Public policy discussions on India present formidable intellectual challenges given the great variety of issues and perceptions involved in their objective analysis. The challenges become more daunting given the expansive backdrop of a few thousand years, over which India has produced individuals and ideas—Aryabhata in space exploration, Chanakya in governance, emperor Akbar in religious coexistence, Ramanujan in mathematics, Gandhi in ahimsa, Tagore in humanity—to name only a few. They have become examples for the world to emulate and admire. The world has kept looking at India for new sources of admiration even after Independence, notwithstanding the substantive changes in its sociopolitical and economic context.
Comprehending India’s journey over the seven decades that it has travelled since 15 August 1947 is not possible unless contextualized in the light of the pain and the trauma characterizing the milieu in which independent India took its first steps. Partition sowed seeds of hatred to a great depth among the country’s major religious communities. The animosity, which was difficult for the young country and its new leaders to contain, remains a significant challenge even today with communal harmony a major governance goal for political leaderships and administrations across the country. The importance of building a secular, independent India and making its institutions work in a fashion uninfluenced by religious tensions and biases have been a key objective of Indian public policies. Most of the public policy is shaped by the tenets of the Indian Constitution.
India chose to go down a path like most other countries at the time, which were emerging from and embarking on independent futures. Providing effective governance and building efficient institutions were major public policy challenges that India encountered upon becoming a sovereign republic. The intensities of these challenges were, in many respects, more for India than its peers given its remarkable decision to grant complete political freedom to all in the country. The grant of democratic liberty, along with a series of Constitutional rights guaranteeing freedom of speech, opinion and religious practices for individuals, wasn’t accompanied by a similar freedom for economic activity. For four decades after Independence, India relied on the state as the main driver of economic growth. The seeds of state-led economic development sown in the Industrial Policy Resolution of 1956 were carried forward over the next decades into greater dominance of the public sector and contracting role of private enterprise. By then, India had nationalized its banks, insurance companies and coal mines, and regulated private capacities in heavy industries through licences. The government was steering towards reaching the overarching goals of tackling poverty, reducing unemployment and ensuring self-sufficiency in food production. The way it decided to do it was through greater state control, which then laid the foundation for a ‘licence and inspector raj’ through the regulatory apparatus it spawned. In a sense, it created more governance and institutional challenges for India, primarily by generating bottlenecks in economic expansion and efficient delivery of public services, which the country could have well avoided. Most of the economic reforms that India effected since the early nineties were aimed at undoing the deeds of the past four decades. The energy and time spent in creating unproductive regulations and disbanding them were costs that the country could have well avoided.
Politically, the wheel appears to have turned the full circle in India. The tallest leaders at the time of Independence—Mahatma Gandhi and independent India’s first prime minister, Pandit Jawaharlal Nehru—represented the Congress party that dominated Indian politics. Nehru was succeeded by Lal Bahadur Shastri and Indira Gandhi, prime ministers who ensured political sustenance of the Congress well into the decade of the seventies. Imposition of an internal emergency by Indira Gandhi during the mid-seventies (25 June 1975 to 21 March 1977) was responsible for changing the character of India’s politics as a disillusioned electorate voted out Congress in the elections that followed to usher in a non-Congress government for the first time in the history of independent India. Though the Congress rebounded to regain primacy in the eighties, the general elections to the Parliament held in 1989 marked the onset of multiparty coalition governments in India. Regional parties began occupying prominence in the governments at the Centre as the Congress realized the inevitability of aligning with smaller parties for mustering numbers in the Parliament.
The 1989 election also marked the emergence of the Bharatiya Janata Party (BJP) on the national political scene. The growth of the BJP underscored the resonance of a right-wing nationalistic political agenda with a significant section of the electorate. This was in marked contrast to the centrist political posturing of the Congress and the left-of-centre positioning of the Left, comprising mainly the Communist Party of India (CPI) and the Communist Party of India (Marxist) (CPI-M). The BJP went on to displace the Congress as the leading political party of India and formed coalition governments at the Centre with regional parties in the late nineties under Prime Minister Atal Bihari Vajpayee. Coalition governments refused to fade away as the Congress under Prime Minister Manmohan Singh stitched multiparty alliances to run governments at the Centre for most of the last decade and into the current one. The 2014 elections again marked a watershed as the BJP under Narendra Modi came to dominate the arithmetic in the Parliament with an absolute electoral majority of its own. While the BJP still has some regional parties supporting it as part of a broad alliance at the Centre, the last Parliament elections, and the electoral success of the BJP in most state elections held thereafter, marks its emergence as the most prominent political party in the country. While still not as overwhelming as the Congress was in the first four decades after Independence, the BJP’s electoral success at both national and sub-national elections has enabled it to significantly reduce political opposition in various legislatures of the country, making both regional parties and the Congress struggle for political survival.
