Giving bad advice

Examining the role of NAC in contemporary India

Since 2004, India has been ruled by an arrangement that is Byzantine in its strangeness.  Nominally, it has a Prime Minister. It does have a cabinet, albeit one which has given a go-by to the principle of collective responsibility and opted for individual irresponsibility instead. It has a coalition government, and while the main party in the coalition has the most number of seats, none of the leaders of this party who have a popular base is in the cabinet, or indeed anywhere in national politics. The party relies almost entirely on its local leaders to win national elections and cuts them down to size when they grow too big for their boots. At the national level, it relies, for its political survival, on the residual charisma of the Gandhi family, the current members of which have yet to demonstrate any significant ability to win votes.

The head of the Gandhi family, Sonia Gandhi, has chosen not to head the government directly. Instead, she has established the National Advisory Council, an extra-constitutional body whose formal powers are, as the name suggests, only advisory. But in reality, given that the Council is headed by Mrs Gandhi whose word is law in the Congress, the position of the NAC is more akin to that of the superannuated head of an Indian joint family.  Their advice cannot be ignored, but those who offer the advice bear no responsibility for how it turns out.

The mandate of the NAC is best captured by the description: “Planning Commission for the social sector”.  Virtually all the members of the Council have been picked up from among civil servants, social activists and development economists, with a token businesswoman to represent Industry. Given that this group is charged with driving the policy agenda for the government, this is dangerously lopsided.

Ever since its formation, the NAC has shown a penchant for the grand initiative, usually in the form of a landmark legislation that is expected to bring about a revolution in the area that the legislation covers.  Now, any well-informed observer who knows about India can point out the problem with this approach even if he knows nothing of the laws in question. India’s problem is not a shortage of laws. Its problem is a lack of state capacity to implement legislation and an almost infinite capacity to pervert the intent of even the most well-intended law.  Adding additional laws into the mix without fixing the problem of administrative capacity does nothing to solve this essential problem.  It may even make it worse, because it adds an additional layer of bureaucracy.

Take the Right to Information Act, the one initiative from the NAC that is actually a step in the right direction. When it was being debated, it was being touted as a panacea for improving administrative responsiveness and transparency. When it was pointed out that corruption was likely to undermine every initiative that the NAC was proposing, the response inevitably contained the letters “RTI”.  But seven years after its passage, it is clear that the RTI act has fallen short of its promise. The lumbering administrative machinery of government seems perfectly capable of withstanding the attacks on it in the form of RTI requests.

Or take the Communal Violence Bill, which is another example of a legislative solution to what is essentially an administrative problem. The problem is that the police is inefficient, corrupt and highly politicised. The problem is also that the courts are slow to dispense justice. The “solution”, as put forward by the Bill, is to create an entirely new category of offences that will need to be investigated and prosecuted by the same flawed administrative machinery that is unable or unwilling to prosecute existing laws. The offenses have been defined in a discriminatory manner, and the oversight mechanism proposed is a recipe for politicisation, misuse and ultimately, paralysis.

Photo: julinemo

The various entitlement schemes championed by the NAC have come under the most amount of scrutiny, with good reason.  The rights and guarantees that they promise- employment, food, and education, are all sought to be provided by the same administrative mechanisms that have let down the poor during India’s socialist years, and all the promises have been made without any concern for how to pay for them, or what the impact would be on the larger economy.

The National Rural Employment Guarantee Act was pushed through parliament over the heads of a sceptical cabinet. When P Chidambaram, then Finance Minister, tried to underfund it by limiting the coverage of the Act to only the poorest districts, he was harangued in the press by John Dreze, the architect of the Act. When the inevitable problem of corruption came up, we were subject to more pontifications from Mr Dreze about how “traditional” corruption is undermining the aims of the NREGA. Currently, the NREGA is providing employment in the better administered areas, and it is causing a shortage of farm labour.  For a scheme that was supposed to be a backup mode of employment for the poorest, this is a perverse result.

The Food Security Bill proposes to guarantee heavily subsidised food to nearly 66 percent of the population through the Public Distribution System. This, it plans to do even in the face of the C. Rangarajan committee recommending against its feasibility and over the objections of the agriculture ministry.  If the NAC had its way, it would have universalised the PDS. The argument for universalisation is that the government’s mechanisms to identify the poorest is flawed, it is a better idea to entitle everyone to food from the PDS so that no one is inadvertently left out. The fact that this will result in the corrupt and leaky PDS gaining control of a significant chunk of the food supply, leaving farmers and consumers at their mercy and destroying private networks that have been struggling to develop is an administrative detail that the NAC would rather not be bothered with.

The Right to Education Act, in a similar vein, is all set to make life difficult for private schools by imposing social sector requirements and an inspector raj on them. The theory behind the Act is that if a private school does not meet certain arbitrary criteria set by the government, it has no right to exist, no matter what the parents’ choices or options are, and regardless of whether the government schools are up to the scratch in that area, or even exist. Ensuring that the government actually improves the quality of government schools is, once again, an administrative detail.

These examples illustrate the essential problems with the NAC.

First, it functions both as a lobby group and a policy-making body. As a lobby group, it has certain very specific aims, but there is no body within government to balance out these aims with the question of how to pay for them. Second, because the NAC does not have the responsibility or power to fix implementation details, the NAC sets focus on legislation, and when problems crop up due to implementation challenges, it devises more quick-fix solutions rather than focus on the nitty-gritty details. Thirdly, the NAC has a bias against the private sector.  Free market advocates would view the consequences of many of their policies- the shortage of farm labour caused by the NREGA, the possible choking out of private players in food, education and health – with alarm. But with the NAC’s mind set, these are benign, even beneficial results.

Finally and most importantly, the focus on the NAC has led to an almost complete stalling of the reform process.  It is common wisdom that the lack of any visible free market reforms under the UPA regime is because the allies in the coalition do not let them carry them out. But, as commentator Ashok Mallik points out, the problem is really with the priorities of the Congress leadership. It is willing to expend its political capital on the issues championed by the NAC. It is not willing to do so on other issues. It does not even seem to understand that improving the administrative delivery mechanism and freeing up the economy are the two most important policy themes that will improve the condition of the poorest Indians.

Where does the idea of the NAC come from? The best explanation is that Mrs Gandhi is modelling it on what Indira Gandhi did in the 60s. She was faced with the problem of running the government while being a political lightweight. She was unable to trust her cabinet ministers, all of whom had their own agendas. So she formed her own coterie consisting of P N Haksar, T N Kaul, D P Dhar, P N Dhar and R N Kao to guide her. This group, most of whom were leftists, provided intellectual respectability to the elder Mrs Gandhi’s populist policies that consolidated her position and ensured her popularity.

It is possible that the current Mrs Gandhi is trying the same tack. Those policies caused general economic stagnation, nationwide unrest, a declaration of national emergency and ultimately, loss of power for Indira Gandhi. For Sonia Gandhi, who lacks her mother-in-law’s charisma and who does not have to her credit any genuine achievement like the Green Revolution, the historical cycle may well be shorter and quicker.