Dialogue October-December, 2011, Volume 13 No. 2


Jettisoning a failed system: The need for alternatives

Patricia Mukhim



India entered the era of free markets in 1991. Free market enterprise envisages a reduction of Government controls and a more liberal environment for private players to conduct businesses. In short, it meant the end of the license-permit raj which had placed enormous powers in the hands of politicians and bureaucrats. But this is easier said than done. There was resistance to this make-over from the bureaucracy which hitherto enjoyed not just power to pass or fail a project but also to make extra money out of the transaction. Perhaps the only public sector undertaking that stands out as a profit-making enterprise is ONGC. In some ways, SAIL and GAIL too have made it despite being in the public sector. We would need to understand why the above have succeeded and what structures are there in place which allows them to behave like the private sector while being a PSU (Public Sector Undertaking).

   Administration means government. It means running, directing, supervising and managing the affairs of governance. But today the cynicism about government and its failure to deliver the basic services has gone in so deep that an overhaul is imperative before complete lawlessness takes over. Every citizen, educated or uneducated knows that government is more likely to put stumbling blocks than to remove them. In fact there is a growing feeling that if the money allocated annually for various public services including all kinds of poverty alleviation schemes were to have been equitably distributed directly to the people there would have been more visible benefits then we see today because by the time a scheme reaches the last man in the village about 80% of it has been creamed off. Corruption in the bureaucracy is all pervasive. A corrupt bureaucrat survives in a corrupt political regime. Very soon a nexus develops which is entrenched and difficult to uproot.

      All of us know what is wrong with the present system. Many of us have spent quality time analyzing what is wrong with it and even seek to give suggestions to reduce the gap between passing of a project and its implementation. But in a system where think-tanks are discouraged or seen as intruders who are not part of the government system we find our efforts consistently torpedoed. But this is not to say that we should give up. Part of being a civil society is to be whistle blowers and raise a stink when we see corruption and mal-administration being blatantly played out before our eyes. This is dangerous and quite often a lonely journey. Hence, the need to engage more and more people in this attempt to hold governments accountable and make governance a truly participatory enterprise.

      Reinventing government or jettisoning those aspects of it that have become dead wood may seem audacious but universities and other centres of learning need to come up with revolutionary ideas which governments must consider and adapt. This is not to say that governments have remained static. Major PSUs have been disinvested and governments are slowly reaslising that they cannot do business because of their welfaristic and populist nature which puts them under pressure to employ more than the required employees and, therefore, defeats the very purpose of business and profit which is how private sectors are run and how they survive.

     The emergence of a world-based knowledge-based global economy has introduced new realities creating both opportunities and problems. More and more we are seeing the government as an inefficient machinery because we tend to compare it with the way private sector behaves and carries out its business. Examples of public dissatisfaction abound in the way the Telecom sector prior to its new avatar as BSNL used to work. It took days even weeks to restore a dead telephone. Today with the entry of private players in the Telecom sector, BSNL is trying to pull up its socks and to be more customer-friendly. But they still have a long way to go. What we see from very close quarters is the inability of a lethargic to switch over from their old habits to be part of a new, dynamic system. It will take some time before BSNL becomes truly efficient and that will only come with the golden handshake when the old team retire and new blood is pumped in.

      Nationalised banks which have also been run pretty much like governments are today struggling to compete with their sleek, trim and more customer-friendly rivals in the form of private banks. What one person in a private bank does would take three in a nationalized bank and even then customers would still be kept waiting and fretting, this despite the computerization process and attempts to introduce       e-governance in banking.

     India’s North East has entered the exciting new phase of the Look East Policy (LEP), media and academia blitzkrieg. Although we are all collectively in the dark about the nuts and bolts of the policy and we are told by one ministry that it is an approach not a policy per se, there is still need to know what we are getting into. It is like being invited to a party without knowing where to go and how to be dressed for the occasion. Obviously the LEP is not a sudden desire to develop the backwaters of the country’s eastern frontier. Rather it is an attempt to create a geo-political-economic balance in the South East Asian region which is increasingly dominated by China, and to use the North East as a bridge, also because of China’s unrelenting claim on Arunachal Pradesh which is an intrinsic part of India. These are national imperatives which we fully appreciate but what is difficult to understand is the unwillingness to provide a blueprint of the policy. Is this an economic policy or is it related to external affairs or is it to do with politics? North East people need to know and be clear in their minds before they adapt the policy. It would not be wrong to ask ‘what’s in it for us’. After all we cannot be stakeholders without any returns.

