"We are all for reforms and rightsizing or downsizing of government, whatever you call it, as long as it doesn’t affect our ministry." This cryptic and candid comment by the late Pramod Mahajan in 2001, typical Mahajan speak on reforms, captures the essence of the distance between performance and the oft-repeated promise of ‘minimum government’.
Context is critical. On February 28, 2000, the Atal Bihari Vajpayee government set up the Expenditure Reforms Commission (ERC) under K P Geethakrishnan to ‘find a solution to the problem of high rate of growth of non-developmental expenditure by the Government and to begin the process of downsizing’. This year marks the 21st anniversary of the promise.
The Geethakrishnan Committee reviewed 36 ministries /departments/organisations and submitted 10 reports on restructure of government and administration. The reports occupying 1,300 plus pages triggered a debate in the country on the role of the state and the state of administration. What eventually came of the reports is best illustrated by this one response in Parliament. “The report of Geethakrishnan Committee has been considered... However, no final decision has been taken in the matter.” Mahajan, then the go-to-person for any question which began with ‘What is happening to…,’ was prescient and not just about the ERC of 2000.
In 2021, India’s administrative architecture continues to bear the burden of the 1950s design which was chosen to execute the Harrod-Domar model of state-led economic development. The central government has over 50 ministers and departments, besides over 500 autonomous bodies. Indeed, the largest ministries and allocations are those dealing with subjects under states.
Between 2001 and 2011, the wage bill of the central government went up from Rs 31,950 crore to Rs 92,785 crore for about 34 lakh employees. In 2021-22, the wage bill for 35 lakh persons stands at Rs 2.54 lakh crore. The weight of the costs is exacerbated by the cost of the inertia which arrives with size.
The quest to restructure the Leviathan has flailed over decades. Five years after the ERC, the Manmohan Singh government set up the Second Administrative Reforms Commission chaired by Veerappa Moily to ‘suggest measures to achieve a proactive, responsive, accountable, sustainable and efficient administration for the country at all levels of the government’. Between 2005 and 2009, the ARC submitted 15 reports spread over 3,500 pages detailing problems, processes and reforms.
To know what came of the ARC II recommendations would probably require an archaeological dig — incidentally, the DOE archives contain notes on how to use both sides of the paper for typing and issue of SIM cards for overseas travel. Presumably the political conclusion, after the 2009 Lok Sabha victory, was all is well! The pathos visible in UPA-II and the policy paralysis shattered the notion. Indeed, in the run up to the 2014 elections, PM Narendra Modi evangelised subscription to the idea of ‘minimum government, maximum governance’.
The 2014 Budget invoked the idea and set up the Expenditure Management Commission under former RBI Governor Bimal Jalan. The report was submitted in 2015 but not made public and the follow-up action is in the domain of known unknowns. What is interesting is that four years later Jalan was asked to head a committee to facilitate transfer of reserves from RBI to government for funding expenditure.
In 2021, restructuring, rationalisation for expenditure control and process ease seems back on the agenda. A task force under Sanjeev Sanyal, principal economic adviser, is looking at departmental overlaps and need for autonomous bodies.
There are curiosities galore — the bureau of industrial standards is in the ministry of consumer affairs, boards of coffee, rubber, tea are in commerce and industry ministry as are fisheries and agri produce. There is the issue of location and, more critically, the question of whether there is a need for many of these bodies in the new millennium.
This week, the PM announced the scrapping of 6,000 compliances to ease business climate. It is a welcome recognition of the hardships. There is also the Permission Raj — a new power project requires over 90 clearances, a hotel over 110 clearances and so on.
Labour laws have been codified but MSMEs face up to 60,000 possible compliances and over 3,300 filings. The fulcrum of complexity is located in the state’s historical distrust of the entrepreneur.
This is aggravated by the landscape of governance. Three decades after the 1991 liberalisation, India has ministries for civil aviation, telecommunication, steel, chemicals, fertilisers, shipping, I&B, textiles et al.
To paraphrase Parkinson, permissions and clearances expand to keep the behemoth employed. Peculiarly, the government is the policy maker, a player owning PSUs and the regulator in many sectors. World over, telecom, civil aviation, broadcasting and shipping are governed by independent regulators answerable to elected bodies.
Conceptually, minimum government is less about number of ministers or ministries and more about less government — aka minimal interface. The moot question for the government to answer is whether it should be doing everything that it is doing.
Author of The Gated Republic, Aadhaar: A Biometric History of India’s 12 Digit Revolution, and Accidental India