the face of all manner of violations.
If the deficit is not addressed with missionary zeal, people’s faith, which is already sinking, will dissipate completely
India must now look to re-engineering the design of these institutions forthwith. Whereas rent-seeking is a human phenomenon and almost impossible to eliminate entirely, it can be minimised by a) education, b) accountability (with tough and swift action to set out examples), c) transparency and d) the use of technology. In case if the deficit is not addressed with missionary zeal, people’s faith, which is already sinking, will dissipate completely.
Henry Clay (April 12, 1777 – June 29, 1852), the American attorney and Statesman, once observed, “Government is a trust, and the officers of the government are trustees; and both the trust and the trustees are created for the benefit of the people.” To live-up to this trust calls for some fundamental change in our approach to reforms. Many of the politico-economic pundits talk of second-generation reforms but restrict their recommendations to supplementary reforms of factors of productivity. The second-generation reforms call for a rewiring of the entire institutional framework, if we indeed seek to build a great nation. We must preserve independence, allow institutions to work freely and forcefully but keep a sharp eye for systems that build power only to exploit the people and self-perpetuate themselves. All institutions are, must be and at the peril of being dissolved, should work to serve the ordinary citizen. We need to work hard to achieve this and to meet our obligations of building an egalitarian society full of justice, liberty, equality and fraternity. I will attempt to discuss some solutions in a later piece.
(The writer is a former Chairman of SEBI and LIC. Views are personal)