In the last few weeks the Centre and RBI have announced a slew of economic reforms. We have seen the RBI transferring to the Centre a whopping `1.76 lakh crore out of its ‘profits’. The Centre also announced a merger of public sector banks. Even as these measures are meant to stimulate the economy, we also read about the slump in several sectors. Evidently, there is something going wrong somewhere in the economy, with GDP growth at an all time low of 5% coupled with soaring unemployment.
With exports too facing hurdles with inward looking trade policies, particularly in the US and EU, more job losses are only to be expected. Increasing security concerns, particularly in Kashmir and the Indo-Pakistan border, call for greater defence preparedness and consequential expenses, bringing government resources under greater stress. Given this context, the alacrity with which the Centre has acted on the economic and fiscal front needs to be appreciated, though experts differ on the wisdom of some of the decisions, mainly those relating to 100% FDI in coal mining, relaxation of local sourcing norms for single brand retail and the timing of the merger of the banks.
The Centre evidently wants to enhance the confidence of the investor and trigger the spending instinct of the consumer.
The moot question is whether the measures will elicit the desired responses. In macroeconomic management there are always imponderables. However, there are areas where the government has better control.
The administrative machinery with its multiple levels, mandated to implement these crucial measures is something that needs to be calibrated to meet the challenge. Announcements have to translate into administrative action in sync with the intentions of the Centre. It is not being insinuated that major announcements will not be converted into administrative measures. Of course the required notifications will be issued, banks will be merged, and several orders and other macro-level actions will be done. But will our banks at the branch level and government offices at the district and sub-district levels, and the local bodies take upon themselves the task of promoting investment? Lofty announcements meant to bring in major changes are often thwarted by administrative laxity and the addiction to old habits.
The Centre often falls into the trap of perception fallacy. The reality at the branch level of a bank is quite different from the elite board rooms of the bank headquarters or the rarified corridors of power in New Delhi. Even in states, the distance between the capital and the village level is quite pronounced. The several levels of administration from the panchayat level up to the Central ministries do not act and react in tune with the policy intention of the government owing to a number of distorting factors. Employees’ Organisations with political affiliations are a major agent of distortion. Depending on their relationship with the political party in power, employees organisations decide the pace and commitment with which new measures are implemented at the grass-roots level as well as at the state capitals. This lack of political sagacity to distinguish between the government and the political party that constitutes it is indeed the tragic flaw of Indian polity.
That being the reality, it will be nothing short of a make-believe if the Centre waits for the harvest after sowing the seeds by way of policy changes and major measures at the macro level. This anxiety is brought home by the sheer lack of political or government concern or discourse about administrative reforms. Nothing is more critical today than overhauling the bureaucracy. The way it goes about doing its business, the way it thinks, the manuals and orders that control it, irrelevant hierarchies that only retard and considerable deadwood that clog the wheels of governance cannot be left unaddressed. We should not be losing even a day to address bureaucracy’s inherent sloth, deep rooted fears, proclivity to make things complicated so as to facilitate corruption, the unholy nexus between the unscrupulous political leadership and the bureaucrats and a host of such deep-set archaic attitudes and lethargic habits. How technology can be tamed as a powerful tool to counter these attitudes and weed out corruption is a major area that merits immediate attention.
The political leadership has to resist the temptation of rewarding political commitment among the bureaucrats by selective rewards and targeted punishment. Tempting in the short term, it divides civil service as ‘our people’ and ‘their people.’ In such a slanted world, professional competence and fairness of the civil service become instant casualties. The government’s silence on administrative reforms is indeed quite ominous. In fact, the usual Administrative Reforms Commissions which work in a relaxed time frame may not be the immediate answer.
The Centre should come up with a set of cardinal decisions that encourage the bureaucracy to be impartial, fearless, professional, honest, and result-oriented. It should show its creativity and courage to think out of the box to trust, to delegate and to make bureaucracy accountable and responsible with appropriate incentives and rewards. Without this inevitable home work, the outcome of these ambitious policy initiatives and crucial measures may fall short of realising their true potential.
Former Chief Secretary, Government of Kerala and former Vice-Chancellor, Thunchath Ezhuthachan Malayalam University