The recurring primary revenue deficits, along with stagnant industrial production and consumer price inflation obdurately high at 8.6 per cent for the month of April 2014, are casting a shadow on India's economic health. The pervasive trust deficit between the ruled and the rulers in India is even more damaging. The contours of the new government should be clear by tonight. If India's economic growth is to accelerate and generate employment opportunities faster both sustainably and equitably, one of the urgent tasks ahead for the new government has to be to improve public trust in the executive. This article highlights systemic fault lines in Indian governance and suggests illustrative steps the next government could take towards regaining trust.
The innumerable unresolved cases of alleged corruption over the last several decades relating to bribes for parliamentary votes, Jain and other hawala episodes, Commonwealth Games, telecom spectrum allocation, coal and iron ore mining, change of land use and environmental clearances have eroded confidence in the government and our justice system. The blatant pursuit of self-interest by a powerful few has at times resulted in sub-optimal legislative, administrative and economic outcomes.
There are several bodies that are mandated to investigate malfeasance. Some of these are the Central Bureau of Investigation (CBI), Central Vigilance Commission (CVC), Enforcement Directorate (ED) and the Directorate of Revenue Intelligence (DRI). The CBI has come to the adverse notice of the Supreme Court. And the CVC came into controversy as the appointment of its chief was set aside by the Supreme Court. By contrast, the Election Commission and the Comptroller and Auditor General (CAG) have gained a measure of self-confidence. Further, the higher judiciary has fulfilled its role as a check on the executive relatively well, though it has on occasion encroached on the executive's turf.
Mass demonstrations and fasts against corruption in combination with competitive populism led to the adoption of the Lok Pal Act in December 2013. One of the arguments for a high-level Lok Pal at the Centre was that the government takes forever to permit investigation of officials of the rank of joint secretary and above. This is no longer valid after the Supreme Court's judgment of May 6, 2014, which allows the CBI to question officials at all levels.
Distrust in government can be attributed to the distortions in our governance system and inordinate delays in the justice system. This, in turn, can be traced back to the lack of a critical mass of competent and upright administrators, investigators and judges. It is inevitable that some appointees will be close to one or the other political grouping. However, it is depressing that personal interests often influence critical appointments in government, regulators and, at times, the judiciary. It is usually widely known who among the politically well-connected is mediocre, has shielded the corrupt, or engaged in amassing wealth. Therefore, it has to be the executive's cynical self-interest that results in the appointment of mediocre or scam-tainted persons to key positions.
The next government should ensure the appointment of independent, competent and transparently honest professionals to key positions. Of course, this is much easier said than done, given the quid pro quos that stem from the electoral funding needs of our political parties. It would be naïve to expect that collusion across wrongdoers in the civil services, political executive and private firms can be reduced immediately.
On balance, despite our political-economy constraints, incremental improvements can be made - for example, by changing the norms for the Appointments Committee of the Cabinet headed by the prime minister. The processes by which the senior-most members of statutory, regulatory, investigative and other bodies are selected could be amended to make it mandatory to set up pre-selection committees with at least half the members drawn from outside government with fixed tenures.
The interminable delays in our courts cannot be remedied without augmenting the strength and efficacy of the investigative, legal and judicial bodies. According to the media, Reliance Industries, British Petroleum and Canada's Niko have filed arbitration notices against the Indian government over gas prices. Vodafone, too, is said to have registered an arbitration notice against the Indian government on the issue of taxes due from it. In order to resolve these and a host of other unending legal disputes in which the government is mired, it is important that the officials concerned have domain knowledge.
It follows that senior appointments in government, CAG, CBI, financial sector and utility regulators should not be reserved exclusively for the civil services. Our government and investigative bodies need well-qualified professionals, accountants, detectives and legal experts.
We also need more courts and judges to ensure speedier judgments. It can be expected that there will be stiff resistance from suspect circles since lengthy delays enable rent-seeking. The next government should set up offence-specific fast-track courts, appoint additional judges and provide the required administrative facilities. Although it is difficult to strike the right balance between autonomy and accountability, investigative and oversight bodies have to be made liable for questionable or inordinately delayed decisions. Again, the right people at the top would make a difference.
On a related note, for institution-building purposes and to provide continuity in decision making, the minimum term in office for the Cabinet secretary and a few others is currently two years. This norm should be extended to all secretaries to the central government. It is inexplicable that repeated extensions were granted in the recent past to Cabinet secretaries, since this lowered the morale of those who were in the queue.
For ever so long, the government has opted to reserve membership in statutory, regulatory and other bodies such as the Union Public Service Commission and the Human Rights Commission to retired members of the civil services, and in the case of the Election Commission to just one service. Such appointment practices tend to engender pliant behaviour from officials while they are in service. The next government should broaden the catchment area for appointments by including those who have served eminently in corporate and law firms, media, non-governmental organisations, academics and so on.
To conclude, trust begets trust. The next government's chances of making a measurable difference will to a considerable extent be determined by the quality of its appointments and the extent to which it trusts its appointees.
The writer, a former Indian high commissioner to the UK and finance professional in the World Bank and ministry of finance, is currently RBI chair professor in Icrier.
These views are personal.
j.bhagwati@gmail.com
These views are personal.
j.bhagwati@gmail.com
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of www.business-standard.com or the Business Standard newspaper
