There has been considerable debate in civil society, as to why despite having a surfeit of natural wealth, a salubrious climate, excellent human capital and worldclass entrepreneurs, it is taking so long for our country to take its place under the sun. Also, persons of Indian origin, be it in Europe or the Americas, successfully head important institutions and corporations in their adopted countries, occasionally winning the Nobel Prize also ~ which leaves one wondering why the ones left behind could not replicate their non-resident brethren’s success.
The answer, perhaps, lies in the way our resources are managed. Addressing a post-Budget webinar on 27 February 2023, PM Modi said that mere allocation of large funds could not ensure the nation’s development or public welfare. To ensure that benefits of Government schemes reached the poorest and well in time, it was essential to have an able and a sensitive administration. Mr Modi was referring to the more than seven hundred Central Schemes aimed at promoting social welfare and social security, which do not seem to be achieving their purpose, even though expenditure of Rs14.68 lakh crore, the largest component of the Union Budget 2023, has been provided for them. Interestingly, the Fifteenth Finance Commission, in its report tabled in Parliament on 1 February 2021, had questioned the efficacy of Central Schemes and recommended a third-party review of all Central Schemes.
Earlier also, almost two years ago, Mr Modi had expressed his disappointment at bureaucratic non-performance. In a longish speech in Parliament, on 10 February 2021, PM Modi questioned the operational capability of IAS officers. Since the aforesaid speech was in connection with the promotion of private enterprise, charitably interpreted, it would appear that Mr Modi was praising private entrepreneurship in contradistinction to State run businesses. However, Mr Modi’s meaning was abundantly clear to everyone, including those at whom these remarks were directed.
Mr Modi has enough reason for his ire; the quantum changes envisaged by him nine years ago elude the country; progress has been incremental, at best, and never exponential. Somehow most success stories scripted by the Government are cut short, never reaching their full potential; many welfare measures are planned with noble intentions and humongous budgets but somehow do not achieve their desired objective. Agricultural reforms, judicial reforms and a host of other initiatives have fallen at the last mile. The underlying cause for the failure was common ~ poor planning and execution.
At no time was governance failure so obvious and heart rending as at the time the second wave of the Covid-19 pandemic struck India in March, 2021. The second wave of Covid-19 infections was not unexpected; all countries including the US and UK had seen a second wave of infections that had proved deadlier than the first wave. Despite having some excellent hospitals and some of the best doctors and nurses in the world, the rampaging Coronavirus pandemic overwhelmed our healthcare system.
Inefficiencies are the hallmark of almost all branches of Government; more than 5 crore cases are pending in courts in India; a Niti Aayog study in 2018, when pendency was 2.9 crores, estimated that it would take 324 years for all pending cases to be disposed. Contrast it with the situation prevailing in the UK, which has substantially the same judicial system; the length of time between offence and completion of a criminal proceeding in a magistrates’ court is a mere 196 days. Additionally, on 30 September 2022, there were only 347,820 outstanding cases in magistrates’ courts, and 62,766 cases in Crown court. Government managers have proved inept in other fields also. Their inefficiency can be gauged from the fact that the perennially loss-making Air India is set to post a profit in its very first year of privatisation.
Corruption at the top levels of governments, increasingly reported in newspapers, has put paid to many initiatives. Presently, senior cabinet ministers of States like Maharashtra and Delhi are in jail on accusations of corruption; senior IAS and IPS officers from places as wide apart as Jharkhand, Punjab, Maharashtra and Karnataka have been arrested for corruption, not to mention arrests of a host of senior PSU executives. So infectious is the malaise in Government functioning that newly established tribunals and regulators soon acquire all undesirable characteristics of government offices. The Adani-Hindenburg debacle was due more to the inaction of the market regulator, Security and Exchange board of India (SEBI), rather than antics of the antagonists. SEBI is mandated to ‘protect the interests of investors in securities and to promote the development of, and to regulate the securities market…’ For this purpose, the SEBI Act confers it with quasi-legislative, quasi-judicial and quasi-executive powers. Thus, SEBI drafts regulations in its legislative capacity, conducts investigation and enforcement in its executive capacity, and passes legally binding orders in its judicial capacity ~ making it Brahma, Vishnu and Mahesh for the corporate sector.
To recapitulate the Adani imbroglio, shares of Adani Enterprises Ltd. (AEL), had a face value of Rs.1, but were being offered to the public at prices ranging between Rs 3,112 and Rs 3,276 in a Follow-on Public Offer (FPO). Just before the FPO opened, Hindenburg Research, a US-based short seller, published a report accusing the Adani Group of accounting malpractices, stock manipulation and fraud through a wave of shell firms. So convinced were the investing public by the Hindenburg report that AEL shares traded much below the FPO price band during the FPO period and touched a low of Rs 1,017, the day after the FPO closed.
Proceeding on publicly available facts, the Hindenburg Report had estimated that Adani shares were overvalued by 85 per cent, a value towards which the Adani Group shares seem to be gravitating. However, forgetting its mandate, SEBI gave the goahead to the Adani FPO at a highly inflated price. Also, SEBI did not warn the public about potential risks of investing in AEL shares, even after the Hindenburg Report came to its notice.
The Adani episode revealed that public financial institutions, viz. PSU Banks and LIC had purchased thousands of crores of rupees of shares in Adani companies, and were preparing to buy huge numbers of shares in the AEL FPO also. It is not understood why public institutions, with their army of analysts, were not able to draw proper conclusions from the adverse facts, highlighted by the Hindenburg report that were in public knowledge, and had wilfully embarked on a course of action which would have caused further loss of public money.
As pointed out by the PM, most Government schemes fail to deliver desired results because they are not implemented properly by ill-trained and lethargic bureaucrats, who treat Government employment as a sinecure. To improve the functioning of the bureaucracy, the Government had launched the National Programme for Civil Services Capacity Building (Mission Karmayogi) in September, 2020. However, so far, Mission Karmayogi has not taken off; there has been no impetus in the training of civil servants, and in many cases, the right person is not in the right position. A much simpler solution is possible; the Government can make decision-making transparent and make the bureaucracy responsible for the decisions taken by them, including decisions for not taking a decision. The much-reviled Emergency was the last occasion when the bureaucracy performed its assigned role e.g., meeting targets, running trains on time and being available in office during office hours, which leads one to conclude that wielding a big stick is required to make government functionaries fall in line. So, another necessary reform could be streamlining the convoluted procedure to book delinquent officers, that makes action against bureaucrats virtually impossible. This would put the fear of God in bureaucrats, particularly lower-level functionaries, who are the first point of contact for citizens.
Brooks Atkinson had said: “The perfect bureaucrat everywhere is the man who manages to make no decisions and escape all responsibility.”
Perhaps, we have a perfect bureaucracy.
(The writer is a retired Principal Chief Commissioner of Income Tax)