governance, political economy, institutional development and economic regulation

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India’s pressured public institutions

BOOK REVIEW
Rethinking Public Institutions in India
Devesh Kapur, Pratap Bhanu Mehta, Milan Vaishnav (Eds)
Oxford University Press
548 pages; Rs 995

Rethnking Pub Inst in India

Public institutional reform has a stale air about it. There are plenty of options but little action. The sombre packaging of this book adds to this gloom. Possibly, the “monkish”, value-for-money branding is a consciously adopted tactic, setting it apart from the current trend favouring glitz and hype. The authors appear to be flinging a dare — that in their case substance needs no gloss. They are right.

PBM

The editors’ academic pedigree is reassuring. Pratap Bhanu Mehta is the best-known of them, a public intellectual extraordinaire and the acknowledged voice of evidenced, liberal political thought.
Devesh
His co-editors Devesh Kapur and Milan Vaishnav are US-based academics.
milan vaishnav
This new publication is a follow-on of a 2007 publication Public Institutions in India: Performance and Design co-edited by Messrs Kapur and Mehta.
The contributors are an eclectic mix of UK-, US- and India-based academics and Indian civil servants, serving, repositioned or retired. What is common is their deep and systematic association with public institutional development and an enviable record of publishing their work and opinions.
Are public institutions in India doomed?
So, are central public institutions going to seed? And does that explain India’s future challenges? The introductory chapter, written by the editors, provides an elegant, broad sweep of drivers and trends in institutional malaise, highlighting areas where performance has been dangerously below par. But the helicopter view is a mite too one sided, veering to a dark view of the state of national institutions.
Institutional resilience outnumbers the failures 
A more nuanced and refreshing view emerges from the succeeding chapters, each about a single institution. James Manor, writing on the Presidency, exquisitely details how this apex institution, despite the occasional failures of individual incumbents – think Fakhruddin Ali Ahmed who signed on the dotted line to impose emergency in 1975 and Giani Zail Singh, who was not averse to being actively political – has been a steady hand, safeguarding constitutional propriety and citizen rights from potential executive and legislative transgressions.
Errol D’Souza, reviewing the Reserve Bank of India, describes its pugnacious success in enlarging its regulatory space, solely through its performance-driven credibility. E Sridharan and Milan Vaishnav pen a fluid and attractively rendered tale, about the Election Commission of India, which has similarly earned its spurs. Eighty per cent of Indians trust it because of its remarkable conduct of timely, fair and efficient elections. Madhav Khosla and Ananth Padmanabhan describe how the Supreme Court has nurtured the public’s trust by courageously and consistently ruling in favour of equity, inclusion and fair play. However, they warn that dark clouds loom unless justice is delivered more efficiently.
Navroz Dubash writing on new infrastructure regulatory institutions – the Central Electricity Regulatory Commission (CERC) and the Telecom Regulatory Authority of India (Trai) – acknowledges that in the initial years both had to fight severe challenges from publicly-owned monopolies and their patrons in government. Two decades on, they are the arbiters of positive change. The CERC has overseen competition in bulk electricity supply. The Trai has curated highly competitive private telecom customer services and tariffs. However, Dubash correctly points to the need for enlarging the regulatory space such that all actors – the Parliament, Judiciary and the Executive become active players in negotiating regulatory outcomes, with the Regulator playing the balancing role,
Institutional failure more visible in sub-national entities
“State failure” is a malaise more visible in sub-national institutions, which have failed to imbibe the positive changes taking place in related central public institutions. State governors, legislatures, the lower judiciary, state public financial management institutions, electricity regulatory commissions, vigilance departments, and election commissions are often severely blemished. T R Raghunandan woefully records that institutions of local government remain ignored, underfunded and underused, except in Kerala, Karnataka and West Bengal. Consequently, inclusive growth suffers and an opportunity is lost for embellishing and inculcating local traditions of results-based democratic functioning.
But there are black sheep at the national level too
Not all national institutions, despite inherited advantages, have developed benignly. Parliament is one such. M R Madhavan ruthlessly excavates the reasons it has lost the public trust. R Shridharan similarly unravels why the Central Vigilance Commission, India’s anti-corruption agency, and its investigative arm, the Central Bureau of Investigation, have failed to establish their credentials. The former is merely a tool, to be used selectively, by the executive against its own officials. The latter is at its nadir. The moniker “caged parrot” accurately reflects why it has lost credibility in the fight against corruption.
The Comptroller and Auditor General (CAG) of India, the supreme audit institution, gets mixed reviews from R. Shridharan and Amitabh Mukhopadhyay. The CAG is uniquely placed and significantly empowered, to guide and assist Parliament to exercise granular oversight over the executive. Its path-breaking exposure, under Vinod Rai, of massive inefficiency and financial impropriety in spectrum and coal allocations lifted its public profile. But, in its “independence”, also lies the danger of it being ignored, through a “conspiracy of silence”, between a dysfunctional Parliament and a pliant executive.
The civil service, particularly its elite component – the All India Services (AIS), which constitute 0.03 per cent of the total civil employees and just 1 per cent of the Group A employees of the Union Government – have unambiguously failed. K P Krishnan and T V Somanathan admit that nothing has changed for the better over the past decade. Recruited on merit, this tiny elite thereafter enjoy the rents accruing from that initial, one-time achievement. But the authors shrink from endorsing that the AIS be phased out and its functions reallocated to the specialist cadres of the Central Services — these constitute 99 per cent of the Group A civil employees, who currently fester despondently.
This is a multi-layered, exhaustively referenced publication, which surgically exposes the dark side of public institutional dysfunction. But it also provides sufficient evidence of institutional resilience, on which an enlightened political leadership can build. A must-have, for all those who either belong to, or wish to join, the frustratingly uplifting community of public institutional developers.
Adapted from the authors review in Business Standard June 15, 2017 http://www.business-standard.com/article/beyond-business/public-institutions-under-scrutiny-117061401505_1.html
raj ghat
Raj Ghat – Gandhi ji’s memorial keeps the flame of “independence” alive

