Economy Jan 19, 2013
Almost half a century back, John Kenneth Galbraith, the US ambassador to India and a renowned economist, had called India a "functioning anarchy", where the implication was that the country did well despite the government not doing much.
A lot has happened since then, with India going through a series of ideological changes ending in a phase of economic reforms where a number of institutions and structures were created or changed. Have these institutions really delivered or does the epithet - 'functioning anarchy' - still hold?
Here it would be interesting to look at our public institutions to gauge the extent of progress or regression. Broadly, we can look at political, administrative, economic and social institutions that have evolved over the years. One does not quite get a clear picture on these institutions and the public reaction to them is even more intriguing.
India remains a democracy despite our disenchantment with various parties and their opportunistim. Except for the brief period during the internal Emergency of the mid-seventies, we have had regular elections and several reforms, including control of expenditure on elections and the anti-defection laws. But today the general feeling is that all parties look alike and there is little differentiation between them. There was a promise of youth when Rajiv Gandhi took over, or the illusion of governance when VP Singh came to power on an anti-corruption platform. But little has changed really and at the end of the day it does not seem that governance standards have improved at all.
What do people do here? The rich do not vote and live in a world of their own. They only discuss the decline in standards but do little about it and prefer to concentrate on their own business. The middle class runs around hoping for change. But the level of interest has dwindled and the disillusionment is palpable.
The Aam Aadmi Party could be what they look up to, but one does not know if the interest will remain. The poor actually matter, as they can be swayed by largesse and can be made to vote for specific parties. Therefore, ultimately those who sway this group either through monetary benefits or threats get the votes. It is not surprising that when governments change, names change, but quality does not change significantly.
The administrative institutions strike a more dismal picture. One has less faith in the bureaucracy and even less in the judicial system - except at the topmost levels. It is hard to get a ration card without bribery and getting anything through a government department can be frustrating. Systems are not changed because it affects everyone down the line. One wonders why registering an agreement, which is anyway not checked, can't be done online. It would mean a loss of income for the entire chain along the way.
The police force is known to be either inefficient or corrupt, where cases are not allowed to be filed unless one pays for the same. Our antiquated laws ensure that cases never get solved and are heavily in favour of criminals. If one does not have money, one can forget about getting justice.
What do the people do here? The rich use agents and pay to get things done. Or they simply keep away from the masses, as that is the best way to ensure that no crime is committed against them. The middle class tries to fight it out, but they finally relent as they have no choice. The poor continue to suffer, but frankly no one cares, as they are a class which has no hope and have the maximum atrocities committed against them. It is not surprising that most crimes are committed against them, right from exploitation and land grabbing to physical abuse. As it involves the poor, they go largely unreported.
The social institutions show an even more distressing image. The Constitution as well as manifestoes of various parties speak the same language of providing education, health and other civic facilities to all people, especially the weaker classes. Large amounts of money have been spent every year under various schemes on education, health, water, transport, etc. services.
Yet government schools provide the lowest quality of education. At higher education levels, the lacing of politics to admissions policy has compromised significantly on quality with a plethora of reservations based on birth rather than merit. Hospitals are pathetic where patients live in abysmal conditions. Civic amenities are invariably supplied better to the higher strata of society.
What do people do? The rich never make use of public institutions and take recourse to five-star hospitals for health requirements. The new bands of IB schools are preferred, where the logical corollary is to move out of the country for higher studies. The middle class struggles with the system and relies on our insurance companies for support in times of need. While education is still in a state level school or the CBSE or ICSE curriculum, they get squeezed when seeking higher education with marks being skewed heavily through competitive pressure. They are finally opting for taking loans and studying overseas. The poor remain with government schools from where they enter the category of educated unemployed, as the job opportunities for them are limited. This leads to frustration and at the margin and gives rise to crime.
The economic institutions are probably the only ones that have fared relatively better in the last two decades but they still present contrasting images. The financial systems are robust - both the institutions as well as the capital market, with a number of reforms and developments having enhanced access as well as quality of services. The fact that the system has held on during crisis times is heartening. The rich have benefited through better access and returns from these segments. The smaller entrepreneurs have struggled against the systems and still fight for survival.
Growth has picked up notwithstanding the hurdles in policy which have certainly clouded the pace of progress. Infrastructure has shown a mixed picture with expressways coexisting with the absence of roads, electricity and urban infrastructure. The middle class has drawn the benefits if located in the metros or larger cities where they have access to modern lifestyles that promise hope for upward mobility. Government programmes for the poor are afflicted with leakages, but have helped some of the poorer sections nonetheless. There is evidently a long way to go here because to reduce inequities in our social fabric, these leakages have to be eliminated.
Where does this leave us? We have created many institutions which are inundated with several challenges. The fact that the country has grown is remarkable because it has happened notwithstanding these obstacles - signs of a functioning anarchy. The economic reforms story has been continuous despite different governments, which again is a good sign.
Indian enterprise has fought to find its way, but the government evidently needs to clean up the administrative and social institutions which will necessarily have to begin with the political structure. Therefore, there are still signs of anarchy where the guilty have an easier time. The rot has set in our institutions fairly deeply.
But the country functions mainly due to the people - driven by motivations of faith or fate or just pragmatic realism where they try because that is the only way out.
The author is Chief Economist, CARE Ratings. Views are personal
More From Madan Sabnavis.