A more adventurous state

Written by Manish Sabharwal | Updated: Nov 7 2013, 18:21pm hrs
Last weeks Supreme Court instructions to the Central and state governments on civil servants and last months CBI pursuit of Kumar Mangalam Birla and P.C. Parakh build on a recent tradition of Indias five other policy backseat drivers (CAG, CVC, the press, NAC and NGOs) of confusing the accounting of accountability (did you mindlessly follow checklists, rules and procedures) with the account of accountability (did you do the right thing). Accountability may be overdue, but it must be effective. The breathlessness of the Indian state today emulates Pandolfo Petrucci, the tyrant of Siena, who according to Machiavelli, conducted his government day by day, and his affairs hour by hour, because the times are more powerful than our brains.

But Indias complex problems need the ambition, gumption and imagination both private and public that have been hit by the simplistic accounting accountability of the last five years. The biggest job for the winner of the 2014 elections is catalysing policy and private entrepreneurship by restoring Indias confidence in its future. Even Keynes patron saint of the dysfunctional ayatollahs at the National Advisory Council recognised that the most important economic variable is expectations.

Parents and poets have long tried to understand the sources of ambition, gumption and imagination. Are they like shoe-size or height, something that is given and cannot be changed Or are they like muscles that can be developed by working out Research suggests that people take bigger bets when they have more confidence in the future because they accept longer payback periods. They also take bolder bets when they have the room to make mistakes the old quip about entrepreneurship is that its the same outcome if you jump from the 10th or 50th floor of the building, but with the jump from the higher floor you have more time! Economist Albert Hirschmans hiding hand was about the necessity of entrepreneurs operating under the useful delusion that what they are attempting is less risky than reality.

Entrepreneurship is about trying to prove Hamlet wrong, and success comes from failure. Hamlet like Indias seven policy backseat drivers took himself too seriously, thought he needed to be perfect and could not imagine learning from mistakes. But the best plans do not anticipate the future; they help shape it. Research suggests that entrepreneurs are worse than pessimists at knowing the future, but they tend to be more successful anyhow, because they have the courage to try things, and also because their can-do attitude carries others along. Imagination is also crucial for progress; it was science fiction writers who first envisaged cellphones, vertical take-off planes, robots, satellites, space travel and cyberspace.

Lant Pritchett of the Harvard Kennedy School highlights the contradiction between If at first you dont succeed, try and try again and Insanity is doing the same thing again and expecting different results in his great paper The Folk and the Formula. He suggests that the correct version is If at first you dont succeed, try something different and cautions against isomorphic mimicry which involves copying surface effects for camouflage. For example, Kenya has the best anti-corruption legislation on paper and India has 100 per cent-plus primary enrolment but poor learning outcomes, etc. He urges creating the policy space for mistakes and experimentation by differentiating between the accounting and account of accountability. This is particularly relevant for India where, in the last five years, not distinguishing between fraud, incompetence and bad luck by our seven policy backseat drivers has hurt not only policy entrepreneurship but also policy functioning. Its like a curious autoimmune disease where your body has turned on itself. Political leaders arent governing, civil servants arent implementing or innovating,

and consequently entrepreneurs arent investing.

The question that bothered me the most a few months into business school in the US was, these Americans arent smarter than us, why are they richer than us Poverty is a complex phenomenon for which India has many alibis: the British, the climate and much else. But the more interesting question than why we are poor is what we can do about it. The solutions are hardly unknown; the policy entrepreneurship of Deng Xiaoping took 600 million people out of poverty in China with massive non-farm job creation. Later this week, the Third Plenum of the 18th Communist Party Central Committee will unveil what President Xi Jinping has called a master plan for reform. It is expected to focus on rebalancing from investment to consumption, accelerating urbanisation and upgrading Chinas innovative capacity. Of course, while the technocratic process of China might generate superior short-term results, it is also a system that allowed Maos repressive regime to exist. India must find its own way to policy accountability because the current simplistic interventions are not working, and because it is only a small leap from doing no evil to doing nothing. There is also no precedent of any country facing Indias situation of needing jobs for 10 lakh kids every month for the next 20 years.

A government of clerks, pessimists and auditors may seem like good value for money but a less adventurous state cannot solve our problems. We need our political leaders, bureaucrats and entrepreneurs to think big, boldly and creatively. The urbanist Jane Jacobs felt that being magnificent literally, makers of great things has been a characteristic of leaders throughout history, not because they love opulence, but because they need to show the scope of their ambition to bring people along with them. The election campaign for 2014 has not yet shown opulence or ambition. And consequently, India has not yet seen the hope that comes from fear the reason Spinoza called them twins.

The agenda for the new government is clear: rethinking our accountability framework in a way that controls policy abuse but restores the magnificent but suppressed ambition, gumption and imagination of Indias policy and private entrepreneurs.

The writer is chairman, Teamlease Services