Thursday, October 10, 2013

New Paradigm: Transform Governance

Governance Failure

 Though poverty has declined over the past decades, it has declined less in the poorer states, because the latter have grown more slowly than the country as a whole, with the result that inter-state inequality has increased.  A number of eminent economists have asked us the question, ‘What is the role of the State in dealing with this issue?’ under the proposed paradigm/approach.  Our reading of the ground reality is that most of these States are characterized by pervasive government failure.  Consequently, ‘the State is part of the problem and may not be part of the solution.’ 
            The senior most officials of one such State govt. admitted in a meeting with  peers from Central and State governments that they were not competent to procure excess production or deliver food to the starving.  Hearing this from a member of the elite service, an inheritor of the ‘steel frame of India,’ was a shock.  Similarly, the top political leadership of one State admitted the existing State machinery could not spend money productively and that it would be very happy if development activities could be carried out by anyone else, including the provider of the funds.
The only solution to this incredible failure of governance is to create alternative non-State institutions within such States to build physical & social infrastructure and carry out development tasks, perhaps including some of the basic functions of governance.  There is an even more urgent need than elsewhere to get the stifling hand of government out of the peoples’ business, by downsizing govt and liberalising State laws, rules and procedures, and focussing whatever positive energy the government is able to muster on the ‘basics of governance.’  The mammoth State of UP will perhaps also have be broken up into (about four) smaller States so that the span of state govt. control is more suited to the provision of basic public services and rural development.
The State and its functionaries have accumulated excessive power to the point that it has corrupted them not just financially but in spirit.  Paradoxically the system’s power to do useful work has been undermined, while its ability to do harm has multiplied. Countervailing power must be created to check the power to misuse and to strengthen the ability of the system to do good. Power must be returned to the people from whom it has been usurped and the State and its functionaries made accountable to the people. This will only happen if the State sheds all activities that the people and its institutions, both economic and social, can do, and the State becomes a facilitator instead of a controller.  Only then will the State focus on and accomplish what it alone is able to but has neglected to do.


    Over the next decade (or at most two), the people must re-establish their democratic power by forcing the Central and State Governments to undertake the following reforms:
  • ·         Review Laws, Rules, Regulations and Procedures to remove distortions and harmful incentives (e.g. red tape, corruption).
  • Remove distortions that provide a disincentive to hire labour in the organised sector and encourage capital intensive, non-labour using techniques of production and supply.
  • ·         Promote economic freedom and competition in the supply of all goods and services by removing controls on private/non-governmental economic activity and introducing modern professional regulatory mechanisms where needed.
  • Regulatory systems are needed for ‘natural monopolies,’ fiduciary financial institutions, education (school and college) and health (food, drugs, surgery).
  • ·         Privatize Public sector units producing ‘private’ goods & services.  Corporatise,  unbundle and privatize all departmental public enterprises (except those producing nuclear, aero-space or defense systems).
  • ·         Privatize Public Sector Banks and Financial Institutions and move from government oligopoly to genuine competition.
  • ·         De-centralize the supply of ‘Public goods and services’ to the lowest possible level of government and empower each level with the appropriate tax and expenditure power based on the principle of subsdiarity.
  • Nagarpalikas and Panchayti Raj institutions must have the power to tax local land and property (within specified bands) and to control the supply of local public services.
  • ·         Introduce a Right to Information act that gives the unfettered right to people/poor (& NGOs representing them) to all information relating to the expenditures made in their name and ostensibly for their benefit.  Empower user groups to ensure accountability of expenditures and provision of service to these users.
  • ·         Government must ensure all its citizens (poor, rural, urban slums) the following basic entitlements:
  • Drinking water of acceptable quality for all by 2010. Pollution of drinking water sources should be eliminated and drinking water quality reach global standards by 2020.
  • Water harvesting, watershed development, tanks, wells for conserving water for personal, agricultural or other uses in all rural areas.
  • Modern sewerage, sanitation waste collection and disposal facilities in all urban and semi urban agglomerations and appropriate systems for all villages. Emerging economy standards by 2010 and global standards by 2020.
  • Epidemic and infectious disease control of global quality
  • Permanent Road connectivity to all villages.
  • Free and compulsory Primary education for all by 2010, followed by universalisation of secondary education by 2020.
  • Though government has the responsibility to provide the funds needed for provision of these entitlements it need not produce everything itself.  Wherever more efficient non-governmental delivery mechanisms are available they should be used.
  • ·          Reform the Police system by setting up operationally autonomous Police Commission in each State.  A Public oversight committee, with representatives of government and prominent citizens, would also be set up to ensure that the police do not misuse their authority and obey the law that they are charged to uphold.  The monitoring/oversight committee should have the authority to ensure that any policeman that misuses his position or violates the law is given exemplary punishment.
  • ·         Set up a National Legal commission to provide similar oversight over the legal system and the neutrality and probity of judges at different levels.
  • ·         Introduce a law to debar those against whom criminal charges have been framed in a court of law from holding or standing for election to a public office, till such time as the person has been acquitted.  Set up a special tribunal for expeditiously trying all such cases in which the person wishes to stand for public office or is holding public office at the time of notification of the new law.
  • ·         Ensure access of the rural areas to information on crops, non-agriculture and related activities through telecom connectivity (internet, internet telephone) at competitive cost.  This requires immediate access of the private sector to monopoly networks like the telegraph system, elimination of explicit or hidden taxes (e.g. revenue share) on rural telecom provision, and modernisation of agricultural R&D and extension systems (autonomy, management, accountability).
  • ·    Replace the myriads of anti-poverty and related programs for the poor by a smart card system that entitles the poor to a consolidated income supplement based on all relevant family parameters (income, health, age, gender) and identification & authentication systems.

"Conclusions"  from the paper, "A New Development Paradigm: Employment, Entitlement and Empowerment,"  Economic and Political Weekly, Vol. XXXVII No. 22, June 1-7, 2002, pp. 2145-2154. [  NewParadigm4nf ]

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