Suffice it to say that these measures do not reflect ‘tinkering at the margin’.
The Modi administration’s governance reforms are disruptive and have transformative potential. Steps for qualitatively improving governance range from installing biometric attendance machines at government offices, to holding bi-monthly meetings of the PRAGATI group (Pro-active Governance and Timely Implementation) with top ranking bureaucrats in major provincial capitals to de-bottleneck infrastructure projects, to direct transfers of government subsidies to actual beneficiaries’ bank accounts. This large number of seemingly marginal measures are beginning to have a significant cumulative impact on making governance more efficient, accountable and transparent. They will ensure that growth is more inclusive and benefits are not confined only to the well-heeled, well-connected and the corrupt.
One key goal has been Modi’s resolve to minimise the marked differential between public and private sector performance. In essence this implies, perhaps for the first time since independence, establishing a ‘development state’ in New Delhi. There is now a conscious, consistent and clear-headed attempt to improve the delivery of public services, to make bureaucracy more accountable and to steadily eliminate leakages from government expenditure through the effective use of the JAM trinity.
In the Indian context, improving governance is a key structural reform. This effort has evidently disappointed those who perceived Modi as a Thatcher–Reagan clone. To be fair, Modi himself lent credence to this perception by talking of ‘maximum governance and minimum government’. But having learnt from his own ground level experience in Gujarat, Modi has realised in quick time that a development state is a necessary and critical condition for the success of further liberalisation.
A development state, which is the antithesis of the ‘soft and rent-seeking state’ that has characterised India through all its post-independence decades, is essential to ensure the efficient provisioning of basic necessities for the poor who are excluded by the market. It will also reverse the hitherto dominant trend of substituting private solutions to palpably public problems. This outsourcing of basic public services has resulted in an exclusionary pattern of development since 1991. Breakdowns in public schooling, basic health, public transport and power transmission networks are all testimony to the ruinous outcomes of the soft and rent-maximising state.
Modi aims to put in place a governance system that efficiently delivers public services to the poor and promotes ease of doing business in a non-discriminatory, transparent and accountable manner. This is certainly not easy. Vested interests are entrenched and they fight back at each step. Modi is trying to overcome this resistance with recourse to digital technology and centralised, purposive and persistent monitoring and regular feedback.
When successful, this difficult but necessary structural reform will generate an inflexion point in India’s growth trajectory, both by raising GDP growth rates and making it qualitatively more socially beneficial. Reforms will remove the substantial and unfair advantage that large domestic corporate houses presently enjoy vis-a-vis small and medium domestic enterprises, as well as foreign investors. This will be a game changing move for spurring investment.
Modi has also chosen to not take steps that would result in powerful political coalitions ranged against him. He maintains a calibrated stance that combines continuous governance improvement with political stability. This rankles the opposition who rightly sees this as shutting them out from success in the next elections. Modi can hardly be faulted for that.
Modi’s India is in the throes of a paradigmatic shift in its development experience. Going by present approval levels in opinion polls and the frenzied state of equity markets, one could surmise that common Indians have bought into this story. This is not an illusion of reform.
Rajiv Kumar is director of Pahle India Foundation, a Delhi-based think tank.
A longer version of this article was first published here in The Times of India.