India - Time to realign the Indian state

Harish Khare

India can cope with the global fiscal meltdown only if it is able to ensure that policymaking is firmly aligned on the side of public purpose, not private greed.


On Wednesday, Chandrayaan-1 was successfully put into the orbit, a magnificent scientific achievement. A day earlier, the Vilasrao Deshmukh government put the chief of the rampaging Maharasthra Navnirman Sena behind bars. And a day still earlier, Prime Minister Manmohan Singh assured parliamentarians and the nation that “there is no place for fear. This is the time for unity of purpose and resolute action.”

All these can be taken as manifestations of an activist state at work, and ought to be placed in the larger context of failure of ideas and ideologies behind the current global economic meltdown. Three decades of ideologically fashionable sniping at the state and its role as the custodian of the public interest has come to an abrupt end. And, it is about time it did.

The worldwide financial crisis can and must be a sobering, as also chastening, experience for us, particularly to our policymakers and those in the political space who pretend to serve the masses. There are a few lessons that suggest themselves.

First, we need to detoxify our economic decision-making of its current biases and assumptions, without having to dismantle the post-1991 architecture, or even without turning our back on the market and its capabilities. While there can be no return to the bad old rent-seeking days, it is necessary to scrutinise our policy prejudices.

Nothing better illustrates these embedded biases than the official responses to the presumed crisis in the aviation sector. The country watched in utter disbelief as a Minister chose to act as a spokesman of the industry — correction, of two industrialists — rather than give primacy to his role as the custodian of the larger public interest. Then, another Minister allowed himself to be persuaded of the need to dole out immediate help and relief to the two corporate entrepreneurs who, till the other day, were being serenaded as successful practitioners of the market magic.

It was left to a Left parliamentarian from Kerala to sum up the lopsidedness in the current priorities: “The Centre has not yet found time to discuss demands from State governments on the allocation of PDS rice. But it has got the oil Minister to change fuel allocation rules for airlines in neat three hours.”

This is the time for the Prime Minister to take a call. Dr. Singh needs to send out the message in and outside the system that while governments can and must put in place policies designed to help invite private investment and promote entrepreneurship, they do not have the responsibility to ensure that the private sector makes enormous, even windfall, profits. In a democracy, a government will be respected and obeyed only if it is seen as promoting the larger public good, which is socially relevant and morally defensible. No democratically elected government can allow itself to become an instrument of private greed.

The Prime Minister has to tell his ministerial colleagues and senior bureaucrats that they have to respect the Indian values and sensibilities, rather than the demands, expectations and prescriptions of the “captains” of industry and high finance who think they have the Davos mandate. The only mandate relevant to the Indian decision-maker is the idea — and ideals of public purpose. He ought to feel in his bones whether a policy prescription is good for India or not. This would be possible only when the decision-maker reflexively believes that his primary obligation is to the Indian people and their welfare, not to the transient (and self-serving) prescriptions from the World Bank/IMF crowd.

Fashionable willingness


Of late, there is an all too fashionable willingness among the senior bureaucrats to adjust their native impulses and, instead, accommodate the wealthy American lobbyist. This has been one of the unintended consequences of the Manmohan Singh administration’s engagement with Washington over the civil nuclear agreement.

The harsh fact is that the post-1991 mandate has run its course in India, and those policy choices would have to be politically revalidated; it is obvious that such an endorsement can become available only if the policymakers are seen as working for the larger public purpose, instead of playing a junior partner in the game of crony capitalism.

The economic crisis and its unsettling fallout have underlined the critical importance of the political leaders’ trustworthiness. The rioting in Mumbai over jobs in the Railways for Maharashtrians and the counter-rioting in Patna are only the latest reminder of the fragility of the popular acceptability of our democratic arrangements. As the economic situation becomes less certain, the citizens as well as the consumers, and the investors will want to be reassured of the integrity and trustfulness of our governmental leaders.

Therefore it becomes imperative for us to ensure that our regulatory institutions, especially those dealing with the economy, are strengthened and empowered. To begin with, it should be ensured that the men and women chosen to preside over these institutions are individuals of merit, integrity, competence and wisdom; these appointments should not be allowed to become a subject of bargaining and negotiations among coalition partners. This is the minimum that is expected from a Prime Minister who has so admirably become the symbol of integrity in public life.

An unhappy perception is gaining ground that the regulators are not being allowed to discharge their responsibilities to the best of their professional competence; perhaps, what is worse, whenever the government can, it does ignore the regulators’ advice, notwithstanding the statutory requirements to place the recommendations in the public and parliamentary domain. Lawfulness in governance and regulatory mechanism needs to be respected, especially by the government and its functionaries. Institutional resilience is the best anti-dote to economic shocks and dislocations. And, in these times of fiscal meltdown, it is vital to shore up constitutional institutional arrangements. The judiciary, in particular, needs wise leadership all around if the courts are to remain a vibrant institutional arbiter of lawful economic growth.

Then, the economic policies, if not policymakers, ought to be fire-walled against corporate greed. The current global economic crisis presents us with a collective opportunity to question dubious claims and assumptions made on behalf of the market and its servants in the corporate crowd.

The scramble among various States to invite the de-Singurified Tatas to relocate their Nano plant was, to say the least, rather unseemly. The industrialisation agenda has to be placed in the larger context of overall public welfare, there has to be a balance between private profit, personal initiative, on the one hand, and the State or Central government’s largesse, concessions and public good, on the other.

Democratic irony


Unfortunately, the economic crisis has surfaced at a time when we are moving inexorably into the election phase. A very large chunk of our political class is going to remain preoccupied with the elections, first in the north, and, a little later, in the whole of India. This, in effect, often turns out to be the time for political leaders and parties’ vulnerabilities to the corporate crowd and its money power. It is perhaps a supreme democratic irony that come elections, the leaders become invariably inclined to inflict on themselves corporate linkages and obligations which can be repaid only at the expense of public good.

The coming contests would also encourage political parties to seek votes by demanding greater allocation of resources for their regional/ethnic/caste constituencies. This is no surprise. After all, our public discourse and popular culture have got used to selling dreams of easy prosperity, without hard work and sacrifice; now, all our citizens, especially those from the lower strata, demand that the government make the economic dreams come true for them too. And, there is a willingness as also a “democratic sanctity” to make such demands roughly and violently. In other words, the moral efficacy of the post-1991 economic era has come under severe stress.

At a time when the polity needs competent capacities for honest compromise and just bargaining, the political crowd will be distracted in the reverse direction. This is the cost of democratic arrangements, and the cost should not be grudged too much. At the same time, the grand requirement remains that we conduct our democratic rites in a manner that ensures that the Indian state and its policy instruments are re-charged with their democratic obligations.