While centralising elements are necessary at times, the problem is that India’s institutions have not evolved along with the country’s growth.
More than 70 years after Independence, most of India’s institutions continue to act predominantly as forces of control rather than governance and administration. While centralising elements are necessary at times, the problem largely lies in the fact that these institutions, which stemmed from colonial structures, have not evolved along with the country’s growth, thereby obstructing State capacity. This was perhaps understandable in the initial post-colonial decades given the magnitude of the nation-building project and existential threats. That time, however, is long gone. When we talk about State capacity in India, we are not referring to specific governments or political parties, but rather, the ability of the State to provide for and support the aspirations of its 135 crore people. Why are institutions failing citizens and how they can be improved?
Daron Acemoglu, Simon Johnson, and James A. Robinson, in a seminal paper titled ‘The Colonial Origins of Comparative Development’, argue that two types of institutions were established in erstwhile colonies – extractive institutions, primarily located in Sub-Saharan Africa and South Asia where colonists did not intend to settle and created institutions to extract resources, and “Neo-Europes”, formed to replicate European institutions in settler colonies such as in Australia and Canada, encompassing the protection of property rights and rule of law.
In India, depending on where you look, institutions fall into both categories. Consider the Government of India Act (1935): India had some semblance of provincial autonomy, with elected chief ministers and state assemblies, albeit with limited concessions; at the same time, a cornerstone of the Act enabled unelected, centrally-appointed governors to centralise power by dismissing state legislatures, blocking legislations, and curtailing the voice of elected representatives. Such centralisation carried on after Independence. It was supported in the Constituent Assembly as a way to ensure stability, given the prevalent communal violence and integration of princely states. In 1950, the Constitution conferred to the central government significant powers to take charge of states’ affairs through President’s Rule, the concurrent list, and the office of the governor. Since then, despite evolution in the country’s growth trajectory, the nature of institutions has largely failed to keep up with them. For instance, since Independence, President’s Rule has been invoked 121 times, with the most under Prime Minister Indira Gandhi (50 times between 1966-1977 and 1980-1984), and the Janata Party (20 times between 1977-1980), often for reasons of political expediency rather than crisis resolution. Similarly, excessive fiscal power held by the Centre undermines the notions of cooperative federalism that India was built on and has led to bungled policies and decision-making.
The scale of this problem has not gone completely unnoticed. In recent years, bureaucratic and governance reforms have been instituted to address challenges of State capacity; however, most of them urgently need to be scaled up. For instance, a few weeks ago, the Narendra Modi government announced that it, under the current lateral entry scheme, aims to make 30 senior hires from outside the bureaucracy. While this is a positive step forward, it pales in comparison to the 1,500+ vacant IAS officer posts. Another example of welcome initiatives includes the Digital India project, which aims to move online a host of paper-based documents, thereby providing policymakers the tools and resources to make quick and informed governance decisions, with significantly less paperwork. Moreover, there has been heightened attention to improving training for bureaucrats, such as via the upcoming iGOT platform, equipping them with the necessary skills to carry out tasks more efficiently.
Centre vs states – constant power play
At the local level, it was not until the 1990s that local government bodies in urban and rural areas were constitutionally recognised through the 73rd and 74th constitutional amendments; even then, their powers and autonomy are limited. An analysis of local government provisions reveals that the appointment and dismissal of municipal commissioners and district collectors across different states, barring Kerala, is at the discretion of the state government, not the citizens in the districts they administer and represent. This mismatch between authority and agency is reflected in the poor condition of welfare services. Thus, the post nation-building political establishment has failed to transform institutions from agents of control to those of governance.More recently, the rapidity with which centralisation occurred during the early days of the Covid-19 pandemic was evident through the use of the Disaster Management Act (2005), even though health and family welfare is a state subject. In times of crises, the centralisation of power is not egregious; moreover, it can be argued that the pandemic is a black swan event where, especially at the beginning, citizens and the State were acting with pretty much the same information. However, the challenge arises when the crafting and implementation of policies at the state level is restricted. For example, the infamous plight of migrant workers did not necessarily mandate a central response. With northern states supplying migrant labour and western and southern states demanding it, states should have been permitted to deploy their own emergency responses depending on their individual situations. Fiscal centralisation and states’ reliance on the Centre’s patronage for funding and resources—revealed by delayed devolution of GST revenue and states’ subsequent scrambling to provide services—underscores the limitations of India’s federal structure.
Matching State capacity to people’s needs
This is not to say that India has not made advancements in creating new institutions that are efficient, well-resourced, and underpin aspects of its State capacity. The Election Commission of India (ECI), Reserve Bank of India (RBI), and the Comptroller and Auditor General’s (CAG) office, are such examples that have been strengthened in the post-Independence era. For instance, the ECI was created in 1950 with the aim of implementing universal franchise, following the limited franchise available to Indian citizens pre-Independence. It continues to carry out free and fair elections and has a history of staying its ground in the face of executive pressure.India can also learn from international measures to build a more capable State. Under the UK’s Tony Blair administration, Sir Michael Barber popularised the concept of state delivery units, which are temporary, small groups set up within government bodies to solve specific delivery challenges and build capacity from the outside. India has experimented with delivery units in the past, but formalising and growing this ecosystem could prove beneficial to the country’s long-run growth trajectory. Other global success stories of building State capacity that India’s institutions could gain insights from include labour market redesign and personnel management in Kenya, and information sharing and financial management platforms in Indonesia and Uruguay.
The year 2020 exposed fissures in India’s State capacity. The fault lines were present before Covid-19 struck, with lack of investment in infrastructure and inadequate public service delivery plaguing various parts of the country, but the pandemic pushed them to prominence. Further, 40 crore Indians are predicted to become poorer as a result of the novel coronavirus, a significant blow to decades of headway lifting people out of poverty. Strong, effective, and agile institutions can cater to changing demands of the country and its citizens. As 2021 progresses, we need to rethink some of our public institutions and their role in building State capacity, modifying their functioning to meet the needs of 135 crore Indians.
Vibhav Mariwala and Kadambari Shah are, respectively, Senior Analyst and Senior Associate at IDFC Institute, a think and do tank in Mumbai.
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