    If things are to move in a positive manner we will have to rethink what areas government needs to look after and what can be left to the private players. Perhaps entrepreneurial government is the need of the day. What is an entrepreneurial government we might ask? Before getting into that explanation it is important to understand the word entrepreneur first. JB Say, the French economist, says ‘the entrepreneur shifts economic resources out of an area of lower into an area of higher economic productivity and greater yield”. So an entrepreneur, in other words, uses resources to in new ways to maximize productivity and effectiveness.

    This definition fits all sectors of the economy namely the private, public and the voluntary or third sector. Those who lead organizations, run schools and hospitals are always using existing resources in new, more productive ways to produce maximum results and effectiveness. There is tendency to believe that entrepreneurship means taking risks. But that is not entirely true. Entrepreneurship means creating new opportunities. Peter Drucker, the management guru, says: entrepreneurship is not about taking risks. It is about defining those risks and minimizing them as far as possible. Drucker says that almost anyone can be an entrepreneur if the organization is structured to encourage entrepreneurship. But the risks are also that any entrepreneur could easily become a bureaucrat if the organisation encourages bureaucratic behavior.

    Today the prime sin of our governments is that they have goals which they never achieve because they are never held accountable. Projects in North East India suffer from time and costs overruns. There are several abandoned water supply projects where no account is kept of the allocated funds where they have been diverted. Every project is laced with scams including poverty alleviation projects such as the SGSY, the PMGSRY. The public distribution system intended to serve the poorest of the poor is manipulated to cater to the interests of whole-sellers and stockists who are in league with politicians and bureaucrats. In Meghalaya the top notch business groups today which have diversified into other money-making ventures, all started off as government stockists and whole-sellers.

   While appreciating the depth of the problem that bureaucrats encounter on a daily basis there is also the argument that the best and brightest of this country should find solutions to every problem through innovative ways. One major loophole of the government system is its budgeting system. Normal government budgets encourage managers to waste money instead of spending it judiciously. If governments do not spend their entire budget by the end of the fiscal year, they (1) lost the money they have saved (2) they get less next year (3) they are reprimanded by the higher authorities for requisitioning more funds than was required. There is, therefore, a need to rethink the budgeting process and to invent a new budget systems.

       Another major problem facing the bureaucracy today is that of time. In the global marketplace and knowledge society people get quick information and demand quick results. If bureaucrats are unable to keep pace the government loses credibility. Today the demand is for more flexible and adaptable institutions which deliver high quality goods and services and are responsive to clients. The phrase "public-private partnership" is often repeated without understanding its real implications. What the PPP model actually means is that citizens develop a sense of ownership and participation in all services. They do not look at government as the sole provider of those services free of cost while they are passive recipients. This kills entrepreneurship and participation and finally the very service delivery system itself. The reason why government schools do not deliver is precisely because government under-writes all expenditure without demanding accountability in terms of teachers’ attendance and students performance.

    The entrepreneurial government is innovative, imaginative and creative. It is the anti-thesis of one where the tendency is to protect turf, to resists change, to build empires, to enlarge the sphere of control, to protect projects and programmes even when they fail to deliver. In contrast the entrepreneurial government seeks for more innovative ways to deliver.  It eschews traditional alternatives that offer only life support systems. It works well with private sector and employs solid business sense. It focuses on performance measurement and rewards merit. It does not put hundred obstacles when something is proposed but says, ‘Lets make this work’.

