Author: Rajiv Kumar, CPR
With the Modi government less than 3 months old, it is surely too early to make any assessments. But high expectations and his track record have generated an impatience for results even among Modi’s supporters. News trickles out mentioning an indefatigable prime minister driving from the front, changing the tenor and temper of the entire bureaucracy.
This apparently unprecedented behind-the-scenes activity was reflected in Modi’s maiden Independence Day address on 15 August. Being beholden to symbolism, he used the address to lay out his government’s development blueprint and invite people’s participation from the ramparts of the Red Fort, the ancient imperial seat of the Mughal emperors.
Those who observed Modi during his tenure as Chief Minister of Gujarat point to his stellar record in project implementation and in raising efficiency levels across government departments. His model involved intensive analytical work with a highly trusted team, along with other senior bureaucrats, and then a focus on delivering on the targets agreed. Planning took place during three-day brainstorming camps, or chintan shivirs, which culminated in clearly defined annual targets along with a plan of action.
Apparently this is being replicated in Delhi, with senior bureaucrats making detailed initial presentations, followed by iterations that reflect feedback from Modi himself, and then finalising modalities for project execution. This is top-notch project management. But will it suffice to achieve the rapid, sustained and inclusive growth needed to fulfil rising aspirations? Will it shield India’s new middle class from the double whammy of high inflation and growing unemployment?
The Indian economy, unlike Gujarat, is not merely a vast project site. The Modi model pioneered in Gujarat, which saw the chief minister as a super-efficient CEO, can no doubt produce higher growth rates by improving project implementation and raising the efficiency of public services delivery. These are India’s weak spots and Modi is right to rectify them. This also plays to his strength.
However, unlike in the states, the central government has the principal responsibility of putting together an overall, multidimensional and coherent policy framework. Policy formulation has to precede project design or its implementation.
Consider the many thorny policy dilemmas facing Modi. Is inflation in India a purely monetary phenomenon to be tackled by fiscal and monetary contraction or does it require focused management of supply side issues? Can India afford to run higher fiscal deficits if this results in improved productivity? Can agriculture be modernised without a robust land market? Are flexible labour policies a necessary condition for promoting manufacturing? Should India maintain a relatively weak currency for promoting exports?
There are myriads of other areas demanding attention, including food security, climate change, FDI restrictions in defence, and the balance between closer ties with Japan and a diplomatic strategy that aims to leverage China’s vast financial reserves for infrastructure investments in India.
In tackling these problems, the central government must establish a coherent and rational policy framework that will better serve strategic national interest. And an undue emphasis on policy continuity would severely constrain innovative policy choices and rule out breakthroughs.
Making the right policy choices in an increasingly complex and globally integrated economy requires technical inputs and expertise. Fortunately, such expertise is available. Modi needs to tap into this pool of knowledge, including successful expats, as well as employing new technology to source ideas and make the right policy choices.
It would be efficient to locate expertise either within or in close proximity to the government. This will create positive synergies between experts and civil servants. In India, bureaucrats spend most of their time putting out fires and implementing projects. It is not allowed to develop expertise and its global exposure is sporadic. An exclusive reliance on career bureaucrats and diplomats and the resultant bureaucratic capture of policymaking can have seriously negative outcomes.
India’s current isolation in the WTO following its rejection of the Trade Facilitation Agreement is an example of where expert advice could have made a difference. Outside expertise will also be needed to build upon the 31 July India–US dialogue in time for Modi’s trip to the US in late September. By effectively marshalling available expertise and creating necessary synergies with the bureaucracy, the prime minister will signal his preparedness to move beyond Gujarat.
Rajiv Kumar is a Senior Fellow at the Centre for Policy Research.
This article was originally published here, by the Times of India.