While it might be adventurous to correlate the economic and political transitions, the fact that state control of the economy was the highest when the Congress was the undisputed political authority in the country can hardly be overlooked. Generational changes in leadership did impact Congress’s views on economic management with Prime Minister Rajiv Gandhi being among the earliest to visualize economic liberalization. But it was actually a Congress government supported by some regional parties that implemented the most decisive economic reforms in the nineties under the leadership of Prime Minister P.V. Narasimha Rao. Some of the politically sensitive reforms were facilitated by the prospects of the country defaulting on external payment obligations due to paucity of foreign exchange arising from precarious balance of payment conditions. But the Rao government and its successor coalition counterparts kept working on reforms even after economic conditions improved. Challenges in this regard have often been significant for various governments given that they needed to muster sufficient numbers in the Parliament for legislating major economic policies. Lack of adequate numbers often stifled the pace of reforms, like in the early years of the current decade when ‘policy paralysis’1 afflicted the Manmohan Singh government. Indeed, this was the time when the political economy of the country began showing stress with intra-coalition relations becoming tenuous leading to dissensions and tensions within the government. Turf issues began emerging with regional parties that were exercising influence disproportionate to their strength in the coalition. Quite often regional interests dominated national interests perpetuating policy paralysis. This was in marked contrast to the leverage enjoyed by the current Modi government. The latter’s political authority enabled it to implement the rather audacious ‘demonetization’ of more than 80 per cent of the Indian currency in circulation on 8 November 2016. Political goodwill for the Prime Minister and for his party following the resounding electoral victory little more than two years ago, helped the government to push ahead with the measure despite the hardships it created for people and the setbacks it meant for the economy, at least in the short term.2 While the benefits of demonetization in terms of its impact in making the economy less cash-intensive, more digitized, flushing out ill-gotten wealth and counterfeit currency will require to be examined over the long term, the importance of solid political authority in administering ‘bitter’ economic pills was evident from its implementation.
The extent by which the changing character of the polity and visions of political leaderships has impacted the quality of governance and the functioning of institutions—India’s major challenges that she inherited and continues to live with—is not easy to answer. But some vital institutions are worth taking a close look in this regard. Notable among these are Indian banks. Prime Minister Indira Gandhi nationalized fourteen banks in 1969 on the pretext of breaking their control and ownership by a few business families, to mobilize savings from the masses and to cater to priority sectors of the economy like agriculture and small enterprises. The move resulted in more than 80 per cent of Indian banks coming under government control. This also set in motion lending among banks, in particular public sector banks. While private banks came up after the economic reforms of the nineties, state-owned banks remained the major entities in the sector, handling both government and private corporate businesses. Financial difficulties of public sector banks were usually rationalized by political parties and governments as inevitable side effects of their role in aiding the development of priority sectors, where lending decisions were not guided by the principle of maximizing returns.
Indian banks were also praised for being relatively immune to catastrophic developments in the global banking industry, notably the global banking crisis of 2008, as they were not plugged into the toxic assets circulating in regional financial markets. However, Indian banks began experiencing their own crisis of existence soon after as they became inundated with non-performing loans due to excessive lending to businesses lacking domain experience in building infrastructure assets. They also borrowed heavily from markets for maintaining their lending and became financially overleveraged. This factor got further compounded by inordinate delays in projects being given statutory clearance, leading to time and cost overruns and thus defaults on advances from banks. Build-up of stressed assets of around Rs 6 trillion has eroded the capital of Indian banks.
The situation reflects the failure of not only vital state institutions like public sector banks to manage their capital and lending, but also the political reluctance of decades to reform banks. This could also be since banks have been performing politically ‘important’ functions such as lending to electorally important constituencies like farmers, small businesses and scheduled castes and tribes, as well as large businesses that are major funders of political parties. Indeed, fear of persecution has made executives of public sector banks slow in resolving or restructuring stressed assets, leading to a huge amount of capital remaining locked up in defaulting accounts.
