Tuesday, June 7, 2005

No Captain could have saved the Titanic

cyber age: From The Statesman
Globalisation exposes India’s dilemmas
ND Batra

Globalisation has raised the curtain on India, exposing its strength and its weaknesses. So it is not unusual to come across a person asking a question, such as: If Indians are so smart, why are there so many poor?
The quick answer is that corruption and poor fiscal management have bogged down India.

But on the other hand, many fast growing Asian countries, including China, have not been free from these problems either. Of course, one could blame the socialist politics of the post-Independence generation that believed that a bad shaving blade made in India was a sign of self-reliance and spiritual strength. It is true to some extent that protectionism and crony capitalism of the socialist era proved a poor substitute for the challenge and response of the competition of the marketplace.

Initially the foreign exchange crisis of the early 1990s forced India to open up its doors to privatisation and market economy. But India was sucked into globalisation aided by the information revolution that had begun to sweep the world.

India’s diaspora, especially in the IT field, began to show its unusual ingenuity for developing new products and services as well as for solving complicated problems, including those arising from Y2K.
Bangalore was able to leapfrog its poor infrastructure and transformed itself into a cyber module that smoothly docked with the rising digital world, thanks to Indian satellite technology, which ironically developed during the era of socialism and self-reliance.

While the spectacular success of Bangalore and IT showed what India could do for the world, at the same time it exposed India’s vulnerabilities, its slow-moving rural economy, massive shortfalls in investment for infrastructure development, more than 300 million illiterate people, and a high rate of underemployed and unemployed people.

The world began to look at India’s underbelly, as it were, and the exposure has challenged Indian sensibilities. Indian policymakers and intellectuals began to grapple with the problem of slow growth and rising expectations as never before.

Bimal Jalan, former Governor of Reserve Bank of India, has argued in his book, The Future of India: Politics, Economics, and Governance, that the euphoria created by IT and other industries might not last, not unless India develops the political will to succeed.

Mr Jalan suggests that a stronger Parliament and more powerful judiciary would make politicians and bureaucrats more accountable and responsive to public needs. Individuals who exercise political power should be made answerable for not only how they make use of the power vested in them but also whether they achieve their goals.

“If ‘powers’ can be exercised without collective responsibility, then there is an equally strong case for ministers to take individual responsibility for their ‘duties’ in certain vital areas like poverty alleviation,” says Mr Jalan.

But some problems are systemic and individuals can do so much, howsoever honest they may be. Poverty reduction depends on the rate of economic growth and how widespread and decentralised are the economic opportunities. The system as a whole has to be geared to growth, which means a national consensus on growth strategies rather than holding any individual minister responsible for poverty reduction.

Mr Jalan leaps to a surprising generality: “If there were no corruption, India’s growth rate would have been eight per cent per annum in the 1980s and 1990s, rather than close to six per cent.” I don’t know how Mr Jalan came to this 20/20 hindsight of econometric calculations, but being a banker and economist he must have done his homework before writing the book. If economic growth jumps to eight-nine per cent, would that be an indication that corruption level has dropped in India?

How strong is the correlation between corruption and economic growth? How strong is the correlation between infrastructure and economic growth? What are the other factors of growth?

If India cannot eliminate corruption immediately, or to put it in another way, if corruption is a social constant (C), are there other factors that can be manipulated to spur growth to a double digit?

That’s the challenge; nevertheless, that does not obviate the necessity of reducing corruption. The source of corruption is unaccounted exercise of power, of course. Elected officials can be removed, though one might say cynically, only to be replaced by another bunch of corrupt people. But democracies do have methods of dealing with corrupt people in high places.

There is a two-fold solution to the problem. Public accountability through media exposé, especially the Internet and television, as the American experience shows, is a strong corrective. Second, privatisation could act as an antidote to corruption because it takes power away from bureaucrats and gives it to entrepreneurs and corporate leaders.

But they too, as the American experience shows, abuse power. Nevertheless, if laws were enforced rigorously, the corrupt would find their rightful place in jails as many American CEOs have discovered. Fighting corruption is a never-ending process. So is the case with poverty.

Dedicated ministers no doubt have a crucial role to play and some do so with great gusto, for example, India’s energy minister, Mani Shankar Aiyar, who has put India on the world energy map. India has begun to make a giant, energy sucking sound.

A person of similar zeal and dedication is needed for controlling the spread of AIDS. India should appoint a high-powered AIDS czar and give him necessary funds and authority and make him accountable for fighting the disease, which is much more widespread than we have been given to believe.

There are other areas where individual ministers could be held accountable for doing their duties well and fulfilling their political commitments, but on the whole in a parliamentary system, as Mr Jalan knows, it is the collective responsibility that matters. It is not only the captain who matters, but it is the ship as a whole.
No captain could have saved The Titanic.

1 comment:

  1. The scenario has started changing. With the use of Right To Information (RTI) Act, citizens are making their MLAs accountable to where the money is spent. The wave against corruption has started and with more people becoming aware of the RTI Act, it will be difficult for these corrupt Ministers, MLAs or Public Servants to misuse their positions.

    What do you say?