Sunday, December 23, 2012

Stop talking, start doing



Ratan Tata is a reticent man. He is 74 and retires this month as chairman after guiding his group to be the country’s number one, $ 100 billion, in revenues. He commands respect not only from his 450,000 employees but from the entire global business community. He is courteous and complains rarely. But earlier this month he spoke out in anguish. “Government inaction is driving investment away from the country,” he said, and this was forcing groups like the Tatas to seek opportunities abroad where you don’t have “a seven or eight year wait to get clearance for a steel plant.” The finance minister, P. Chidambaram, echoed this view, reminding us that over 100 mega projects had been stuck for years because of a lack of approvals. Clearly, this failure of the government is greatly responsible for bringing India’s economy to its knees. 

Not only CEOs but ordinary Indians have been voicing the same complaint for years. Why should it take 12 years to build a road or 10 years to get justice in our country? Our public debate is filled with talk of corruption, about the right to information, of democratic answerability but almost no one speaks about the need for quick decision making or enhancing the capacity of our weak, soft, and ‘flailing’ state. No amount of CAG’s disclosures or ranting about the Lokpal will improve the state’s ability to act or strengthen our crumbling institutions. Is our obsession with accountability and transparency making us forget that the state was, in fact, created for collective action?

Accountability is, of course, important. Over the past decade, campaigns by activists supported by intellectuals have brought significant gains, such as the Right to Information Act. The pressure exerted by Anna Hazare’s movement backed by the media have raised awareness of corruption in high places and even helped in the arrest of powerful people. We are rightly proud of these achievements which have strengthened our democracy. But these laudable steps have not significantly improved services of the state to the citizen. Cases are still stuck in the courts; roads are built at a snail’s pace; police will delay registering an FIR unless influence or money is exchanged; it takes 117 approvals and 7-10 years to build a power plant. The list goes on.

Oddly enough, the push for democratic accountability may have weakened our already feeble state. The average official, always faint hearted and timid, is now even more afraid of putting his pen to paper. This is the other side of our fight against corruption. The modern democratic state has to balance the ability to deliver services on time with accountability to the people. Other democracies have also faced this problem of balance but they have found a way to cope by reforming their institutions. All institutions, in fact, must aim for a balance between accountability and action. A company could not survive if the CEO spent the whole day listening to shareholders. A school would not be effective if its principal spent his time only listening to parents. Already scorned as a “nation of talkers and not doers”, India needs to shift its focus to action.

There is a great deal to be hopeful about India’s future. It is stable, open, and amazingly tolerant. Its economic reforms have put it on a promising path of rapid growth. It is breeding outstanding companies which are more innovative than most in Asia. Its middle class is growing rapidly and its poor will benefit from a more effective welfare system based on cash transfers. But India’s soft underbelly is a soft, weak state, whose institutions of governance—the bureaucracy, the judiciary and the police--are in desperate need of reform. This is one of the reasons why its economy has hit a wall as it approaches the $ 2 trillion GDP mark.

Ratan Tata and P. Chidambaram have focused on one symptom of the disease—paralysis in decision making at the centre. But even the solution--the recently formed cabinet committee on investment—invites scepticism. The issue is not ideological—a big versus a small state. India needs to achieve an effective balance between our government’s ability to act and be accountable to the people. 

27 comments:

Sangeeta Kundap said...

Sir,
the question is how to change the mindset of the people? In corporate sector it may be achievable as every one is accounted for some responsibility. At State and Central Government Level how it can be achieved?

Sangeeta Kundap said...

Sir,
the question is how to change the mindset of the people? In corporate sector it may be achievable as every one is accounted for some responsibility. At State and Central Government Level how it can be achieved?

sksharma said...

Things are realy not that easy. Serving the people and the Nation is nobody's aim. When greed and selfish motives only are the driving force then things do not improve as suggessted. A chrismatic Leader is needed to steer India and its people for their betterment. And that void is difficult to be filled in near future.

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Hari Garhwal said...

Thank you, Mr. Das, for sharing your insights and enriching and enlightening us by your thoughtful writing. I also greatly enjoyed your 1993 piece in HBR, Local Memoirs of a Global Manager. There you write: “…each blade of grass has its spot on earth from where it draws its life, its strength; and so is man rooted to the land from where he draws his faith, together with his life.”
On further reflection, your powerful words quoted above give us some insight into the corruption problem facing India. I submit that India’s corruption problem is cultural and civilizational while Indian elite and media treat it a political problem. I have done further work in the area of correlation between (a) rate of GDP growth in mid-term (spanning even decades) and level of corruption, human development, quality of institutions and even innovation; and (b) level of GDP per capita today to all these variables. And we find that if the country now is set to a resolute, unwavering path to economic development the correlation for the former is not significant; but very strong for the letter. So a country now committed to right economic path (China, for example) can still have superior growth rate for decades despite the other shortcomings. India is devoting too much political capital to solving the corruption problem which may take decades if not a century to resolve. As you very well know from your P&G days how difficult it is to change cultures, especially country cultures. Instead, as you are correctly pointing out, India should “manage” the corruption issue, and focus like a laser beam on the balanced economic development. People quickly learn to work around the known corruption; it is the increasing rate of it needs to be wrested.
I would be also grateful, if time permits, to your thoughts on my piece on Global Regional Trade Alliances, in particular the concept of possible Japan-India trade alliance. You will find it at: www.harigarhwal.com

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