China and India have been running neck-to neck in the timing of their Five Year Plans: both into their twelfth plans now. However China has run far ahead in outcomes, with an economy now almost three times the size of India’s and with hundreds of millions more citizens out of poverty. Bold reforms have enabled China’s success. There was vicious political opposition to economic reforms in China, as Ezra Vogel recounts in his masterful biography, ‘Deng Xiaoping and the Transformation of China’. There is dismay that India’s reforms process has got bogged down by political in-fighting. There are lessons for India’s leaders in Deng’s story.
The first set of reforms Deng undertook, in 1975, were in the railways, which were in a state of disorder, and in coal, with stocks piling up near coal mines with no incentive to mine more. Deng knew that, unless transportation and energy problems were solved the economy would not move. The root causes of these problems, he found, were factionalism within organizations, political interference, and a culture indifferent to performance. Therefore Deng applied himself, very skillfully, to improve the performance of these sectors with a number of organizational and management interventions. He addressed the railway organizations directly: “We need to find people who aren’t afraid of being knocked down, who dare to accept responsibility. We want in the leadership teams those who dare to struggle.” There was political opposition to Deng from people close to Mao whose support Deng could not be certain of. But Deng persevered. From railways and coal, he moved to sorting out the management of other sectors—steel, other forms of transportation, and other industries—before moving on, many years later, to reforms of commerce and finance.
Deng was not an economist. But he created an economic miracle. He mastered the art of getting things done. His enduring legacy is the confidence he built in Chinese people that they can work together and get things done as well as anyone. Economists are exhorting the Indian government to find the political will for reforms. India, unlike China, moved to reforms that opened the economy to markets before strengthening the foundations of the economy with reforms of public health, education, and administration. The weak foundations are now curbing the pace of economic growth. In fact, railways and coal have become bottle-necks in India’s growth story, as they were for China in 1975. We must break through. Excuses of ‘our culture’, our ‘chalta hai’ attitude, and the propensity of Indians to argue and not work together, are not tenable. How come those same Indian genes seem to change when Indians are abroad, working in other organizations, in which they are recognized for their outstanding performance? Also Mao did not change Chinese genes: he reformed the organizations in which the Chinese worked.
India has an overdue administrative reforms agenda. The Second Administrative Reforms Commission (ARC) has prepared 15 reports covering many facets of administration and governance, from judicial and police reforms to reforms of civil services and government structures. The ARC has consulted extensively. It has examined India’s needs and studied how other countries have improved governance of their public services. Almost all its recommendations have been approved by groups of ministers (GOM). Thus the ARC has loaded the gun, and pointed it at the target. The political will required now is to pull the trigger and implement.
The creation of ‘agency’ structures to improve delivery of services and building of assets referred to by the Indian Express on March 30th (Rein in the bureaucracy if you want us to deliver, perform) is recommended in the Commission’s 13th Report, already approved by a GOM. The private sector executives the Express spoke to, including this writer, are presently working within unreformed structures of government, and therefore can validate the problems pointed out by the ARC. With their management experience, they also confirm that the ARC’s recommendations would be good solutions. They have endorsed the urgency of institutional reforms, without which the country cannot sustain its economic growth. It is not only the private business sector that is advocating for reform of government structures and systems. Public sector corporations are pleading for it too. Also citizens at large and civil society organizations are clamoring for governance reforms. Even good bureaucrats are entreating for change in the system in which they feel trapped. They too want to produce results for the country. But they find themselves stuck in silos and tied in their own red tape.
India is unlikely to become the large economy that economists seem to extrapolate from economic numbers only. Large buildings cannot be built upon weak foundations. India’s political configuration is a kaleidoscope of political parties. Each electoral turn can throw up another pattern. Consensus is not easy amongst competitors with different political ideologies. Thus economic reforms are stalled—such as FDI in retail, and fuel subsidies. Whereas the administrative and management reforms proposed by the ARC are likely to receive support across the political spectrum. Such reforms that strengthen institutions will enable any government, whatever its political hue, to produce results for the people. They will have an impact which will be large, widespread, and enduring too. Therefore whoever leads and implements these reforms will leave an enduring legacy.