Our democratic system of governance does not allow pragmatic politics and good economics to share the same bedspread.
As I reflect on the decade that has just ended, and the year ahead, three thoughts cross my mind. First, most of the issues that are at the front and centre of this government’s policy agenda have also been on the previous government’s priority list for years. Irrespective of the acronym defining the politics of the government or the personalities in charge, the needle of change has hardly moved on these issues.
Second, there are multiple reasons for this policy statis but the one that is relevant for all governments is the steady erosion of the institutional underpinnings of governance and the resultant concentration of power in the hands of extra constitutional authorities and individuals. Decisions have been held in abeyance because of the blurring of the lines of responsibility and accountability and the lack of clarity on where power truly resides.
Third, the society and state are in conflict. A youthful, vibrant, ambitious and connected society is pitted against a hesitant, at times paralytic, politically-shackled and precedent-bound state. How this clash will play out is not certain but what is clear is that it will be difficult to bring about constructive change without a balancing of interests — a modus vivendi between these two entities.
I have been a columnist for nearly two decades. I have written mainly on energy and business but my opeds have also covered the economy, finance, environment and governance. I have endeavoured to write about issues of contemporary significance. I was flipping through my articles recently and noted that many of the topics I had written about in the past remain unresolved issues of concern today.
I have, for instance, written about our vulnerability to energy imports and the need to develop and implement an integrated energy strategy
Today, we import 85 per cent of our oil requirements. More worryingly, our imports of thermal coal are increasing despite the abundance of indigenous deposits. Further, there is still no one executive authority responsible for energy policy.
The banking crisis has been staring us in the face for years. Reams have been written about it, including by world-class economists, solutions have been proffered and some steps have been taken, but clearly not enough has been done. The contagion has now spread to the non banking financial institutions. The consequent credit choke is a major contributor to the current economic downturn. Disinvestment was first brought onto the governments policy agenda 20 years ago. Several maharatnas, including PSU petroleum companies, were identified for strategic sale. I had advocated that the government hold fast to its policy in the face of the inevitable challenge from trade unionists and vested interests. The government was not persuaded and the process was aborted. Today, BPCL — and Air India — are back on the table. Investors will be wondering whether the countervailing forces that stalled the process earlier are now firmly in check. One could continue to cite examples of policies that everyone agreed needed to be implemented but which have remain unresolved — second generation factor market (land, labour, capital) reforms; environmental pollution and administration overhaul.
The question is, why? The simple answer is, it is because our democratic system of governance does not allow pragmatic politics and good economics to share the same bedspread. And when the political push comes to the economic shove, it pushes economics off the mattress. But some issues do not impact politics. Why has there been no progress in tackling them? Why have governments not effectuated good economics when politics has not been a constraint? Here the answer is more complex and, in my view, rooted in the erosion of our institutions of governance. This erosion commenced in the 1970s, when for the first time since Independence, appointments to the bureaucracy and judiciary were made on the basis of personal and political preference, not professional integrity. The erosion has continued unabated. As a result, today, the institutional checks and balances have corroded and power has shifted from the constitutionally-embedded organs of governance towards extra-constitutional authorities and individuals. There is a lack of clarity about who is responsible for what and this has further calcified decision making. A senior bureaucrat on the verge of retirement is now understandably cautious — why risk the fallout from an an act of commission when there are no sanctions attached to acts of omission.
The hollowing out of institutions, the personalisation of power and the widening gap between the promise of policy and its delivery is compounding the tensions between society and the state. These relations have been tense since the economic reforms unleashed the animal spirits of our youthful population and the forces of globalisation and technology heightened expectations. We are witness today to a public manifestation of these tensions. The trigger is the CAA but there is a deeper message underlying the current protests: Society will not allow the state to rewrite the social contract to reflect narrow and partisan predilections.
In The Narrow Corridor: States, Societies, and the Fate of Liberty, economists Daron Acemoglu and James A Robinson write that squeezed between the lawless chaos of a failed state (“absentee leviathan”) and the choke on civil liberties by autocracy (“despotic leviathan”), there is a narrow corridor where the state and society can be in balance (“shackled leviathan”). It is within this corridor, that the state can discharge its duties to “resolve conflicts, enforce law, provide public services and create economic opportunities” without “encroaching on the rights and liberties of society”. The hope for the new decade must be that our state and society will find a way into such a corridor. This would reinvigorate our institutions and accelerate the resolution of critical issues.
This article first appeared in the print edition on January 10, 2020 under the title 'New decade, same challenge'. The writer is chairman and senior fellow, Brookings India.