A new government is in power and, if the first few days are anything to go by, its head appears to be a hands-on leader. He is reported to have a 12-hour working day starting at 8.45 am. He has chosen a lean Cabinet and one where the maximum age of the ministers is less than 75. I wish he had a lower cap on the age of ministers, but the very thought of such self-imposed age caps is a breath of fresh air. This is not to say that people above a certain age are useless. However, in a country where the median age is below 25, it is good to have younger, rather than older, people in the decision-making business. The elderly can always be good advisors, sharing their experiences with those in charge of decision making. A younger minister will, hopefully, have a longer time horizon since she will expect to be around longer. This, plus the energy of a younger person, will lead to faster and more decisive actions.
The other thing that is worth noting is Prime Minister Narendra Modi's policy priority list. According to newspaper reports, at the top of the agenda are education, health, water, energy and roads. And, the 10-point priority list also includes transparency and auctions. A big problem with recent governments has been the belief that politicians and bureaucrats - at the district level, state level and central level - must handhold the poor out of poverty, give employment to the unemployed and decide on whose land to build factories. I find this approach extremely feudal, notwithstanding the huge support such policies get from the leftists and many non-governmental organisations.
When it comes to economic matters, the government is an enabler and facilitator. Its primary job is to develop and maintain a system in which people - the rich and the poor - can take steps by themselves to better their lives. Nothing should act as a barrier to the realisation of people's aspirations. It is not for the government to decide on what people's aspirations should be - so no free television sets or computers or rice. Instead, people should be able to earn enough by themselves to afford any or all of these. Good governance enables the individual to carry out a decent and independent existence; good governance is not about making a public show of how much one cares for the poor.
The first step towards uplifting the poor is to get rid of the reasons why a person is poor, and not to give them monetary doles. In a modern knowledge-based society, the poor will remain poor if they are unemployable in the more productive jobs. In a society where healthcare is inaccessible to the poor, a health shock will rapidly bring, and then keep, households below the poverty line. Poor training and poor health are two primary reasons why one is poor. It is silly to think that the poor can be taken care of by taking some of the earnings of the rich and, if the latter are unwilling to give up voluntarily, one can use the government's powers to enact legislation like the recent corporate social responsibility (CSR) law (wherein companies above a profit threshold have to spend money on doing good things as defined by politicians and bureaucrats). It is silly for supporters of such policies to say that cash transfers to the poor are an abandonment of the government's responsibility while the CSR law is a study in responsible government. One hopes that the new government will not only prioritise health and education but also create sustainable policy alternatives, rather than developing a complex web of targeted subsidies. The latter invariably lead to corruption; a lot of resources are spent on "finding" the poor.
The second step for uplifting the poor is to create opportunities for productive employment. However, governments do not, and cannot, create enough jobs for the poor. The private sector can and, therefore, must create the jobs that a young population needs. Therefore, good governance becomes one of creating the environment in which the private sector will invest in economic activities that create jobs. Physically integrating people in different parts of the country increases the size of markets and this is a huge incentive for investing in profitable activities. Putting roads on the top of the priority list is, therefore, a good beginning.
The third step involves maintaining the economic activities. The three most important factors in maintaining growth and investment are water, land and energy. Though I do not see land in the list, I do see the other two as priorities. I hope the new government takes a fresh look at the land acquisition Act, which is biased towards an ideology that believes the government is the best intermediary in market transactions. A good Act should lay down the rules within which individuals and private entities must carry out market transactions; the current land acquisition Act, instead, is premised on the notion that the government must be a major actor in all land transactions!
And, the final step in this project of uplifting the poor has to be, of course, transparency in government actions and decisions. So far, there has been focus on transparency in actions but little on decisions (or, why those actions were taken). One interesting study on decision making could be the following. Download the first draft of the Bills put up on the websites of various ministries for the public to comment upon, and then compare the first draft with the final draft. While putting up things on the website may be necessary for transparency, what really makes for transparency is the government's detailed explanation of why it is doing what it is doing. That has been totally absent so far.
The writer is research director of IDF and director of the School of Humanities and Social Sciences at Shiv Nadar University
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
