Dr. Bimal Jalan - Governor, Reserve Bank of India     

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State of Politics, Civil Service and Governance in India

It is a great honour for me to be here today for the Memorial Lecture in honour of N.P. Sen. I had the privilege of knowing him and members of his family personally over several decades, and I am grateful to Nandita Sen and Badshah for giving me this opportunity. I am glad that Probir and Binoo are also here on this important occasion.

In this audience, I don't have to say much about N.P. Sen's multiple contributions to our country. He held several positions over nearly fifty years of public life. He was variously Principal of the Administrative Staff College, Chairman of Indian Airlines, Managing Director of Food Corporation of India, Director in Commonwealth Secretariat, London and also Chairman/Director of several companies and Undertakings. What is particularly striking about his professional career is that in all the organizations with which he was personally involved, management by consensus, not only at different layers of management but also in consultation with workers and their multiple unions, was among his articles of faith. Another important belief that he pursued in all the organizations that he headed, was that managements of these organizations must do their best to pursue certain social objectives for advancement of the society. In pursuing the social agenda, N.P. also introduced effective management practices so that maxi mum benefits for the people could be generated without jeopardizing the financial health of the concerned corporate entity.

It is a very special occasion for me and, given N.P's multifarious contributions to the development of our country, it was not easy to decide on what I should talk about today. In this Lecture in N.P's honour, I had two choices: I could either choose to highlight India's positive achievements as the emerging economic power of the 21st century or deal directly with several problems of concern to all of us as citizens of this country. I chose the second alternative and today in the midst of this distinguished audience, I propose to exchange some views on the dismal state of politics and administration and governance in India. I believe that in all these respects we are now facing multiple problems and unless we endeavour to tackle at least some of the difficult issues with the same resolution and clarity as N.P. Sen did in his professional life, the process of national integration, equity and economic progress, which are the hallmark of India's democratic heritage, may be at stake.

I also feel that what makes the present situation in politics, and governance much more alarming than during the earlier decades is that it is no longer "episodic" or temporary. Over time, it has become "systemic" and spreads across practically all segments of society, including governments at Centre and States, public institutions, enterprises and delivery of public services in different sectors.

In this context, let me briefly deal with subjects of Politics and Governance and their impact on the state of economy. Without doubt, the state of governance in India is abysmal and has been deteriorating over time. Governance is the responsibility of the government in power in states and the centre. The deterioration in governance is most visible in respect of public delivery of services to the less disadvantaged as well as maintenance of law and order, and provision of basic services.

A fundamental reason for this state of affairs is the proliferation of ministries and offices of government. There is no item of government business for which a single ministry can be held responsible, except perhaps taxation or budget-making. The number of ministries has shot up from 18 in 1947 to 51 now, and the number of cabinet ministers is 33 with 7 independent ministers of state in charge of separate ministries, and 37 ministers of state who report to cabinet ministers - a total of 77 ministers in all. Most of these ministries have very little to do. They also have more than one department and several offices. The rigid hierarchy in the delivery and decision making process further ensures that horizontally, as well as vertically, a dozen or more offices are likely to be involved from different ministries even when there is no policy to be decided, such as, say, provision of drinking water or electricity.

In addition to the centre, there is similar proliferation of governmental organizations at the state and district levels. It has become a routine matter for policy to be announced by the central government, but implementation to be in the hands of state government and their subsidiary organizations. Central government blames state governments, and the latter blame the central government rigidity in the provisions of the scheme or inadequate allocation of funds. Within the central government, it is now common for one department or ministry to blame another department for any drawback in either policy formulation or policy implementation.

India, at the time of independence, inherited a civil service structure which was generally referred to as the "steel frame" and was supposed to be the envy of the post-colonial world. What made India's civil service an extremely effective instrument of governance was the independence that civil servants enjoyed in effectively implementing policy decisions, which were taken by political leadership. There was a clear separation of executive powers between ministers and civil servants within the executive. Gradually, but surely, all this seems to have undergone a change, particularly after the emergence of coalition governments at the centre and states with short life expectancy.

As emphasised by several former cabinet secretaries and other high level officials in their memoirs, most of the administrative powers which were earlier in the hands of the civil servants have now been taken over by political masters at the ministerial level who have no direct or indirect experience of administration. As politics has become more combative and personalized, and coalition governments have become less secure about their tenure in office, transfers of civil servants have also become very frequent. Some years ago in U.P., for example, where two parties resolved to have a 6-monthly tenure in government, there were as many as 1000 transfers within a year amongst members of the IAS and the IPS. First head of government transferred senior officers at an average rate of 7 per day. The second head of government, who took office after the expiry of 6-month period, decided to beat this record and transferred officials at the rate of 16 per day!

As a result of frequent transfers, administration has naturally become weak. What is even worse is that civil servants, instead of being independent of political leaders or parties in power, have now become sub-servient to them. As a result, corruption has also become rampant, both to avoid transfers as well as secure remunerative postings.
I must make it clear that I am referring here to the system as a whole and not to individuals. We are fortunate to have many first-class civil servants at different levels who perform efficiently without fear or favour.

