It rained through 15th August 2003. After Lahore, the moon has become our new samjhauta destination. In Tripura, 26 people were killed, but Kashmir was smooth. On a BBC broadcast our politicians appeared more incompetent than they surely are, and the world?s longest (and totally dysfunctional) towel was on display.
In modern times, 56 years is a long haul, even for a civilisation that is thousands of years old. So it is but natural that Indians seek to construct a scorecard ? where did we get it right, where not so, and by how much. As well as the counter-factual: Had we but made timely course corrections, how much farther would we have got? (The answer is a lot further). However, there is a larger problem ? confusion between ends and means. All those indicators of progress, economic growth, infrastructure, average life expectancy, and the proportion of people in poverty are all outcomes of a process.
The process has two components ? policy and institutions. It is possible at any given point in time to have bad policy and good institutions, or good policy and bad institutions. But in a dynamic setting, good policies reinforce good institutions and vice versa. Well functioning institutions deliver public services most efficiently, that is, they optimise scarce public funds. They also generate the atmosphere where public dialogue is most meaningful, that is, the right kinds of questions are asked. The corollary is poor public service delivery, ever-acute funds squeeze and too much of the wrong kinds of questions.
If we reflect on the past decades, the decay in many institutions is quite plain, encompassing those aspects of government that are very important to the ordinary citizen. Municipal bodies, for instance, were the testing ground for India?s first generation of nationalists. They ran the primary and secondary school system and sometimes those at higher levels too, and most middle class families sent their children to such schools. The level and quality of drinking water, sanitation and public roads were reasonable ? at least by the global standards of the time. Funded from local taxes and user charges, these municipal bodies had little or no dependence on devolved finances. Today, the government directly runs the public school system and most middle class families avoid sending their children there. Public utilities run, but just about ? and are much worse in secondary towns than in the metros. Despite devolution, finances are strained. Properties are not adequately assessed to tax, water charges are not adequate, and the collections trail behind the billing.
Take another example ? the electricity business. Begun in most parts of India as private enterprise, later mostly taken over and expanded by the state, for decades there was no problem reading the meter, delivering the bill and collecting the proceeds. Most state electricity boards were in the black, earning a profit of 3 per cent on their assets. Today, their combined losses are in the region of Rs 50,000 crore each year. In remarkable contrast, some organisations have suffered less. The most striking example is the postal department and, to a lesser extent, the railways.
If we try and mark a point in the timeline as to when the decay began, it would probably be the latter half of the sixties. Some regions were more severely affected than others. In fact, it was the cumulative effects of the regional differential in the rates of decay of institutions that today account for the yawning gap between southern and western India and the eastern half. In colonial as well as post-Independence India, the Centre was the unequivocal leader, possessing superior qualities, both of architecture and raw materials, and was always way above the average. Offsetting this was the unpleasant electoral arithmetic of the Lok Sabha, which colours the nature of the dialogue.
So, what are the pressing questions of the day? A temple-mosque controversy, more job reservation, the life span of cows and now a manned mission to the moon. If wrong kinds of questions dominate the public space, surely the underlying institutions require remedy if we are going to be headed much further. The private sector, which funds the politicians, must take the lead, for someone has to.
The author is economic advisor to ICRA (Investment Information and Credit Rating Agency)
