New Delhi— On Sunday Manmohan Singh, India's earnest, new prime minister, declared to the nation that his top priority is to change the way government runs and improve delivery of services to the poor. This happy focus on governance is one of the unexpected consequences of the change in government in New Delhi. For the past two months the Left has smugly spread the myth that the election verdict was a revolt of the poor against the rich. Nothing could be further from the truth. It was, quite simply, a vote against day to day failures of governance. Local governments in India are so eaten away by corruption and mismanagement that they cannot deliver the basic services to the poor, such as decent schools, primary health centres, and drinking water.
My cousin says that her tap began to run dry this summer just as she went in for a bath, and that is when she decided to switch her vote. What matters to the rickshaw driver is the policemen not take away a sixth of his daily earnings. The farmer wants a clear title to his land without having to bribe the village headman. His wife wants the doctor to be there when she takes her sick child to the health centre. She also wants the teacher to show up in her village school.
This is how government touches ordinary peoples' lives, and the sobering lesson from India's dramatic election result is that decent economic growth is not enough in a democracy. India's economy had grown at 8.1% in 2003--0.3% in the last quarter, surpassing China for the first time--and not surprisingly, the ruling National Democratic Alliance, led by the nationalist Bhartiya Janata Party (BJP), tried to capitalize on this feel-good factor with an "India Shining" advertising campaign. But it failed to win the election.
India's GDP has been growing close to a 6% real rate for 23 years, making it one of the fastest growing major economies in the world. While this is slower than China, it is almost double India's growth rate of the previous 30 years, and double the rate at which the West created its Industrial Revolution. More recently, India's population growth has also begun to slow; in 1998 it was down to 1.6%, compared to a historic 2.2% growth rate. And literacy has begun to climb--it reached 65% in 2000 compared to 52% in 1990. Almost 190 million Indians have risen out of destitution since 1980 and the middle class has more than tripled to around 250 million. Had India's GDP growth chugged along at the pre-1980 level, Indian incomes would only have reached America's present per-capita income level by 2250; at the current rate, it will reach today's American income levels by 2066. This not the same thing as convergence but it is a gain of 184 years and it is worth dying for!
The amazing thing is that all this growth is happening alongside the most appalling governance. In the midst of a booming private economy, Indians despair over the simplest public goods. The contrast between power and telecom is obvious to everyone. After a successful reform program, we are in the midst of a telecom revolution that is as profound as China's. Telephones have grown from 5 million in 1990 to 75 million and are growing by two million a month. Unlike competitive markets that have come up in telecom, power remains a 'public good' as reforms have failed, and people whine about daily power cuts applied by the state monopolies.
¼br /> No single institution has disappointed us more than our bureaucracy. When we were young we bought the cruel myth of the 'steel frame.' We were told that Britain was not as well governed because it did not have the Indian Civil Service. Today our bureaucracy has become the single biggest obstacle to development. Indians think of their bureaucrats as self-serving, obstructive, and corrupt. Instead of shepherding economic reforms, they are responsible for blocking them.
In the fifties, the idealistic Mr. Nehru wanted a regulatory framework for his 'mixed economy', but the bureaucrats gave him License Raj. In the holy name of socialism they created a thousand controls and killed our industrial revolution at birth. In my thirty years in active business I did not meet a single bureaucrat who really understood my business, yet he had the power to ruin it. In the end, our failures have been due less to ideology and more to poor management. ¼br /> Why has the heaven born civil servant let us down so badly? Why don't employees of India's central, state, and local governments do their jobs? Many Indians are convinced that lifetime employment is the reason. And labour laws protect them; so they are no longer accountable. Yet, we have excellent examples of good execution right under our noses—the building of the Delhi Metro, or the exemplary project management in the fast expanding National Highways system, or the running of Surat and Thane municipalities. These may be exceptions, but they prove that it can be done.
Prime Minister Manmohan Singh believes the answer lies in sweeping administrative reform. Perhaps, he should look to Britain, where we are told 40 per cent less people work in the government than in 1979, and this not only saves more than a billion pounds a year but governance has improved. He cannot easily cut down our government, but he can certainly make it result oriented and more responsive to citizens. Cynical Indians, however, have heard this song before. They think the bureaucracy is too clever and will sabotage his efforts, as it has done to all such attempts for 50 years.