The challenge for public policy in India emanates essentially from the requirements of good governance. Banks exemplify the challenge better than most other institutions. Despite most of India continuing to remain unbanked, banks have brought forth critical challenges for governments. These include their recapitalization and tackling financial stresses for ensuring that basic banking facilities are extended to the vast numbers that would gradually become part of the banking system as the economy formalizes. Significant initiatives such as the Insolvency and Bankruptcy Code, time limitations for National Company Law Tribunals and an ambitious recapitalization plan for public sector banks have been steps in the right direction. However, these steps need to be administered in a manner that enables banks to perform efficiently while reaching out to more and more people. This, then, reemphasizes the persistence of challenges that India took on right since it obtained independence and as alluded to earlier in the chapter: providing effective governance through efficient institutions.
The issue of governance and institutions in India can hardly be addressed without looking closely at individuals entrusted with the responsibility to govern. Civil administration in modern India has increasingly become more and more complex as most of the country’s shortcomings, particularly in the areas of public service delivery, are being attributed to lack of good governance by scholars, practitioners, civil society activists and international organizations. The heightened focus on governance has enhanced challenges for administrators with citizens now empowered with the Right to Information that calls for a far more responsive bureaucracy than the legacy carried from the days of the Raj. It is unfortunate that recommendations of multiple administrative reforms commissions for overhauling the bureaucracy have been either left untouched, or if implemented, then flouted more than adhered.
One of the best examples is the recommendation to have fixed tenures for some key appointments. While incumbents have been shifted out before the end of their fixed terms upon change of governments, the contrary instance of incumbents being retained well beyond their fixed terms is also available. Furthermore, little attention has been paid to the differences in expertise and skills required for governing India at the national and sub-national levels. While for states, administrators need to be proficient in ensuring timely delivery of key services (e.g. education, health, water, sanitation and local rural and municipal services), the demands at the national government level are more of conceptualizing and designing programmes with an eye on their reach and target. Delivering to people what they need in the right mix of quantity and quality, irrespective of agencies formulating the schemes, can fail if states are poor in implementation. State bureaucracies must be trained accordingly with a greater focus on the ‘field’ as opposed to the ‘ivory tower’. Needless to say, the emphasis for national level bureaucrats has to be different with greater focus on conceptualizing schemes, studying efficiently devised projects in other parts of the world and customizing them to Indian requirements. But innovative and ‘out of the box’ thinking are unlikely to figure easily among a bureaucracy accustomed to thinking and acting in set moulds.
The need of experienced technocrats, particularly in key infrastructure sectors (e.g. electricity, roads, ports, telecommunications, urban services) in this regard can hardly be overstated. Such lateral and technocratic expertise can be attached to major infrastructure ministries. The problem though is ‘lateral’ infusion of external skills is not welcomed by the existing bureaucracy given that it is considered encroachment on turfs. Indeed, on many occasions, technocrats have found working in government agencies frustrating and counter-productive given the resistance they have encountered. The half-hearted attempts to implement suggestions of administrative reform commissions combined with the reluctance of bureaucracies to accept external expertise reflect formidable challenges in improving the quality of governance in the country.
India has come a long way from the days when it depended on other countries for supply of essential foodgrain.3 ‘Green’ and ‘White’ revolutions have ensured self-sufficiencies in foodgrains and milk production. While chronic food shortages have become distant memories, the Indian state has fallen well short in providing its citizens clean and hygienic living conditions. Notwithstanding the advances of the country in nuclear science, space exploration and high-end technological solutions, India’s failures are conspicuous in human waste management and environmental pollution. Around 40 per cent of the Indian population still practice open defecation4 and until recently, building toilets and improving sanitation facilities were not among the topmost priorities of the state. The ‘Swachh Bharat’ mission—one of the most important flagship public policy programmes initiated by Prime Minister Modi for creating a ‘Clean India’ by 2019—targets eliminating open defecation, building modern toilets, eradicating manual scavenging and bringing behavioural changes among people. The mission focuses on extensive people participation and combining good habits and clean practices of individuals and households with expansion of sanitation capacities. Quite a few Indian states, notably Sikkim, Himachal Pradesh, Kerala, Uttarakhand and Haryana, have declared themselves Open Defecation Free (ODF) in rural areas. While achievements and rate of progress under the programme will be keenly followed across the world, the salience of ‘good governance’ in making it successful can hardly be reiterated. In the context of the earlier discussion on bureaucracy, the importance of commitment and dedication of local administrators to the otherwise mundane, but incredibly important civic objectives of shifting people from open defecation and ensuring appropriate garbage disposal, can hardly be overstated.
