THE FUTURE OF INDIA:POLITICS ,ECONOMICS AND GOVERNANCE

1. THE FUTURE OF INDIA:POLITICS ,ECONOMICS AND GOVERNANCE BY BIMAL JALAN

2. ABOUT THE AUTHOR • One of India's well known economist. • Governor of the RBI from 1997 -2003. • Nominated to upper house of parliament. • Held several top positions in ministry of finance ,industry and planning commission. • Was the chairman of the EAC to PM & represented India on boards of IMF & World Bank. • He is the writer of many books such as, "India's Politics: A View from the Backbench", "The Future Of India: Politics, Economics, And Governance", "The Indian Economy: Problems And Prospects", "India's Economic Policy", "Emerging India: Economics, Politics and Reforms" and "India's Economic Crisis: The Way Ahead".

3. INTRODUCTION • The writer analyses the interface between politics, economics and governance and their effect on functioning of the democracy and the future of India. • He analyzes the causes of failures for India to realize its full potential in the past and argues that there is no certainty that the present euphoria about India becoming a developed nation in a decade will last for long. • He goes on to suggest a number of reforms to be undertaken immediately to seize the present opportunity, such as, greater accountability among ministers; effective ways to curb corruption and enhance fiscal viability; strengthen Parliament and judiciary .

4. CONTD. • The book is divided into 5 chapters and epilogue ,all emphasizing on the political systems and the desired changes. • The first and the fifth chapter deal with evolution of democratic politics, second deal with economic policy making, third and fourth deal with issues of governance and corruption. • The epilogue “Resurgent India” postulates what needs to be done to realize India's full economic potential.

5. CHAPTER I:The triumphs and travails of democracy Triumphs of democracy: • Freedom to choose • Wrong policies may be corrected due to public discussions and media • Public can not be ignored for long • Capability of equitable growth is higher • Researches have proved that there is no direct correlation between the type of regime and economic development.

6. FUNCTIONING OF DEMOCRACY • 1962: Strengthening of democratic politics resulted in economic growth. • 1979: suspension of democracy in 1975,led to volatile economic growth. • 1989: need for strengthening democracy. • Post 1989 : era of coalition politics.

7. TRAVAILS OF DEMOCRACY • Coalition politics • Democracy within political parties has reduced. • Parliaments have become perfunctory in assuring government accountability. • Political parties have become subservient to leaders and not to people who vote for them • Politicization of bureaucracy

9. OVERBURDENED JUDICIARY • Easy and equal access to judicial system • Delay in proceedings is refuge for corruption • Courts are highly understaffed.

10. CHAPTER II:ECONOMICS OF UNDER PERFORMANCE • India has competitive advantage in terms of production technologies, international trade, capital movement, and deployment of skilled labor. • Integration with global financial markets • Demographic dividend • Service sector performance

11. OBSTACLES IN REALISING ECONOMIC POTENTIAL DEADWEIGHT OF THE PAST • highly controlled state dominated development strategy • political and bureaucratic control over public sector. • Aversion to FDI. DISTRIBUTIVE COALITIONS • Haves are more powerful than the have nots. • Special interests rather than general public • 85 % revenues goes in salary and pensions of govt servants. • Caste and regions become dominant • Fiscal disempowerment of agriculture

12. CONTD. DISJUNCTURE BETWEEN POLITICS AND ECONOMICS • Political system is unresponsive to economic interest. • Economic performance is not a decisive factor in determining election outcomes. • If centre and state govts differ development assistance is not provided. • Fiscal accountability has reduced

13. CHAPTER III: CRISIS OF GOVERNANCE • Apathy of governance structure towards the welfare of the general public • Leakage in govt funded anti poverty programs • Poor access to public services • Unutilized funds for anti poverty programs • Public delivery system inefficient • Legal systems provide full shield to corrupt and government servants. • Power of governments has reduced • Plans may be announced but cant be implemented due to fiscal stringency • Multiple depts involved in simplest decisions. • Multiplicity of responsibilities to ill trained staff in public offices

14. REMEDIES • Collective responsibility should be replaced with individual responsibility, quantitative annual targets to be given to each ministry& its only possible with the reform of administrative system. • Radical reform of administrative system is required • Distinction to be made between ownership of resources and delivery of public services • Reducing political interference in promotions and transfers of civil servants • Empowerment of civil service and separation of powers within executive. • Ensuring accountability of civil servants in their service and ethical conduct.

15. CAHPTER IV:SUPPLY AND DEMAND OF CORRUPTION • Widely accepted as necessary evil now. • Vertical (elected politicians-higher bureaucracy-lower bureaucracy) and horizontal integration(legislatures-judiciary-media) at various levels. • Politicization of corruption • Widespread confusion and distrust amongst general public

16. Economic effects of corruption • Investment choices are driven by potential for corruption • Reduction in corruption can enhance investment and national income • Reduction in corruption by 50% can increase growth rate by 1.5% • Corruption leads to wrong choice of public projects and delays • Corruption is biggest obstacle in start up firms • Aggravates inequality • Cause of fiscal drain and inflation. • Negative correlation with tax collections. • Quality of government expenditure decreases

17. EFFECTIVE ANTI-CORRUPTION STRATEGY INSTITUTIONAL REFORMS: • Weak penalties to be replaced with stricter ones • Reduce complexities and no. of agencies involved in judicial proceedings • Time bound and speedy settlement (90 days ) of cases must be ensured • Autonomy of investigating agencies is must

18. REDUCING SUPPLY: • Reduce the protection provided to corrupt government officials • Article 311 and official secrets act 1923 must be amended • State funding of political parties with equitable allocation of budgets for election expenses must be ensured • Reduce power of ministers in taking decisions • Ensuring transparency and accountability • Simplifying administrative rules and judicial systems

19. Reducing demand : • Corruption at two levels the retail and wholesale level • Redefining the role of the state • Simplification of administrative procedures • Creating a more competitive environment • Tax rules and filing requirements have to be simple ,non – discretionary and understandable to tax-payers

20. CHAPTER V:REFORM OF POLITICS • Parliamentary system is preferable to presidential for India. • Making public servants more accountable • Reduction in number of ministries and ministers • Reduction in role of small parties with narrow interests they lead to political instability • Elections to the council of states needs reforms. Charge sheeted candidates shouldn’t be allowed ,each party should nominate twice the no of candidates for every seat in R.S and elections should be by secret ballot

21. Contd… • Review and revision of several acts is important • Reform in proceedings is required to make it more democratic and open to discussions

22. EPILOGUE: A RESURGENT INDIA • POLICY CHOICE • focusing on ends rather than means. • Agile and responsive policies • Objectives needs to be reviewed • Reforms should be regular and at slower pace • No pure/perfect policy. • Special interest must be aligned with general interest • Cost-benefit analysis of every policy.

23. CONTD. 2) POLITICS OF COALITIONS • Anti incumbency, coalition politics and shorter tenures erode economic growth and collective responsibility. • Universal literacy and social awareness are the plausible measures 3) FISCAL EMPOWERMENT • Improving budgetary receipts and reducing expenditures 4) LEGAL AND ADMINISTRATIVE REFORMS • Cooperation among legislative, executive and judiciary. • Judicial efficiency

24. Contd… 5)GLOBALISATION • Adopt policies which maximize national advantage • Cost –benefit analysis should be done. • Realistic approach.

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