As I reflect on the decade just ended and the year ahead, three thoughts cross my mind. First, most of the issues that are front and centre on this government’s policy agenda are those that have 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 stasis, but the one that is relevant for all governments is the steady erosion of the institutional underpinnings of governance and the consequential 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, ‘society’ and the ‘State’ are in conflict. This conflict is structural. 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 evolve is a matter of uncertainty, but what is clear is that constructive change will be difficult to bring about in the absence of a balancing of interests—a modus vivendi between these two entities.
I have been a columnist for the past nearly two decades. I have written mainly on energy and business, but my op-eds 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 I 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 for developing and implementing an integrated energy strategy. Today, we import 85% of our oil requirements and, more worrying, 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, and reams have been written about it, including by economists of world-class renown. Solutions have been proffered, and some steps have been taken. But, clearly, not enough has been done. For 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 the PSU petroleum companies, were identified for strategic sale. I advocated 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. Interested 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 remain unresolved and unimplemented to date. Issues like ‘second generation’ factor market (land, labour, capital) reforms, environmental pollution and administration overhaul.
The question is, ‘why’?
The simple answer is, it is because of the nature of our democratic system of governance. This is a system that does not allow pragmatic politics and good economics to share the same bedspread. And when political push comes to economic shove, it pushes economics off the mattress.
But some issues do not impact politics. Why has there been no progress in tackling those issues? 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 decades ago, in the 1970s, when for the first time since Independence appointments to the bureaucracy and the judiciary were made on the basis of personal and political preference, not professional integrity. The erosion has continued unabated, and as a result, today, the institutional checks and balances embodied in our constituency have got corroded and power has shifted from the constitutionally embedded organs of governance towards extra-constitutional authorities and individuals. There is now lack of clarity about who is responsible for what, and this has further calcified decision-making. A senior bureaucrat on the edge of retirement is now understandably cautious. Why risk the fallout from an ‘act of commission’ when there are no sanctions attached to ‘acts of omission’.
The consequence of the hollowing out of our institutions, the ‘personalisation’ of power and the widening gap between the promise of policy and its delivery is compounding the tensions between the ‘society’ and the ‘State’. These relations have been tense since 1991-92 when economic reforms unleashed the ‘animal spirits’ of our youthful population, and since the forces of globalisation and technology heightened expectations. We are witness today to public manifestation of these tensions. The trigger is the Citizenship Amendment Act (CAA), but there is a deeper message underlying the current protests. The ‘society’ will not allow the ‘State’ to rewrite the social contract to reflect narrow and partisan predilections.
Professors Daron Acemoglu and James Robinson have recently published a book entitled “The Narrow Corridor: States, Societies, and the Fate of Liberty”. They 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 the ‘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,” but without “encroaching on the rights and liberties of the 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 outstanding critical issues.
The author is chairman & senior fellow, Brookings India
