• Ashwin Mahesh

Promote the principle, not the program


There are two or three ideas which, if the government embraces, we can easily have a great run of economy and society.

(1) Promote the principle, not the program: The government has correctly focused its attention on a few important programs. Swachh Bharat, smart cities, Make in India... these are unexceptionable, and long overdue. But we have seen through decades of Congress rule that programs don't add up. We need principles to anchor those programs, and if we promote those principles the programs will be a wild success anyway. Let me explain.

E.g. "Ease of doing business" : That's a programmatic goal. Why is it important?

Because if we make it easier to do business in India, we can create more jobs and a healthier economy, and cut down on the graft and red tape that holds these back. Good. In that case, let's focus on 'reducing graft' and 'ease of interaction with government' as the principles we should be pushing for. Ease of interaction with government in ALL aspects, not just business, would anyway make things easier for businesses too.

Similarly with "Smart Cities". Why do we want these?

Because, we believe that cities are engines of our economic future. Good, in that case, let's identify ALL the things that need to happen to make cities vibrant, and do all of them. Let's devolve funds and power, let's have municipal cadres in each state, let's have local tax revenues, let's rethink urban planning, and do all the things that help make cities a true third tier of government all over the world.

And more importantly, let's promote this as the goal. We'd get a lot of smart cities anyway, and not just the ones that governments have identified.

(2) Decentralize: Whether in capitalist democracies or in communist countries, we have seen the same thing. Public expenditure by central governments tends to be less efficient than those by local ones. There has been some movement towards this in the 14th Finance Commission, but that was a small step, especially if you factor in the withdrawal of centrally sponsored schemes, and the fact that the money only moved to state governments, not cities. We should take one GIANT step towards the future by dramatically decentralizing public money.

Give 20% of all taxes to local councils and another 40% to the states. Let locally recognisable taxes (profession tax, fuel taxes, stamp duties... which are strongly correlated to local economies) be retained by local bodies. Many of these are 'state' taxes, I realise, but let's get the BJP run states to do these, the others will have to follow.

The advantage of such thinking is that it establishes a basis for many things in government, and at once scopes the legacy of the government that pursues it. 'Better' is a good goal, and the NDA government surely deserves points for making things better on many counts, but if we add 'based on a consistent principle' and 'focused on speedy outcomes' to that pot, we'll get a much more powerful mix of possibilities for the country.

(3) Put the public sector and the private sector on the same level field: This is looooong overdue. We have an endless record of government entities that are under-performing, from banks to airlines to schools to hospitals to industrial firms to... it goes on and on. In every case this happens because the rules that are applied to the private sector are not applied to the public sector, and we find some convenient excuse or the other to keep it this way. It's easy to snap this, just set up regulators who have an equal responsibility to outcomes in both sectors, and let them do their job.

This requires a new stance, in which the people, the private sector and the government are equal partners in the development of India. Past governments have never embraced this view - they have always seen the state as the prime agent of development, and been suspicious of the other two. But around the world we are seeing that long-term development depends critically on this balance between state, market and society, and only those countries that become comfortable with equilibrium among them can really expect to shine for decades together.

I wish the government well, always, because it is my government too, and because ultimately we must all want what is best for India. We may disagree from time to time on what to do, but never on why. Best wishes for four years that truly transform India, and let each one of us too, individually and collectively, commit to being part of that effort.

#SmartCities #EaseofDoingBusiness