Of Politicians, Bureaucrats and 52 ministerial knots in Ease of doing Business in India

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“Ease of doing business In India” seems to be stuck despite being the focus of present NDA Govt. PM Modi, determined to bring India in top 50 places to do business, has directed ministers/bureaucrats to reduce procedures/paperwork so as to improve “Ease of Doing Business” ranking of India.  However, despite all the push for last 2/3 years, India has merely limped to the rank of 130 from earlier 131( just 1 point) as per Ease of Business report released by World Bank. One wonders why has Govt not been able to solve this not so complex puzzle, despite present dynamic leadership and noble intentions and what could be the reason for such a dismal performance on this count?

Interestingly the answer doesn’t lie in the political leadership of present times but rather curiously designed governance structure of India which has been designed to rule than govern. The complex web of the system which on the face of it, appears to be a solution of all problems but in fact is the root cause of all problems plaguing India today.

Indian Govt as per its official website has 52 ministries, 16 APEX offices, 53 departments, and some 85 commissions, not to count State / Junior ministries, an army of bureaucrats and millions of govt servants servicing this large country (2nd most populous / 7th largest economy). However how many ministries (departments) the USA, an economy which is 10 times bigger in terms of GDP has? Just 15 departments and China, a country much bigger than India in terms of population, area, and size of the economy? Just 20 ministries and 5 APEX offices!!! Probably there lies the secret of governance or rather lack of !! One can fairly conclude given the state of affairs in India vs China / USA that quality of governance seems to be inversely proportional to the size of Govt.

A ministry or department once formed behaves like a living organism. It acquires its own identity, shape, and size where it needs energy (budget/power) to survive, grow and stay relevant. Unfortunately, more budgets are granted only if the ministry is more relevant/visible and there lies all the pain. To stay relevant, ministries draft more rules, notifications and circular so that more work is created and more budgets are allocated which in turn create more hindrance for normal businesses. For example, consider the case of the ministry of labor.

Ministry of labor in an ideal world, shall look after the welfare of labor and draft rules related to minimum wages (Ironically a state subject), monitor issues related to labor wages and work conditions. However if one just make policies and issue advisory, it reduces the scope of work and in turn, causes a reduction in budget and power. So ministry of labor does not only stop at labor issues but also worry about “Healthcare” and operates hospitals as well. No not ministry of health but it is the ministry of labor which focusses on providing world-class health care to the workers of India. It has a department called ESIC ( Employee State Insurance Corporation) which collects close to 6.5% of wages earned by an employee and use this money to provide healthcare. Are ESIC hospitals best in the country? NO. Are these hospitals really sought after by all workers? well NO. Is there a perfect alignment of interest among hospitals and workers? NO. Needless to say, the condition of ESIC remains pathetic like any Govt hospital with the poor quality of care, zero accountability, and dismal service standards.

So if there is no operational excellence, no benefit or advantage then why Govt needs to run hospitals and force more and more people to the path of ESIC rather than giving them freedom of buying health insurance and choose hospitals? Interestingly Govt rather than reforming ESIC, keep on bringing more and more people under its ambit ( new limit is 21,000 monthly wage) because core issue is not about the welfare of workers but about the power of labor ministry and ESIC. Without this massive operating outlay, the ministries will be faced with budget cuts / reduced power, a scenario abhorred by bureaucrats and ministers alike. This scenario is not limited to the ministry of labor alone. Every day, every ministry/department is busy thinking of the laws/rules which can increase intervention of the state to next level. Recently parliament passed a bill mandating employers to provide 26 weeks of paid leave to pregnant women in order to come at par with Norwegian countries, however little did the well-meaning minister realized that it will make married woman highly unemployable to small businesses and will again create a rush for Govt jobs with all these perks. There is another minister thinking of ways to control portion sizes served by hotels and list goes on!

PM Modi in his address to NASSCOM ( industry body of IT companies) pointed out that the success of the famed Indian software industry is not because of government but rather in spite of it. He said that IT industry grew as Govt had little understanding of the sector and by the time Govt took notice of it, it had become quite big. Unfortunately, despite such astute understanding, Govt continues to meddle in any industry be it hotels, small businesses or any other flourishing industry. One good example of Govt intervention is the launch of StartupIndia in the otherwise flourishing segment.

Startup India program was launched last year with big fanfare and in a year, we have Startup India events, Startup sessions and even a Startup India policy whose main highlight is that now a nodal body can certify startups!! With dept. at work with all ideas on nodal bodies/ministries/agencies, have startups in India taken off?? Well if one looks at data, 2016 was probably the worst year in terms of VC investments ( lowest in last many years) and policy confusion. So much Govt attention has only muddled startup scene as earlier startups like any other company were taxed on profits and now thanks to overactive Govt, they are getting taxed even on investments!! so much so for ease of business and proactive Govt!

This is not the case with the just ministry of labor or Startup India. We still have a ministry of Steel and we also have a ministry of heavy industries. We have a ministry of surface transport and also a ministry of railways. Tomorrow there will be a ministry of LCVs and then ministry of 22 fire trucks. Overall whole governance structure looks like a design lifted straight from famed British comedy “Yes Minister” which in Indian context looks more like Indian tragedy as the number of departments/ministries keep expanding and expanding.

