Thursday, 29 May 2014

Modi’s government may be small; the state continues to be big

Narendra Modi’s 45-ministry government has attracted a lot of attention. It is also being hailed as the first step in what could be his signature style of governance – minimum government, maximum governance.
Sorry, but it isn’t.
Modi’s government is certainly a lean government, but it isn’t a minimum government. Let’s not confuse the two concepts. A lean government is about size and numbers. A minimal government is about a philosophy, a certain view of the role of the state.
A minimal state, as defined in the classical liberalism lexicon, is about the state confining itself to just a few areas. There is consensus on two – defence of external boundaries and enforcing law and order as well as upholding the rule of law. There are departures from this point on details. Some liberal streams include the provision of public goods as a responsibility of the state and there are differences on the definition of public goods as well. But the broad point is this: the state should not get into too many areas and most definitely not in areas where people are able to manage their own affairs through their own individual enterprise.  
India is not familiar with the idea of a minimal government. Before 1947, it was used to a colonial-feudal set up and post 1947 that got converted into a mai-baap sarkar. The state kept assuming more and more responsibilities till it was present in practically every aspect of the lives of individual and enterprises, riding roughshod over personal and economic freedoms. And yet the size of the government remained relatively small. Indira Gandhi, remember, ran lean governments. The unwieldy size of ministries is a post-seventies phenomenon. Remember also that gargantuan cabinets continued even after 1991 even as the command-and-control economy structure got steadily dismantled. 
It was only the Swatantra Party that came close to articulating the idea of a minimal state. The second of the 21 principles of the party stated: `. . . The party stands for the principle of maximum freedom for the individual and minimum interference by the state consistent with the obligation to prevent and punish anti-social activities, to protect the weaker elements of society and to create the conditions in which individual initiative will thrive and be fruitful. . .’ It is unfortunate that the party did not get much traction.
Modi’s government doesn’t quite pass this test.
It will if his government decides that the state should not be running hotels, airlines and providing telecom services and gets rid of the public sector in these areas. Instead, Modi talks about strengthening public sector undertakings. It is not clear if the government will pursue an aggressive disinvestment agenda.
It will pass with flying colours if the information and broadcasting ministry, steel ministry, culture ministry and the Planning Commission were disbanded. These are clearly, clearly relics of the socialist era. There are a host of other ministries that could make it to the axing list, but changing their role instead into a more of facilitating/regulatory role can be a subject of debate. Closing down these four is a complete no-brainer; no debate is needed.
There are some who argue that since the increase in the role of the state led to the unwieldy size of the government, limiting the size of the government will automatically result in a reduced role for the state, since administration will be a challenge otherwise. This argument is flawed. One, as already noted, Indira Gandhi ran a tight ship but one which was omnipresent and omniscient. Two, reducing the number of ministries and departments will not lead to shedding of work. On the other hand, technology can make it easier for the state to have its tentacles everywhere – far, far more easier than in the seventies.
Though Modi’s minimum government maximum governance idea does talk about the government moving from an interventionist to a facilitating role, the focus is more about using technology to speed up processes, clearances and permissions and make them transparent. It does not question the need for the myriad procedures that any interface with the government involves. It does not question the number of points of interface with the government. It is about making the government efficient in its current role, not about questioning its role.
Maybe that will come. Maybe Modi will realise that the problem with governance in India is that the state/government has taken on far more responsibilities beyond what should be its core responsibility of defence, law and order, upholding the rule of law and provision of public goods. Maybe he will realise the need for the state to focus on just these and do its job well.
Modi must be persuaded into making the 45-ministry government the first step of an ideological leap of faith. A small government must also mean a small, but effective, state.

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