I too, like millions who voted this Government in, am deeply enthused about the prospects of a transformation of our country’s governance and politics – more so because I have been urging the need for this in and out of Parliament in my own small way, ever since I got an opportunity to serve in Parliament in 2006. I make no bones about either my optimism or high expectations from this Government over the next 60 months, and so, have no hesitation in supporting the Motion to thank the President for his address.
Even the most generous amongst us will admit to the country facing serious and challenging times – a headwind self created by many years of profligacy and poor governance.
The tasks, therefore, for this Government are neither easy nor simple. The problems can’t be wished away or tackled through statements and announcements alone, but months and years of decisive governance action and management of the economy.
The President’s address is a good first step to indicating the Government’s roadmap and plan. The next step and a critical statement will be the Budget that will be presented by the Finance Minister, the leader of this House in the next few weeks. This address and the budget statement together will set the basis of the recovery of our economy and nation over the next few years and its transformation back to a sustainably growing, investing and job creating economy.
UPA also had recognized the need for Good Governance but couldn’t deliver
I listened to the Leader of Opposition during his response. With greatest respect, I think he was trying to make a disingenuous case that there is nothing new in this address. In a literal sense, there may be some truth in the case he was making. But he should excuse us for not being terribly enthusiastic about his claim. Here’s why –
Let me quote the Presidential address in 2005 – “My Government is committed to the reform of Government and to making it more transparent, responsive and efficient. A model code of Governance is being drawn up …”. So while the promise of good governance was being made, the reality was a Governance deficit in subsequent years that caused despair and shame. So the comparison should be made in coming months based on substance of Government’s conduct and delivery.
The focus, therefore, is more about execution and outcomes. This would then be the litmus test for this Government over the next 60 months. I look forward to the Budget reflecting and further strengthening our confidence.
Here are some suggestions I made to the Government for incorporating in the Budget…
1. Listen to all MPs and adopt a consensus approach, and not arrogance
First, I hope that regardless of the majority or strength in Parliament, the Government adopts an approach of consensus and is sensitive to all sensible opinions made by Parliamentarians – big or small. Humility and consensus is more consistent with the notion of public service that Prime Minister Modi has described Politics to be. This in itself would be a big departure from the arrogance of the past, where it seemed that opinions of small parties and individual MPs didn’t matter in any discourse.
And here, let me make a few suggestions that could serve as detailing the plans as the Government moves forth to the Budget.
2. Further define Maximum Governance, Minimum Government – Minimum Government means more cost efficient and Maximum Governance means more effective and responsive.
The call to Maximum Governance and Minimum Government is absolutely the right one – both in terms of Cost of Government and effectiveness of Government vis-a-vis the citizens they serve. Per capita cost of our Government is surely amongst the highest in the world, and if adjusted for Governance effectiveness, is probably amongst the least efficient in the world.
I would argue that the concept of Minimum Government is not just about giving Ministers with multiple ministries, unless these are bound together with cost saving and efficiency synergies. Some of the combinations currently do not pass that test as is. Otherwise, such bundling may actually slow down decision making.
I would, therefore, urge a 60-month roadmap where costs of Government decline through higher cost efficiency. This is smart economics because these savings create more headroom to invest or spend on social programs.
Maximum Governance apart from a harder working Government, Ministers and bureaucracy, must also be expanded to mean rebuilding or creating new independent institutions like Regulators and equipping them with budgets and capacity. The Maximum Governance theme needs to be expanded into deep, decisive Governance reforms that hinges around improving throughput and responsiveness of Government, and at the same time, creating independent, credible institutions of Governance. Not just some symbolic effort like the previous Administrative Reforms Commission, but a deeply felt need to modernize and make more effective performance of Government and its institutions and departments.
This re-architecting and change in our Governance is critical to the future of our country. The capture and corrosion of our institutions by politics has to be reversed.
3. Resolve structural issues with Economy and Financial sector including better regulation.
We are a trillion dollar Economy – But the size of the economy and the statistical newsfeed we have been fed over the last few years covers up serious structural problems at the core. These problems have come to the fore as chickens coming home to roost with 12 quarters of GDP decline, an almost full stop of investment cycle and Government finances that have taken us to a fiscal precipice and is now resting there – thanks to some adept book keeping and accounting in recent times.
It is critical to address these structural issues in our economy and Government finances, if we are to set the economy back on a sustainable high growth and investment path.