So for a startup or any company, what will be the best ministry to deal with? MSME or DIPP ? or specific functional ministry depending upon core area ( Fin-tech, travel, Steel, Textile and so on so forth). Needless to say, with dozen of ministers / departments working at same matter in their parallel universe and none willing to lose an inch of control, things remain in perpetual gridlock as every ministry in order to remain relevant / powerful keep on adding its own notifications, rules, processes and thus kicking ease of business out of window.

French writer and aviator Antoine de Saint-Exupery once wrote that “Perfection is Achieved Not When There Is Nothing More to Add, But When There Is Nothing Left to Take Away”. Likewise, the ease of business can only happen if there are fewer ministries to deal with and not more and India can only improve its ranking if it reduces 52 ministries to 20 and eliminates the massive rusted bureaucracy ruling the masses in disguise of servicing them. Hence the Govt need to do the massive thinking and withdraw from the majority of areas rather than getting into every area. This needs a paradigm shift where the aim of government shall be to enable rather than to provide. An area which was well understood by PM Modi till 2014.

So the issue is why it is not happening and PM Modi, a firm believer in maximum governance and minimum government, has not able to solve this issue. And with every passing day, the present Govt looks more “House Trained” than ever ( As Sir Humphrey would have pointed out in Yes Minister).

The answer to this puzzle does not lie at the door of political leadership but at the door of Indian governance system design. India ruled for almost 800 years had an administrative system whose main task was to rule / or help rulers rather than providing governance. In 1935, Britishers relented and started giving natives a say in governance issue but the underlying system remained loyal to the masters in London. This system created an anomaly where the front face i.e political class became accountable for everything while back-end ie the bureaucracy controlled delivery as well execution of state powers.

Indian bureaucracy aka the iron frame of India became a behind the scene administrative machinery which on account of being “faceless, formless”  became a formidable supreme power where its members enjoyed all fruits of the power with full permanency and without any accountability (count the no of bureaucrats convicted/ arrested for failure in delivering their duties). The whole situation aptly summed by Sir Humphrey in Yes Minister  “Dear Bernard,  Ministers comes and ministers go. but we remain forever”. So while political class gets judged every moment and face change of order every five years, bureaucrats remain forever to provide continuity in governance. Moreover, the majority of Ministers/politicians remain servile to bureaucracy as politicians being new to administrative set up have minimal understanding of intricacies of governance due to lack of experience as well as due to lack of time (given very high public engagements).

Hence to assume that a politician will come and reform this rusted Indian service delivery system and usher a new era of policy thinking from this same tired, an entitlement seeking, generalist army of experts, is at best a mirage and worst a daydreaming on part of the Indian public. No politician or media or judiciary can do the required change and only hope is that India will get a strong header PMO secretariat/cabinet secretary who decides that enough is enough and he or she needs to reform this massive government rather than just demanding (and getting) more and more privileges for their clan.

History tells us that last time India saw some serious reform, it didn’t come from political class but from bureaucrats. T N Seshan as an election commissioner changed forever the way elections used to happen in this country, a former bureaucrat cut all the rules/regulations in 1991 economic reform and a strong CAG head turned all crony capitalism upside down with same system, same machinery, and same people.

Hence any talk or thought of bringing India among top 50 places to do business is going to remain pipe dream till present political leadership figures out a way to minimize this vast maze of ministries, departments, APEX offices, commissions and what not, and till then God save the king!

JNU, Rohtak and Crisis of Democracy

India is in rage these days and seems very united against the threats to its unity. Countless messages related to teaching lessons to anyone who dares to attack or break India are getting posted and shared on social media. Yes – as a Nation, we are ready to crush any voice, which attacks the integrity of India. However, this steel-like resolve faced its first encounter with reality and chose to look away when Haryana violence, not very far from JNU, happened and failed to shake anybody except the people who were at the receiving end.

A section from Jat community decided that they have to be treated as a backward class and chose to convey the message in the form of protest but without the usual ways of shouting slogans or doing a foot-march in the Gandhian way. Jats, who are classified as one of the martial races in India, chose to do the protest in their own style, which is a lot of force and show of strength. And the result was indeed something significant, as around 30 people died, a business worth INR 34,000 Crore was destroyed, and much murkier details of mass rapes, violence and arson started emerging from the shadows as the dust settled down. The impact of this event was 100 times more negative than the Pathankot attack or the JNU anti-India shouting or the 26/11 attacks in terms of massive disturbance to society and the common citizen. However, these powerful events were met by equally deafening silence. Photo-shopped planted messages regarding our motherland stopped appearing. All social site activists, who were proclaiming to tear anyone into small parts in case of a threat to the motherland, started forwarding stale jokes again.

In Organisation Building, one of the most important rules is “Hot Stove” rule given by Douglas McGregor. The hot stove never discriminates on the basis of status, rank or caste, and follows a simple rule – “When you touch the hot stove, you burn your hand.“ An effective organization needs to be like a hot stove, which is to treat every employee on the same terms in order to install a sense of fairness and justice. Any organization, which is not fair to its employees, falls apart over a period of time. Organizations constantly face this dilemma about being fair or being subversive to power groups. Nations being a superset of organizations also go through the same dilemma.

