Bimal Jalan is probably one of the best-known names in Indian economics and has had varied experience in the central bank, financial institutions, multilateral institutions, as well as the government. He brings along a lot of knowledge and wisdom not just as an economist, but also as a practitioner in his new book, India Ahead: 2025 and Beyond.
Any book with a title that projects a future date can be cliched, but this is where Jalan makes a difference. This book is quite an erudite presentation of his views of what needs to be done in the next few years to make the country better. He gets to the point directly, which is important, and does not talk of superficial generalisations that have now become a habit with several authors who draw futuristic scenarios.
Jalan’s main focus is on the political set-up, which is in need of quick reforms. This is a good starting point and holds irrespective of the party in power. Good politics makes good economics, and this is why reforms are essential here.
It is not just a case of electoral funding, but also the way in which the administration functions. Politicians draw an awesome amount of power because they are not just involved in framing policies, but also carrying those out, which ideally should be the preserve of the bureaucracy.
He has drawn up a 10-point agenda that the reader can relate to, like the role of council of states, state funding of elections, role of small parties, Parliament, etc. On the role of small parties, he has an interesting suggestion that just like there is an anti-defection rule for MPs, the same must hold for parties in a coalition. This is because it has become fashionable to start small parties with probably four-five seats, which support a coalition and then become opportunistic.
On reforms in the conduct of Parliamentary business, Jalan is critical of the large number of disruptions brought in by the opposition and voices more power for the chairman or speaker to expel members responsible for such chaos. He also points to instances where several bills were passed in the houses without any debate in just a matter of minutes and which should have taken days given their importance.
The author has an important section on criminals in politics, where he argues for quick reforms. This is possibly the only sphere in government where a person charged with criminal offences can stand for elections and win on the strength of the people voting for the candidature. Jalan uses statistics to show how there can be as many as 20% of our MPs and MLAs across the country who have such cases against them. The advantage of getting elected, especially on behalf of the winning party, is that there is immunity for the candidate, as the system works to ensure that no action is taken against the person. Therefore, there is a perverse incentive for criminals to stand for elections.
From criminality, Jalan moves over to corruption, using some interesting research to show that Re 1 of corruption can cost the country Rs 3-Rs 4. This is because such corruption works through a multiplier process, which can be in terms of sale of natural resources, giving licences to the undeserving, purchases by government of inferior equipment, and so on.
To check this, we need to tackle both the supply and demand sides of the story. If things are transparent and do not require human interface, then the demand for paying bribes comes down. If rules are well-structured, then the power given to politicians or officials comes down to bestowing favours. Here, while the author has stayed apolitical, it can be said that in the present NDA government, both the aspects have been addressed to reduce the scope for corruption at least at the central level.
After taking us through the political reforms required and the deeper malaise of corruption and criminality in politics, the author steers the discussion to the economic arena and highlights two issues. The first relates to the quality of life, where he uses the human development index (HDI) and reforms in the financial sector. Both of them are perfect touch points to address with a new approach. On the issue of quality of life, Jalan bats for education, health and food security. On the financial sector, the argument is on the now-familiar story of capital and quality of assets. There is also some customary talk on the role of IT and a useful debate on how the exchange rate management process should be.
Towards the end, Jalan provides his take on the public sector in the context of administrative reforms that are needed in the country. He also feels that there could be too many ministries and ministers, which, in turn, inflate the accompanying bureaucracy, which becomes an administrative challenge for coordination. In his opinion, a large number of offices and sub-offices are non-functional and end up only enlarging the size of the government. Therefore, it is not just a case of closing down the PSUs that do not perform—and depending on public money to operate—but also the departments that do not serve any purpose.
After reading this discourse, the reader may ask, what next? The problem with the entire political and administrative framework is that these deficiencies are well known and hard to dilute. Changes take place only gradually, which is why, practically speaking, it would take decades to completely address these fundamental problems.
Curiously, Jalan points out that while a lot has been attempted to check the flow of money for elections, even today, the checks are dodged through cash payments and free services provided, which are hard to detect! There always are ways to game the system.
Madan Sabnavis is chief economist, CARE Ratings
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Source: Financial Express