    Governments must increasingly play the role of catalysts and facilitator instead of controlling authorities. This role change again requires some amount of flexibility to change and adapt to the changing circumstances. In the tourism sector for instance governments cannot become hotel and resort owners or get into the restaurant business. They are to facilitate private players by partnering them in putting the infrastructure in place. Tourism is intrinsically connected to road infrastructure, air linkages, good airport facilities etc. If governments put this in place the private sector would find it worth their while to invest and thereby create job opportunities a challenge which governments are unable to deal with. More participation by the private sector in tourism adds to the taxes and cuts government spending on losing ventures. Taxes are what governments need to fund welfare schemes like education, health care etc.

      One peculiar phenomenon about states like Meghalaya and the tribal areas of Assam is that they have another tier of governance in the Autonomous District Councils enacted under the 5th and 6th Schedules of the Constitution. When Meghalaya was just a hill district of the larger state of Assam, one of the members of the Constituent Assembly, JJM Nichols Roy, a Khasi tribal felt that the tribals needed special protection of their customs and customary laws and practices so that they could retain their distinct ethnic identity. For the Khasi-Jaintia and Garo Hills, the Sixth Schedule was also meant as a protective mechanism against economic exploitation from the more advanced plains dwellers who were beginning to settle down in the hills and conduct their businesses. 

    In 1971 the state of Meghalaya was created. In the sixty-member legislature, there are at present only three non-tribals. In a sense, therefore, the reins of government were now fully in the hands of the tribal elite. District Councils have been reduced to second tier legislatures for accommodating failed legislators. Initially District Councils administered primary schools, regulated markets, waterways and forests. But funds constraints resulted in diversion of funds from primary school administration to meeting establishment costs.

    Today District Councils make no impact. They have become stand alone institutions undertaking very nominal development work. Incidentally they have become busy only in regulating trade by non-tribals because that brings in substantial income for the Council. This is the only area where the Councils can bare their fangs. They also get part of the royalty from export of coal and forest products. But this revenue is not invested in governance. District Councils also have their judiciary which look after the administration of justice insofar as customary laws and practices are concerned. But even here the hold is considerably weakened because even disputes between tribals are increasingly being arbitrated by the civil courts.        

      Governments are to deliver governance. Governance transcends the routine activities of the Government and requires above all the convergence of official and non-official institutions. Above all governance necessarily entails public participation. In other words it means governments should be community owned. Anuradha Dutta says that democracy and good governance are loyal allies. This has sadly been missing in the North Eastern states. Governments plan for the people without knowing what those people actually need. District plans are made without consulting people as if governments know best and people are ignorant of their needs. This fatal flaw has led to the failure of governments. But there is a problem that governments too face in some of the tribal states. Our traditional institutions have not evolved as development institutions. They continue to function as arbiters of justice in a traditional manner. They are exclusive, gender-biased institutions that prefer to remain monolithic structures rather than engage with governance. They want power without accountability. This is a challenge that the people themselves as stakeholders in the development process and in the changing economic scenario need to recognize and push for change.

      In a community owned government, even law-enforcing authorities are not accountable to their political masters as they are today but to the people who they service. The break-down of the rule of law in our region is mainly because the police is still functioning as the rulers’ police not the people’s police. Despite several committees and recommendations to change the structure, the police still behave like a power centre and flex their muscles at the common man while being unable to implements the rule of law. This is evident from their inability to convict murderers even though there is overwhelming evidence of their having committed the crime. This problem is exacerbated in a climate of militancy where the lines between out and out crime and low-intensity warfare or ideological warfare are blurred.

       People’s participation can only come about when people themselves recognize the incentives of participation. For instance, when there is need for electricity shut down people should be consulted as to which are the most appropriate hours for load shedding instead of government taking its own arbitrary decisions. There is need to constantly keep the information flow open. People must be informed about major policy decisions and schemes so that they can intelligently debate and discuss them and also find out the best means of implementing them and where and how to spend the money most effectively.




Challenges of Development in North East India: Regency Publications, New Delhi. ‘Government, Local Self Government and the Role of Civil Society by Anuradha Dutta, pp. 13.


Reinventing Government: How the entrepreneurial spirit is transforming the public sector by David Osborne and Ted Gaebler, A Plume Book, USA. Pp 13-21


The rest of the paper is based on the personal observations of the author who is a political and social observer and commentator.   


Dialogue (A quarterly journal of Astha Bharati)                                                Astha Bharati