It is also important in this context to consider the role of political parties, their contributions to the causes of waste management and environmental preservation in the country. Elections in India are not fought on the issue of pollution. India’s global commitment to bringing down carbon footprints through the Paris Protocol Agreement on Climate Change is accompanied by a striking absence of discussion on pollution and environment in the domestic political discourse. Indeed, nonchalance of political parties to control of pollution in the country is remarkable and is best borne out by the appalling situation in the national capital of Delhi. Since November 2015, and in the aftermath of the Diwali celebrations, Delhi has been experiencing intense air pollution. The situation has persisted leading to serious repercussions on public health. Courts appeared to be the only actors keen on finding an end to the problem providing directions on limiting vehicle movements on the roads of Delhi. Two years later in October 2017, alarm bells began ringing again as dense smog engulfed Delhi, presumably from burning of crop stubble by farmers in neighbouring Punjab. Over the next few weeks, everyone watched in stunned disbelief as regardless of pollution assuming crisis proportions, the affected state governments failed to thrash out a solution and the Central government too refrained from proposing corrective measures. While the prospects of a long-term solution to curbing pollution in Delhi seem remote, it reinforces the limitations in quality of governance that continue to affect provision of public goods in the country. Indeed, environmental pollution, including the lack of preservation of waterbodies, has been a great concern. Pollution levels in the country’s major snow-fed rivers like the Ganges and the Yamuna do not show any signs of abating despite millions having been spent on action plans for cleaning them. Elsewhere in the country, waterbodies such as lakes and backwaters are getting choked with water hyacinth destroying marine life. What is worrying is the scant concern of local governments, administrations and commercial developers to the fact that Indian residents enjoy a right to clean and healthy habitats and ensuring such conditions is a collective responsibility.
Regardless of disappointment over governance and functioning of critical institutions in India, there are occasions which provide hope. One of these, undoubtedly, is the effort by the Centre and states to come together for putting in place a uniform indirect tax system in the country. What had begun as the Value Added Tax (VAT) has eventually taken shape as the Goods and Services Tax (GST) after nearly two decades of labour. The existing GST is hardly perfect and several sectors are facing teething problems. Nonetheless, the fact that states and the Centre could rise above political differences and short-sighted economic calculations to agree to far-reaching constitutional amendments for institutionalizing a common indirect tax framework gives hope for more cooperation between Centre and states and a greater display of cooperative federalism in improving governance. As far as improvement of quality of delivery of public services is concerned, much in this regard will depend on how central and state agencies and bureaucracies act together in administering a federal framework. The experience of the GST would be a great example in this regard. Not only would it involve extensive coordination between national and sub-national institutions, but also embrace of technological solutions by the latter. Both of these are substantive challenges for people and agencies not accustomed to change.
Hope, more than anything else, reverberates across the various themes discussed in this book. Written by some of the most distinguished public policy practitioners from India and noted scholars with years of expertise on India, the chapters that follow bring together a gamut of issues integral to seven decades of independent India. These include India’s external security and its engagement with the world, particularly Asia-Pacific; evolution and management of India’s elections and the democratic process; India’s globalizing economy and the planning experience; prospects and issues in agriculture and industry; critical challenges in land market and employment; regulations and issues in health, education, skill development, tax framework and corporate governance; and the changes and churnings characterizing Indian media, sports, civil services and caste and society.
While critical and candid, these essays are objective commentaries on India’s course followed thus far and the course corrections that might be required as it goes ahead. Given the connection between public policy, governance and institutions highlighted in this chapter earlier, the papers weave around them the synergy between India’s visions of itself in the current century as evolving from the journey it has traversed and the experiences it has had in policy and governance. And while reflecting, the papers do not fail to touch upon the obvious notwithstanding their honesty: resilience is what has seen India through till now and hope is what will take it forward.