Recent developments in politics are too well known to require any elaboration. While we can take justifiable pride in our vibrant democracy and system of free and fair elections, there is also very little doubt that the shape India's politics has changed fundamentally with emergence of multi-party coalition governments without a shared programme or agenda. We simply have to reflect on political events in states in the past few years. What is happening in several states, and to some extent at the centre, are not accidental. It is reflective of a deeper malaise that is beginning to affect our political system. Let me just highlight 3 political developments which are likely to have substantial long-term significance:

  • The first is the power of small parties in recent coalitions, particularly since 1989. As we have seen, a party with less than 5 percent of the seats can enjoy immense clout - and many of these parties have no national agenda, but only local agenda. (We had nine governments since 1989 with an average life span of 2 years. Excluding four full 5-year term governments, the average life span of remaining five governments was less than one year).
  • Second is the shrinking role of Parliament - Even the Union Budget of the government is often passed without a discussion and with a "voice vote". A few years ago, so much so that the 2nd part of the Budget session was first cancelled after approving the budget and then reconvened. Leaders of major parties decide what will happen. MPs themselves have very little to say.
  • Third political development is the erosion of collective responsibility - There has been an erosion in the constitutional concept of collective responsibility of the Cabinet and Government power in regard to all matters of public importance. On several issues of public importance there are many disparate voices emanating from different sources from same Government.

Thus, three essential pillars of parliamentary democracy are now weaker than ever before - majority party rule, the role of parliament, and collective responsibility. The expectation of a short-term in power has further eroded the respect for political propriety.

Let me now summarize and give an overview of where we are in relation to politics and governance in India and their impact on the economy. On the economic front, there is no doubt that India's fundamentals are strong. In last couple of years growth has been relatively low and inflation high; yet India's comparative advantage in terms of technology, skills, savings and investments as well as an attractive destination for capital inflows remain strong. However, we face substantial problems in the areas of governance and administration. In politics we are now going through a new phase where coalition governments with a large number of small regional parties with differing agendas are likely to become the norm rather than an exception. Several of the constitutional provisions about the working of our rightly applauded parliamentary democracy are also facing some question marks.

We also seem to specialize in the law of unintended consequences. Some important examples are:

  • anti-defection law;
  • the proposal to levy retrospective taxation a couple of years ago and then reverse it;
  • introduction of more than 100 schemes for delivery of public services to the poor with massive diversion of public resources to unintended beneficiaries.

On the whole, we seem to be going through a period of transition with a growing disjuncture between economics on the one hand, and governance and politics on the other. As we look to the future, the overarching issue that India faces is whether in the years to come we will be able to resolve what can perhaps be described as "public-private" dichotomy in the functioning of our country. It is a striking fact that economic renewal and positive growth impulses are now occurring largely outside the governmental sector-at the levels of private corporations, autonomous institutions and individuals at the top of their professions in India and abroad. In the functioning of the government and politics, once elections are over, we see a marked deterioration at all levels.

Can something be done to resolve this dichotomy and improve the functioning of politics and governmental system in the future? Elsewhere, I have suggested an agenda for political reforms with a view to improving a system of accountability and functioning of political parties once they form a coalition. Let me just mention a few areas where I believe reforms are absolutely essential if we have to realise our full potential as an emerging economic power:

  • Within the framework of parliamentary form of government, an important priority is to further reduce the political role of the government in the economy, particularly the power of multiple ministries and short-lived governments over public sector enterprises. Privatisation is not the only answer. The real question is whether we can create an "arm's-length" relationship between the government and these enterprises (i.e. UPSC-type arrangement, where the board is appointed through an autonomous agency, such as PSEB, and has the power of supervision over the CEO).
  • In the era of coalition politics, it is important to try and provide for greater political stability after the formation of government. This can be done if the anti-defection law is also applied to small parties and independent members who choose to join the government. At present, the anti defection law applies only to members of a political party which has had the unintended consequences of providing an incentive for formation of small parties, and reducing the personal autonomy of legislators belonging to a large party.
  • There is also need to change the distribution of powers between the Union and states under articles 245 to 255 of the Constitution. It will be desirable to give states exclusive economic powers, but transfer inter-regional or inter-state law and order issues to the centre.
  • The issue of state funding of elections has also been considered from time to time but has not been found acceptable. Not that state funding would eliminate corruption, but with high cost of elections, the lack of it has become an important defence of corruption in the exercise of political and administrative powers. In a budget of several thousands of crores at the centre and state levels, even an allocation of 0.5 per cent of the budget for elections would generate sufficient resources for providing state funding.
  • Finally, a separation of powers between civil services and ministers for carrying out administrative functions is essential. Greater empowerment of the civil services must, of course, go hand-in-hand with greater accountability of civil services for their performance and ethical conduct.

There is much more that can be done to make our political and administrative system work better and realize India's full potential - which is huge. But let me stop here. Once again, let me say how grateful I am to the Sen family for giving me the opportunity to deliver this Memorial Lecture in honour of N.P. Sen.

 

Thank you.


 

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