Corruption Red Flags and the Original Sin

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The Left has the best track record with respect to controlling corruption, followed by the BJP, with the Congress in the rear. Apologists of the Congress would be quick to assert that often corruption is part and parcel of rapid growth. They are right. China, Indonesia and Malaysia are good examples where rapid growth over the last 30 years has also resulted in large scale corruption.

Conversely, it is also true that an obsessive desire to end corruption, as projected by Kejriwal and the Aam Admi Party (AAP), also negatively affects growth. Even the NGOs and international development agencies know that corruption is like an original sin (the others being illicit sex, drinking and envy) and cannot be ended. It can only be managed, as in the developed world, so that citizens do not encounter it in their daily lives and public finances are conducted with relative probity.

Shanta Devarajan, a World Bank economist, known for his innovative take on economic problems, like Swaminathan Aiyer, pointed out in 2010 that “quiet corruption” (the kind that that the average citizen encounters) costs the economy much more than “grand corruption” of the 2G, Coal-gate kind.  http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/0,,contentMDK:22501207~pagePK:146736~piPK:146830~theSitePK:258644,00.html

“Quiet corruption” is the “rent” that a babu collects for delaying decisions (speed money); is a babu using her discretion to unfairly benefit someone (bribe); it is sending the government decision making process into a spin thereby benefiting someone who profits from the status quo (babu googly or red herring noting on file); it is habitually being averse to taking a decision (babu evasion).

The media reports (Indian Express, January 13, 2014) that Jayanthi Natarajan, the Environment Minister till recently, had stacked a huge bundle of files relating to clearances in her house. This instantly raises “corruption red flags”, at the very least, of “quiet” corruption.

What is odd is that of the 350 files returned to the office from her home, when she resigned, 180 files had not even been seen by her! at least there was nothing on file to indicate that she had. Even odder, she had seen and signed 119 files but had held them back in her home. Why and for what reason? An additional 50 files, signed by the Minister, were in possession of her staff!  Not reading files and keeping them in the “in tray” is a classic red flag for corruption hunters. Signing files but holding on to them is an even more significant corruption red flag. Letting her staff hang on to signed files is the biggest corruption red flag.

Despite the plethora of red flags it is a sign of low expectations from the present government that this case has not raised the kind of furor that coal-gate had. If a babe had committed these sins she would have been hanged by the government but when it comes to Ministers the rope is very, very long.

The BJP, which is the most likely party to form the next national government, or be instrumental in supporting a minority government, must draw the correct lessons, as must Kejriwal and the AAP.

First, just by ensuring that the offices of Ministers do not become clog-holes of files and insisting on time bound dealing of files, by everyone in the chain, corruption can be hugely reduced.

Second, Sarkari corruption hunters like the CVC and now the Lokpal must zero-in on cases of frequent submissions of files and reversion with queries, the favourite babu trick of avoiding a decision.

Third, it is high time, India, at least at the national level, abandoned paper files for electronic functioning as in any other modern day country. Electronic filing and processing has the advantage of security; instant file tracking; generation of management information on “clog-holes” of undealt files; audit of who accessed the file at what time and the changes made therein.

Fourth, the advantage with digitizing government functioning is the heightened levels of seamless transparency which become possible. Managing the information requirements of the Right to Information Act will become a lark with complete digitization, since all it would require is to find the data and email it or print it out.

The economy needs a kick start. What better way than to target complete digitization of government functioning from 2016. The international experience shows that corruption levels drop precipitously when “big brother” is watching as is possible in real time electronic processes. Of course this only works in regimes where “big brother” himself is not corrupt.  

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