India’s biggest deficit

The challenge of making rational public policy in a democratic India.

Even in advanced democracies, public policy rarely follows the textbook script. There are many competing interests whose demands need to be balanced and the policy that emerges from a negotiated consensus reflects the usual give-and-take of popular politics. In a developing country like India with its insurmountable challenges and weak institutions, public policy is largely held hostage to immediate political concerns. When issues defy immediate solutions, there is an understandable desire to do ‘something’ which reflect certain normative goals even though the practical effects may be minimal or even counterproductive.


Take for instance the proposal to establish a women’s only bank as outlined in the 2013 budget recently presented by Finance Minister P Chidambaram. The goal is worthy enough: Greater financial inclusion of women, a particularly imperative consideration in an era where indirect subsidies are being replaced with direct cash transfers.

But as Priya Ravichandran  argues in Mint, all it is likely to achieve is to further entrench the odious system of “separate but equal.” The state fails to ensure security for Indian women? No problem: run separate buses or simply reserve metro coaches. In this environment of competitive pandering, we can expect other proposals which segregate women and rescue the state from any semblance of accountability.

So here we encounter the first challenge: Populism may be inherent in a democracy but in India it often supplants any notion of effective public policy. In many ways, Indian democracy represents a paradox. While it is boisterous and visibly competitive from the outside, there is a high degree of homogeneity attached to it. Lack of independent and effective think tanks and a climate of intellectual incestuousness have ensured that the policymaking process reflects a cacophony of voices that are all essentially making the same arguments. No wonder, the proposed bank was received with thumping of desks by both the UPA Chairperson Sonia Gandhi and the Leader of Opposition Sushma Swaraj. And those who oppose such measures are likely to be dismissed as urban elitists – even by other urban elitists- who are simply unaware of the needs of the ‘real’ Indian women.

The second challenge India faces is the state’s lack of capacity to implement the policies it so strongly endorses. Here again we are faced with a paradox: While public sector enterprises like Air India and Railways are overstaffed and highly inefficient, it is a country with a smaller diplomatic corps than tiny New Zealand. Or take policing where India falls woefully short of global norms. The Indian judiciary is legendary for its glacial pace – and a litigation happy government exacerbates the problem – but it is equally true that even the mighty Supreme Court struggles to fill its sanctioned strength. Unsurprisingly, outside of the moneyed elite, the process itself is punishment in India.

As author Gurcharan Das has argued, India needs a liberal state which does fewer things but does them well. But this argument is a hard sell in India. The middle class which has benefited from economic reforms views the state more as a roadblock to its aspirations rather than a scaffold for its soaring ambitions. It is hard to argue that the poor who may be struggling to meet their basic needs should care about the strength of the police, who they frequently view as their tormentors.

This may be slowly changing. As the agitation over the Delhi gang rape case showed, the Indian middle class is beginning to realise that it has a stake in a well-functioning state. If the recent trends of state elections are any indication then good governance has some electoral salience. Even the handout friendly United Progressive Alliance (UPA) government has belatedly recognised the electoral purchase of an aspirational middle class. A drastic change is unlikely in the near future but a reinventing of the state may well be on its way.

Third, the policies pursued by its government often fail to reflect the limitations of India’s development. Despite its remarkable growth over the last two decades, India remains a poor country. With barely three percent of its citizens as income tax payers and a low tax-GDP ratio, the Indian state lacks the resources to implement the policies it champions. Worse, it wastes precious resources in implementing policies which may be attractive in abstract but are unsuitable for India’s current needs.

Take for instance something as simple as seat belt laws. Despite some controversy in the academic literature, at least in theory, increased seat belt usage would be expected to save lives. But as Vivek Dehejia and Rupa Subramanya point out in their new book Indianomix: Making Sense of Modern India, the vast majority of fatalities on Delhi roads are pedestrians. Even if seatbelt laws are properly enforced, they would hardly make a dent in the tragically high number of traffic deaths. Should not the severely undermanned Delhi Traffic Police then direct its limited resources towards ensuring that pedestrians are able to safely cross the road rather than worry about errant car drivers? The argument is not that the safety of car drivers does not matter. Of course, it does but to recognise that even the safety-challenged cars vastly improve the odds of surviving a trip on Indian roads.

In an ideal world, this would not be an either/or choice. But in a resource constrained state, India must make choices which reflect its limitations and not merely its aspirations. Otherwise, we would be left with ineffectual policies which serve little purpose except starkly illustrating the constraints of the Indian state.

It is easy enough to point to vast pockets of utter deprivation in India and to demand that the government provide immediate succor. Some even argue that in the pursuit of growth, India is sacrificing the needs of its most vulnerable citizens. But this argument ignores an important fact. A rich India would be far better placed to provide for its neediest citizens compared to a poor India, despite all the generosity of heart it may summon. As the government itself has belatedly recognised, it is economic growth which oils the engines of social justice. To sacrifice growth at the altar of equity in this stage of India’s development would hurt the poor the most.

So here in a nutshell is the challenge India faces. It cannot ignore populist considerations in a democracy but it should not make public policy completely subservient to populism. And as it augments its capacity in certain essential areas, it should resist the temptation for mai-baapism: to be everything for all its citizens. It is a fine balance but then who said India was easy?

Photo: Meena Kadri