The Hindu Business Line : Jalan on the future of India

DR Bimal Jalan is an economist with a refreshing lucidity of expression and a range of interests. A rare combination, which makes his latest book The future of India, a rich bouquet of ideas and suggestions worthy of wide attention.

For all his current silence in his latest position as Member of Rajya Sabha, Dr Jalan has been an articulate participant among the economic mandarinate of India during at least three decades.

Educated at Calcutta, Oxford and Cambridge, Dr Jalan had successful innings both at the IMF and the World Bank before returning to India, where he worked in ICICI. From there, he moved to the Ministry of Industry and thereafter to the Ministry of Finance, where he became Chief Economic Adviser, Banking Secretary and, later, Finance Secretary.

He had also a tenure as Member, Planning Commission, Executive Director of the World Bank and IMF. He was also a successful Governor of the Reserve Bank of India for nearly six years during a critical period following the East Asian crisis. He has worked with politicians of almost every hue, from Rajiv Gandhi to V. P. Singh, and Pranab Mukherji to George Fernandes, and gained their confidence — a tribute to Dr Jalan's capabilities of head and heart!

The latest book by Dr Jalan is not confined to economic analysis. It has a broader reach — much too broad a sweep. It covers the issues of politics and governance, besides an occasional reference to political economy. It is a result of Dr Jalan's intense and pained introspection about India's future.

Dr Jalan does not conceal his discomfiture about the country's future. Much as he would like to share the optimists' view about India's prospects, the message of the book is that unless India gets its politics and its governance in order, its prospects of achieving a higher rate of economic growth and reducing poverty in the near future are not too bright.

It is good that gurus like Bimal Jalan sound a note of warning lest dreams of greatness confuse the vision of India's rulers and make them have illusions of grandeur.

The wide sweep of the book gives Dr Jalan the opportunity to express his ideas on such diverse areas as political reform, changes in civil service and even changes in the way Parliament should conduct its business.

While I admire Dr Jalan's courage in venturing on such a wide-ranging survey, I must admit that some of his suggestions are not readily obvious to the layman.

For instance, his idea that the notion of collective responsibility of Ministers should be changed to make such individual minister personally responsible seems to be resulting from a confusion of two different ideas — one a concept of Cabinet being jointly responsible for the actions of its members and the other an idea of monitoring an individual minister's performance.

Collective responsibility is not inconsistent with individual responsibility of a Minister, who is expected to perform and be answerable for results. While the Cabinet as a whole is collectively responsible, nothing prevents an individual minister from being found fault with and asked, if need be, to quit when he fails to perform.

Witness the case of late T. T. Krishnamachari, who had to quit his post for alleged failure to live up to the expected norms of transparency in business matters in the Mundhra affair.

I feel Dr Jalan is carrying his notion of individual responsibility of ministers a little bit too far when he suggests that the concept of collective responsibility be diluted to ensure personal responsibility of individual minister for performance, especially in matters of national concern.

Dr Jalan is quite exercised about the growing bureaucratic jungle, which obfuscates governance in India, apart from leading to higher costs of doing business as also inflicting a growing fiscal burden.

The obvious remedy that Dr Jalan is quick to focus on — and with which most economic reformers will agree — is to remove government from a number of areas of activity. He cites with approval Arun Shourie's narration of what he achieved in the reform of licensing procedures in the telecom field.

Dr Jalan's perspective is clear that the way forward is to cut through the overgrowth of controls and red-tape.

There is also the hegemony of ideas, inherited from our socialist past where Government intervention was considered the solution to all problems.

While Dr Jalan comments on this legacy as infecting all sections of the polity, he is careful not to condemn its continuing influence in impeding economic reform.

Continued opposition to privatisation from various members of the ruling coalition as well as the Opposition is an instance of this ideological baggage.

One idea Dr Jalan suggests is that there should be a redefinition of the role of ministers and civil servants. According to him, civil servants should do the micro-allocations according to rules laid down while ministers should be bothered about the general principle.

Here is the rub. Dr Jalan is too experienced in the ways of government not to know that it is a rare Minister who does not delve into details. Self-abdication is not the defining feature of ministers. Details are where their power resiles. The only constraint that can be placed on political intervention is through civil society and an active judiciary.

Dr Jalan has an excellent chapter on the roots of and solution to corruption. But I feel he has not shown sufficient awareness of the dangers of overdoing this emphasis.

Corruption has to be controlled and eliminated, but the cost of doing that should not be the elimination of enterprise and initiative.

Dr Jalan recognises the dangers in excessive vigilance as restrictive of initiative but claims that the solution is to have quick and decisive vigilance actions. The paralysis of decision-making at higher levels of bureaucracy has a lot to do with the increasing fear of lengthy persecution on flimsy whistle-blowers' allegations. The remedy to such a vigilance-induced palsy in the civil service is not easy. It has to come about through a changed value system, better disclosure and a mixture of a carrot-and-stick approach — an incentive for quick decision-making and a penalty for non-observance of the rules of propriety, if found out and proved in good time.

Dr Jalan also touches on the question of public financing of elections, but a bit briefly.

Dr Jalan hazards a suggestion that no party which has less than 10 per cent of the members in the Lok Sabha can be part of the Government unless it drops its separate identity as a party at the Centre and joins the main party in a coalition as an associate or an affiliate member until the next elections.

True, such an extreme reform will prevent many insignificant, but nuisance-laden, local parties from destabilising a governing coalition. But is such a reform practicable, or is it constitutionally feasible to make a legal requirement binding on political parties? The judiciary may come down heavily on such a reform.

Dr Jalan has many more interesting ideas. One of them concerns restriction on transfers of civil servants — an idea the Prime Minister has also recently put forward. Whether such an intervention in the process of transfers of civil servants is politically feasible is difficult to say.

Ultimately, the government at the political or bureaucratic level has to have the right to change its civil servants when performance targets are not met.

Whether such reasons are to be spelt out in every case of transfer is a matter that defies being defined by rules. However, the Prime Minister has floated a radical idea, which Jalan also endorses.

This is a case in which the "transfer" as a tool of punishment or reward can be removed from the politician's armoury, if sufficient guidelines are laid down. But, politicians use transfers as rewards as well as penalties and civil servants have to learn to live with them, even if there are rules. There can, however, be no rules prohibiting all transfers.

The fact that Dr Jalan's book has excited interest in many circles shows how important are the issues he has raised. While it is true his book has a wide sweep, one also wishes paradoxically that he had covered some questions, such as civil service reform more thoroughly. That would have been an experienced economist's perspective on India's public administration. With all due respect to Dr Jalan, whose opinions I value greatly as a friend and former colleague, I have a bone to pick with him in his latest effort. Dr Jalan's book is both exciting and disappointing.

It is exciting because of its wide range and sweep. It sounds the right warnings that unless India's politics and governance shape up, its targets of greatness are not realisable — notwithstanding ritualistic statements by well-wishers. It is disappointing in the sense that one expects a great deal more of economic insights from such a doyen of economic management as Dr Jalan. He has, of course, consciously avoided writing yet another book on economics of growth. But, that is where his comparative advantage lies.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Lamy's task

Present and future — the PM's view

Competition for Bharat Nirman

The New Exploration Licensing Policy

At what cost your vote?

Gandhian groups

War in US video rental arena — Will Blockbuster's strategy pay off?

Jalan on the future of India

Business as usual

BHEL disinvestment