Photograph of Anil Chawla

IMPROVING THE EFFICIENCY OF INDIAN STATE

Author - Anil Chawla


On the eve of Republic Day (2003) President of India spoke about trying to make India a developed country by 2020. This is likely to remain a pipe-dream unless India improves her efficiency. India must learn a lesson from the collapse of USSR.


"WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN SOCIALIST SECULAR DEMOCRATIC REPUBLIC and to secure to all its citizens:

JUSTICE, social, economic and political;

LIBERTY of thought, expression, belief, faith and worship;

EQUALITY of status and opportunity;

FRATERNITY assuring the dignity of the individual and the unity and integrity of the nation;"

Above Preamble to the Constitution of India has defined the direction of Indian polity for the past fifty-three years. The political class has emphasized Justice, Liberty, Equality and Fraternity ignoring other values like security and prosperity. The paradigm of politics in Independent India has been based on a fair division of the existing wealth instead of aiming for creation of wealth. The key assumptions of the paradigm are as follows:

  1. A nation's wealth is static and limited.


  2. Economics is a zero-sum game. In other words, one person's gain has to be someone else's loss.


  3. State (or Government) can act as a medium for social justice, independent of social dynamics and ground realities.


  4. State in its role as employer is primarily a salary-distributing machine that must keep considerations of social justice as its core focus. Corollary of this is that ends of social justice are served by State acting as a just and fair salary-distributing machine.


Needless to say that each of the above assumptions is misleading, false and harmful. Given two persons and a piece of cake, there are always two options. The first option is that the two fight it out for a larger share of the piece; while the second option is for them to try to increase the size of the cake, or better still, get some butter and fruits to go with it, so that there is really no need to fight. For more than five decades successive Governments have adopted the first option and have strived to regulate the 'fight for a piece of the cake'.

Surely, everyone remembers the story of proverbial monkey who volunteered to act as an arbitrator between two cats fighting over a chapatti and finally took away the chapatti for himself. Governments (central, states and municipal) have been doing almost the same in the name of regulation. They are taking away economic resources from society to distribute salaries, with hardly anything left for productive investment.

Governments and Government institutions in India (we can refer to them collectively as "Indian State") have become large elephantine structures with ridiculously low efficiency levels. Indian state is, today, the biggest parasite eating away productive resources of the country. Indian political class lacks the will to admit it directly, though privatization of state owned enterprises (SOE's) is a tacit admission of the fact. It must be realized that while privatization may be a short and easy cure for SOE's, there does not exist any such panacea for essential State apparatus.

No country can do without the machinery of Governments, municipal corporations and Government institutions. Essential functions of governance cannot be privatized. There is no alternative to increasing the efficiency of State machinery, if a country wishes to become strong and capable. There has to be a change in paradigm of governance in India. The key words of the new paradigm will be efficiency, effectiveness, productivity, optimum utilization of resources including human talent, and creation of wealth and economic opportunities.

Under the new paradigm, Government machinery will cease to be a giant salary-distributing machine geared towards correcting real and imaginary historical wrongs. Performance, talent and capabilities, ability to deliver results, creation of wealth and productive assets will be the key considerations for evaluation of Government employees, systems and structures. Such a change will need a break from the present day assumptions as outlined earlier above. The new doctrine will be based on the following:

  1. A nation's wealth is a function of the manner in which the nation uses her natural resources and promotes and provides opportunities to her talented and capable people.


  2. Economics is based on the technological state of a society. As a society advances technologically, wealth is created.


  3. The primary duty of Government (and Government institutions) is to secure, build and ensure conditions that are conducive to creation and maintenance of wealth.


  4. State cannot act against social dynamics, but it can and should act as a catalyst for social change that leads to more equitable distribution of resources and assets.


  5. State in its role as employer should (and even now does) provide direct employment opportunity to only a small percentage of the population. Hence, using employment in Government service as a means to undo social injustice of centuries is a futile exercise.


  6. State machinery should be such as to use minimum resources of society and deliver maximum performance.


A move towards governance based on the above doctrine will need a complete overhaul of the structure and setup of Government machinery in India.

Corruption is often cited as a key problem of Indian government machinery. But corruption is only a minor part of the malaise; major problem is inefficiency and lack of productivity. Take for example, the case of a teacher who does not teach or, even worse, teaches incorrect stuff. One can also consider the case of a bank manager who never takes a bribe but routinely rejects all applications for loan to keep his career free of any bad loans. Both, the teacher and the bank manager are not corrupt but are non-productive. In fact, if they were corrupt in a modest way, they would serve the society better. Let us say the bank manager took a small percentage of the loan as bribe from the borrower, he would stop being a negative roadblock in the circulation of money. In such a case there would be flow of credit but the cost would be higher leading to inefficiency in the system. One cannot argue for the corrupt, but one cannot find fault with the tendency to tolerate inefficiency instead of roadblocks. From the perspective of the society as a whole, the need to get rid of roadblocks is more urgent than the need to correct wheels that need oiling before moving even an inch.

Of course, ideally the system must perform with maximum efficiency and there should be no tolerance for inefficiency in any form. Such an ideal state cannot obviously be achieved either by cosmetic changes in the state machinery or even by change of ruling parties. It obviously needs complete reengineering. There is a need to look at the genesis of the malaise and to get at the root of the disease. India's gigantic bureaucratic machinery owes its origin to the British who governed the country with a much smaller setup. In the past fifty-three years the size of the paraphernalia of Indian State has expanded by leaps and bounds. Increase in size has been accompanied by a still higher increase in inefficiency and non-productiveness. The reasons for this are many.

Some people (like the President of India, a few years ago) like to blame the people of India. But, a country has to be run by the people that she has. What can be changed is the Constitution that has led to the ever-increasing inefficiency and non-productiveness of Indian state. It is necessary to examine critically the Constitution and all laws to identify factors, conditions and elements that act as impediments in increasing efficiency, effectiveness and productivity of Indian state.

The list of such impediments may be long. It may be required to do away with or modify the Constitutional protections available to Government employees. A cost-benefit analysis of the present system of caste-based reservations will have to be undertaken. The cost of employing an incompetent person has to be measured not just in terms of salaries and benefits paid to him, but also in terms of the costs of missed opportunities, of negative motivation of talented persons and of losses caused by inefficient working. No other country in the world has a similar system of reservations. USA, where problem of racist discrimination has existed for long, has a policy of 'equal opportunity' guaranteed by law. USA may not have achieved significant success in eliminating racial discrimination, but whatever success US has achieved, it has been done without any loss of efficiency and productivity. On the other hand, the success achieved by reservation system in India is, at best, dubious, but the collapse of efficiency and productivity is real and is obstructing the growth of the country.

No country can survive if its State machinery is inefficient. USSR did not collapse because of USA, but because of its own internal inefficiencies. Similarly, the external threat that India faces from Pakistan and China is insignificant as compared to the threat from internal weaknesses. It is high time that Indians woke up to this harsh reality before it is too late.




ANIL CHAWLA

26 January 2003

Please write to me your comments about the above article.
anil@samarthbharat.com
hindustanstudies@rediffmail.com



ANIL CHAWLA is an engineer by qualification but a philosopher by vocation and a management consultant by profession.


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