To start with, fiscal responsibility and a value for money culture must be brought into the Government. A culture that focuses on what got done, and not just how much money got spent – which seems to be even today the way to measure Government effectiveness. That must change. Public money and assets must be handled by Government with a sense of trusteeship. Public spending is notoriously leaky and fosters corruption, and worst, only a small percentage of spending is reaching people. Fundamental reforms in this area are necessary and long overdue and a new Approach to Government Spending is needed. Reduction of corruption and leakages in public spending is a key requirement to create headroom for Government spending at a time of fiscal constraints.
Other structural problems relate to the financial and banking sector. After many years of being seen as a relatively well-regulated financial sector – we have seen in the last few years, allegations of large-scale money laundering and even failures of exchanges due to the regulators being asleep at the wheel. These aren’t academic issues as they increase the risk perception of India and its markets, for investors from around the world. The Government will need to address this head on before it can be successful in attracting big investments. Just as Delhi, the political and Governance capital, needs to be subjected to change, so does Mumbai the financial capital.
The other big worry is the health of PSU Banks – all of which are owned by the taxpayers and public of this country, but seem to have been run like some people’s personal fiefdoms – with the consequence that lakhs of crores of NPAs dominate their balance sheets and write off taxpayer equity. Regulatory competence here again needs to be examined which allows 10 Industrial groups to borrow almost 90% of the Indian banking systems net worth and create the ‘too big to fail’ syndrome that puts the banks and taxpayers on the hook rather than the promoters. The basic principle of fairness and equity stands turned on its head when home owners and two-wheeler owners have their assets seized on default of their loans, when multi-millionaire businessmen who owe Indian banks end up with little or no pain. This situation is neither tolerable nor acceptable, and the Indian PSU Banks have to stop becoming piggybanks for politically friendly businesses. I look forward to hearing about this Government’s approach to big business defaulters, and a strategy to restructure and restore the health of PSU banks.
The Government has many lakhs of crores of public money locked up as investments in PSUs. The Government needs to quickly and transparently come up with a strategic plan for each of its PSUs. To treat them as public investments that must deliver on their promise either of genuine public interest or financial return. Once valuable and profitable companies like BSNL which, just a few years ago, were valued at billions of dollars, are on their knees seeking funding from Government. The decline of PSUs amounts to losses in public investments.
On the issue of private capital in our economy, I agree with the Government’s view on FDI. FDI is to be seen not just as investment and job creation, but also about creating more choice and competition for consumers who will benefit from this. I see no need for any barriers in FDI in sectors that impact consumers and results in creating more choice.
The role of Private capital in infrastructure sector is vital and inescapable. However, the last decade has seen very flawed PPP models that have raised more questions about windfall returns to private investors at the cost of public and Government equity. So a new transparent approach to PPPs and fair balanced contracts or regulation that ensures consistency is the need of the hour. The current model of cost-based regulation used for airports, gas and many others is deeply flawed and is being misused by many private investors to pad costs and pass them through to the consumer without any motivation to be efficient. Getting the PPP model of regulation and contracts right is critical to ensuring large FDI flows and investments into long term investments. And in turn, a successful PPP model is critical to ensuring large scale FDI and domestic capital flows into infrastructure.
So I look forward to hearing during the Budget session details of financial sector reforms, PPP and private capital flows, manufacturing sector and also the roadmap to a new, predictable, simpler and less litigious tax regime.
I congratulate the Government for its mention of the North East, especially on issues of improving connectivity and infrastructure in that region. This will go a long way in enabling its integration into the country. Encouraging local economy and entrepreneurship and investments in the region as part of the Government’s vision of making the east equal the west is what is required.
Let me thank the government for including a commitment to build and construct the National War Memorial soon. I had pursued this since early 2008 with the previous Government and no progress was made apart from endless meetings of committee of ministers and secretaries. I hope this Government moves fast on this and completes it in the next two years. Actioning this along with OROP announcement would be doing the right thing for Millions of veterans and their families.
I don’t claim to be a political pundit, but having campaigned during this election and having interacted with many young and old Indians, I can safely say this – The people of India are anxious to change the discourse in politics from the old, divisive discourse of caste and religion to opportunity, dignity and governance. In the President’s address in 2009, there was a quote “The dreary sand of dead habit must be left behind”! It has been five years since that statement, and I hope this Government, and indeed all of us, can live up to that expectation.