India, touted as world’s largest democracy, really falls apart when it comes to the matter of fairness and providing equal rights to all. There are millions who are languishing in jail without any bail or hearing on the most flimsy of cases while the powerful ones don’t even appear in court, let alone be arrested – be it RK Pachauri or Supreme Court judges accused of molestation. India really follows the principle of animal farm where all are equal and some are more than equal.

This method of selective governance has served India’s ruling elite very well so far. The State rules not only through police and judiciary but also by managing media. However, the recent advances in social sites and crowdsourcing of news are disrupting this power equation. Hence, the sense of fairness becomes more critical and important in these uncertain times.

There is no way one can condone the shouting of anti-India slogans and talk of breaking India at an Indian university and it does deserve suitable punishments, but so are the rioters who raped, killed and looted with no worry about consequences. Unfortunately, not a single political party condemned or raised the issue of Jat violence even when parliament was in session. Vote bank politics or sheer contempt for justice?? While Govt machinery was in full motion in chasing and arresting students, it was holding peace talks with the group of Jat leaders showing total oblivion to the violence, which the same group had inflicted on others in the name of Reservation.

If one sees the chain of events and reflects, it becomes very clear as to why a certain class of citizens of India suddenly feels very alienated and persecuted. Would there still be same silence if this kind of looting/arson/rape and goonda-ism was committed by a section of Muslims? Or by a section that is not large in number and politically insignificant? Will we still be forwarding jokes and ignoring violence while going ballistic over some slogans!!

India is facing its moment of crisis and this crisis didn’t start with PM Modi. It started much before when India started to get ruled by a set of people whose moral compass was shorter than a tiny insect! When Indian judiciary tucked in its comfort zone chose to look sideways and focused more on control of its privileges than dispensing justice! When government executives forgot that they have taken an oath to the nation and not to a political class or ideology, and when the ruler sitting on the chair of governance forgot the need to give equal justice to all. The culmination of all this decay for last 60 odd years has created a situation where a statement like “law will take its own course” is met by bored yawns – by the guilty and the victims alike. Supreme Court’s statement that destroying of public property shall be recovered from hooligans is met skepticism since we don’t even remember as to when was the last time justice was dispensed to common people. Nirbhaya rape? Union carbide? Or when?

The authorities of this country shall be worried that victims of rape in Haryana chose to go silent than come to State for redressal. If the role of State gets reduced when it comes to security and application of the law, the mere existence and validity of State may become questionable in near future? If the State failed to provide security, food, health and sense of justice, the reason for its existence itself becomes very tenuous.

We may dismiss the Haryana incident as one of the random events. However, another random event, i.e. Gujjar agitation, happened just two years back! So a series of such random events shall be taken as a harbinger of a trend rather than a lone star. Hence, we shall see the occurrence of similar events with higher frequency sooner than later, since declining farm income and jobless growth coupled with hyper media connectivity has created a scenario where expectations are high and patience is very low.

While these agitations are worrisome, authorities shall worry more about the nature of these protests, which are going more & more violent and damaging than anything India has seen so far.

Elites / intellectuals in India have generally dismissed the possibility of a Class War in India on the fact that none has happened so far despite so much victimization of backward classes and scheduled castes. However, the reason is very different this time. The upper class in India maintained their supremacy on the lower strata of the society with sustained violence and constant push down ( social discrimination, violence). Barring entry from temples, forcing to sit on ground and probability of heavy violence in case of any rule violation, etc., for last 1000s of years has created a muscle memory in the lower strata of the society which makes then unable to raise a revolt in such a manner. However, the sudden economic shift has changed the game. Poor returns from agriculture and emergence of cities have turned social equation upside down. The earlier upper class is suddenly in the lower strata of society due to changing economic conditions. Given the historical reasons, they are not able to stomach this sudden change in their status. Hence, the revolt by forward class will be more violent and dangerous as there is no muscle memory. Further given the total lack of justice in India legal system, there is a sense of moral hazard where people no longer care about any rule of law or fear any possibility of punishment. This has created a disturbing trend and hence its even more important that a sense of justice is created and guilty are punished irrespective of vote bank, caste or religion.

India is staring at an era, which is going to become more violent, more chaotic if the powers at the helm don’t see the signs and sense of justice and fairness isn’t installed. Rather than these being some rare events, these protests are going to be more of routine! Beginning of so called civil war at a road near you?

Be afraid, be very afraid!

This article was originally published at “Swarajya Magazine” at this link.

Drama @ Wagah Border

Nothing captures the essence of India like Wagah Border Post daily ceremony. The show, Chaos, Confusion, VIPs, VVIPs, honks, false rhetoric, and oh yes, the usual second-class Indian citizen, the native who runs from pillar to post to get passes and then some seat, and ends up being a native refugee with hardly any dignity.

Hence, the ceremony at Wagah Border is a Dance of Democracy! Or is it a Drama of Democracy… God knows!!!