Governance 2009: A New Deal For India ?

The mandate of Elections 2009 has given India a stable government, with a Political leadership that is talking of bringing some real change to the country. Whilst these claims are to be tested by time and real deliverables, I am very hopeful that this time around, unlike the last term, there will be real transformational changes.

For most part of almost 2 decades of economic reforms in India, the focus has been on the private sector and reforms of the economy. These have worked - with private capital, private sector and entrepreneurship playing an increasing role in making the economy more efficient, creating jobs and wealth.

But as I have written before, the state or the Government has not kept pace with progress in the private sector. The Government or state and its representative institutions like Bureaucracy, Judiciary, and Executive have not kept pace with the progress of the rest of the country. This is where the real reforms need to focus on.

In the 1930s, Franklin D Roosevelt, President of the US, introduced the “New Deal” for the US and its people. The phrase itself originates in FDR’s acceptance speech at the 1932 Democratic convention in Chicago, in which he promised “a new deal for the American people”. The various measures included support for, and reform of, the collapsing banking industry, a new stock market regulatory agency, moves to boost wages and prices, the creation of massive public works projects and – perhaps most important of all – the launch of Social Security, the American equivalent of National Insurance in the UK.

Taken together, they not only constituted a “New Deal” to help ordinary Americans. They also initiated a new era of government activism, in terms of both intervention and regulation of the economy. Many New Deal programmes still exist, part of a safety net that even today’s most laissez-faire right-wingers in the US would not dare touch.

India needs a New Deal and the ideas below could be part of India’s New Deal.

I. Governance Reforms and Public Policy priorities

The last decade or so, the focus has been on Economic reforms. Unfortunately whilst the economy has moved ahead, the government and the government institutions have declined significantly.

The institutions of the government to the most part have been corroded by political interference and influence. Professionalism has given way to political pandering and hence the institutions invariably fail (at high cost to the country and people) to fulfill their duty and role. These Government and state institutions must be made more accountable, responsive, transparent and outcome oriented.

a. Depoliticize, Build and strengthen Institutions

1. National Security, Law and order institutions - Armed forces, Police, Paramilitary, Intelligence and Counter Terrorism agencies, Investigation agencies to be professionalized, upgraded and removed from Political interference and influence of any kind including transfers, appointments, promotions.

2. Economic - Strengthen the Independent regulators (Amend laws to make them stronger), make them accountable only to Parliament and independent from executive/ministries, have them depose to Parliamentary committees which in turn are available for public viewing or transcripts made public, bring in non-bureaucrats into Regulatory cadre.

3. Judicial - Significantly expand Judicial Capacity by hiring 80-100,000 new judges. Bring in a judicial review commission of Judges that will be responsible to address corrupt Judges and have the power to sentence them. Improve technology to make judicial access for citizens easier.

4. Election commission - Strengthening of Election commission and to depoliticize appointments to it.

b. New architecture and approach to Government Spending. Public spending is notoriously leaky and fosters corruption and worst only a small percentage of spending reaching the target. Fundamental reforms in this area are necessary and are long overdue.

1. All spending to be outcome driven. All programs must have clear annual outcomes.

2. New and more effective (less leaky/corrupt) subsidy delivery model - Smart card/ID Card/Common BPL Database oriented etc.

3. Reduction of corruption and leakages in public spending is a key requirement of these reforms in Government spending.

4. Restructure central programs and move most directly to states - add allocations to state budgets and States can administer these programs or other programs as they see fit. These programs must be audited by Independent spending auditors and publish quarterly report cards in the public domain.

5. A new Social security framework that covers unemployment, health and education.

6. New comprehensive policy to address Urban Poor. There is sufficient focus on rural poor today but not enough on Urban Poor.

7. Revamp JNNURM for accelerated redevelopment and rejuvenation of our cities and urban centers. Currently JNNURM has become more of a program to fund individual projects rather than a full city’s development.

II. Constitutional amendments and reforms

The constitution as framed and amended at various times in our history has not factored for two modern phenomenon - Coalition politics and the Modern opportunistic politician. The constitution founding fathers had assumed that we would always have one party in rule and that there would be good, capable people being elected to power to steer the country. Unfortunately both those dreams and wishes have proved to be just that - dreams.

a. Constitutional, Legal amendments and Reforms

1. Fixed term for Legislature

2. To prevent repeated elections and political volatility a fixed term for legislature is required. If governments fall, same legislature is forced to form another government and if that fails, Presidents/Governors rule will continue till the term is over or legislators form a new government.

3. Concurrent state and Central elections - Following from above, to reduce costs and to ensure that elections don’t come in the way of governance as they do today, elections to be held once in 5 years.

4. Recall Elections - to recall Elected representatives if they are found to be non-performing or violating the trust of the electorate in forms of impropriety, conduct etc.

5. Amend constitution to make Labor as a state subject.

6. Make Inducements for religious conversions a criminal offence.

b.  Devolve more powers to the State.

Currently for many issues there are two separate and distinct government overheads/ superstructures/bureaucracies at work, adding costs and impacting effectiveness and efficiency. There’s no logic for many of the central ministries except to give un-gainful employment to ministers and bureaucrats.

1. The constitution can be amended to move some of the concurrent subjects to State list - like Labor, Health, Education, Road etc.,

III. Economic Reforms

a.  All sectors of economy (except those of strategic nature to be listed) to be subjected to intense competition. Sustained consumer benefit and economic efficiency will only arise from this.

b.  Review the SEZ framework. To frame guidelines for acquisition of National land.

c.  Launch a significant nationwide Infrastructure building program (Using a combination of Private and Public Capital)

d. Reform financial sector with the objective of increasing competition, deepening and widening the debt and equity markets, and at the same time ensuring good regulation of markets and market participants.

e. Focus on FDI and increase strategic capital flows into our Economy in all sectors.

IV. National security and integrity

a. Ensure a National Security Advisor, who is a security professional (preferably from Military).

b. Appoint a retired General as Head of a new Department of Veteran and ex-servicemen affairs.

c. National ID card for all citizens.

d. Create a clear policy towards illegal immigration and migrants.

e. Stronger Anti-terror laws, Fast track Anti-terror Courts and audit/review commissions to oversee application and use of these laws.

f. A new Counter Terrorism Agency.

g. Align all security forces and agencies to our principle threat of Terrorism and evolve a new structure that ensures full, seamless co-ordination.

h. Ensure Armed forces and ex-servicemen, Paramilitary forces and men and their many outstanding demands on welfare, resettlement are addressed

These are some of the ideas that can go into India’s New Deal.  This kind of a New Deal will change the face of India and lives of Indians for coming generations.  Given the overwhelming majority in Parliament and the feelers of consensus politics from the Opposition, this New Deal can be a reality.

However in all this triumphalism and celebrations, let’s remember that this kind of euphoria and increased expectations are not a new phenomenon. We saw and experienced this in 2004 after the ‘Dream team’ came into Government. They disappointed then and I hope they don’t again. This time around, this is a mandate for a Government with no excuses!