The Union cabinet recently gave the go-ahead to open six new Indian Institutes of Technology (IIT) in India. Obviously these new IITs are intended to train a greater number of good quality engineers. The cabinet did not merely give the green signal for investing about Rs 1,500 crore in the IITs - about Rs 250 crore for each IIT - but also where these would be located.
Why does the cabinet need to give the final go-ahead? Why does it need to specify where the IITs would be established? The matter is not even worth a Union cabinet minister's time. For, it is not a policy issue. Whether and where there is need for more IITs is simply a resource allocation issue. This can be done at the joint secretary level, no more. In fact, which city an IIT should come up is not even a resource allocation issue; it is an implementation issue, and that should be dealt with at the level of director or the state government.
There are two issues here. One, the perceived importance of higher education institutions for local economies; and two, the flawed architecture that allocates decision-making powers in the government.
There are thousands of cities in India; every city would want its own IIT and IIM (Indian Institute of Management). People mistakenly believe an engineering college like IIT will help a city attract industry or kick-start economic activity. Although conceptually that is correct, that does not happen with the IITs at least: See what happened to Kanpur? Or Kharagpur? Or Jodhpur, for that matter? The record of government-run engineering and management institutes, especially of the central government variety, in significantly contributing to a city's economic development has been abysmal.
That is not surprising, given the way they are structured. IITs and IIMs take in candidates from a national exam and their students get placed where the large employment centres are. Local students do not get any extra benefit from the presence of the institutes in their city. Further, these institutes take in faculty, officials and even directors from a national pool, hence local graduates from the city too don't get any extra benefit. The link with the city is initially tenuous and needs to be built over time. But no one in the IIT is incentivised enough to do that.
Typically, faculty members tend to be wary of the business community, especially of the unbranded and non-multinational kind, to take on projects with them. And you don't get any other kinds of entrepreneurs in most non-metro towns. Faculty housing also is within the walls of the institution, so social networks with residents of the city are weak. In other words, these institutions have their own walled existence and contribute little, simply because they have limited connections or stakes in the city. Obviously the institutes do contribute to the national economy in the form of better trained students, but in that case they can be placed anywhere.
Why then do cities and politicians lobby so hard with the central government for setting up IITs and IIMs? They have become a status symbol because we have the prime minister and the cabinet deciding on them. A politician's success in wrangling an IIT for his city reveals his proximity to the PM and his cabinet. This perception is critical in the way Indian politics works.
What is the efficient solution? Let a joint secretary or a director in the central government under the human resource development ministry allocate the IIT based on the state governments' recommendation and availability of funds. Give this system a couple of years to stabilise; during that time do not give in to lobbying for reversing the bureaucrats' decision. The political lobbying will then vanish and the PM and the cabinet can go about concentrating on the really important stuff. Hence, if the bureaucrats and the state government in question chose Rajahmundry over Vijayawada for the next IIT, honour their decision. Under the new system, the human resource development minister can then concentrate on creating an ecosystem where the IITs are better integrated with the local economy. We would need that if Make in India is to succeed.
Of course this is a problem symptomatic of a much larger class of problems that arise from mis-allocated powers of decision-making. The mis-allocation is such that the senior bureaucrats and politicians are forced to grapple with mundane implementation and minor allocation problems when they need to be concentrating on long-term policy matters and substantive institution-building issues. Growing pollution in Delhi, floods in Chennai, the mafia in Mumbai, or traffic jams in Bengaluru are all outcomes of mis-allocated responsibilities.
Why do we, in India, not allow senior or mid-level bureaucracy to take decisions freely? Why do we not allocate decisions to semi-government entities? Several excuses will be put forth, ranging from lack of ability, to preventing corruption and nepotism, to existence of mandatory rules or even law, or even that the "Constitution does not allow it". But there is little substance in most such arguments.
In the India of tomorrow the prime minister, the Union cabinet and even cabinet ministers individually, will take fewer decisions. They will depend more on the executive, technocracy, state and local governments. They will concentrate on long-term policy issues, coordination failures between different arms of government, institution-building and support the manager, bureaucrats and technocrats in their decision-making. This way, the prime minister and his cabinet ministers will be able to focus on more important things, both collectively and individually.
The writer is an economist
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
