Reforms in India must go further

Dhiraj Nayyar

The Indian State was never efficient. Now, in the face of a raging pandemic, it has been exposed as dysfunctional. If the current circumstances do not force a thorough reimagining of the state — its job description, capacity, and design, then nothing will. 

The essence of the state apparatus remains inherited from the colonial era — control. This was only reinforced by the long years of command-and-control economy. The state, in all its layers, is not a problem-solver. By design, it is better at halting things or slowing them down. 

In the first phase of the pandemic, the decision to impose a national lockdown, then the global conventional wisdom, suited the instincts of the Indian State. The problems that accompanied that decision — for example, the mass exodus of migrant labor from cities — festered because solving those was not the core competence of the administrative machinery. In the end, the first wave saw greater damage to the economy than to public health. 

As the first wave ebbed, it was abundantly clear that the only way to banish the pandemic was through vaccinations. Fortunately, there were several vaccines on the anvil, including a home-grown one and a huge vaccine manufacturing base. If the state was a problem-solver, it would have put its mind to the task of procuring 1.5 billion doses of vaccines in 4-5 months. All constraints could have been overcome. 

But a state apparatus trained to control demand and supply opted for a rationing approach with a minimum order of vaccines. There may have been an element of complacency. But that itself flows from a confidence in the ability to control everything, even viruses. 

The state may have got away with it, but pandemics don’t disappear. History and current experience from other countries gave adequate warning. If the scenario had been foreseen, a serious upgrade of health infrastructure and oxygen supply would have been done in the 2-3 months before April if not in the 7-8 months prior. 

But even if GoI had acted rapidly in early April when the second wave was apparent, but not full blown, many of the unnecessary deaths due to lack of hospital beds and shortage of oxygen could have been avoided. Again, a lack of problem-solving approach combined with a lack of coordination between central, state, and local governments meant that by the time the oxygen and infrastructure issues began to be addressed, the damage had been done. If these are still not happening at pace, it is because building temporary hospitals and arranging logistics for oxygen supply are not what civil servants train for. 

Narendra Modi knows the limitations of the state apparatus. But he has tried to get the maximum out of it by trying to enforce accountability mostly by deploying technology. That approach has prevented leakages in government spending and has enabled more efficient delivery of welfare. But it has not fundamentally altered the instincts of the state apparatus. Now, the PM needs to go further. 

For a start, there is a clear need for GoI to exit certain domains of activity altogether, like running a business. Has it been worth pumping lakhs of crores of rupees into central public sector enterprises (CPSEs), particularly sick ones, when that money could have been spent on building up national health infrastructure? Indian entrepreneurs are perfectly capable of doing everything that CPSEs do. But in healthcare, market failures will exist. 

Several ministries, whose sole purpose is to dabble in private sector activities, can be folded up or merged so that human and financial resources can be diverted to only these tasks: security (internal and external), physical infrastructure (roads, ports, airports) and social infrastructure (education, health, sanitation). In the latter two, the private sector can play a complementary part. 

Also required is a clear demarcation of which government does what. In principle, the Union government should focus primarily on policy, financing, regulation, inter-state coordination, not implementation (except defense). The state governments can do partial financing, project planning (particularly in social infrastructure), coordination of districts, and monitoring of implementation. 

Implementation must be largely done by local government, municipalities in urban areas and panchayats in the rural areas. In a pandemic, too, this division of responsibilities would work well. 

And finally, there is the matter of capacity beyond finances. Training for civil servants, beginning from the academies, must be updated for the requirements of government in the 21st century. Opportunities to specialize must be given. Lateral entry is a much-reiterated theme. But there is no substitute for roping in expertise. Non-government doctors, scientists, private sector managers should have been involved to lead the fight against the pandemic.

First Published in Economic Times: The Limitations of a Colonial State on May 10, 2021.

About the Author

dhiraj

Dhiraj Nayyar, Chairman, Trade, WTO & Investment Council, The Associated Chambers of Commerce and Industry of India

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