Confront new realities of governance

Published on 1st October 2015, BUSINESS STANDARD UP recorded a large voter turnout during the recent assembly polls. The pundits have finished typecasting, forecasting and broadcasting.

Published on 1st October 2015, BUSINESS STANDARD

UP recorded a large voter turnout during the recent assembly polls. The pundits have finished typecasting, forecasting and broadcasting. Indian politics has been rife with corruption, injustice, short-term approache and fiscal irresponsibility. Political obsequiousness has touched a nadir, which reminds me of the Hariharan song (1998) Nee katru naan maram, yenna sonaalum thalai aattuven (you are the breeze, I am the tree, my head will sway whichever way you blow).

Globally the ground-level reality of public governance bears some similarity with India. In the US, the Republicans cannot agree anything amongst themselves, let alone with the Democrats. Politicians in Europe, Japan and almost everywhere cannot see eye to eye on anything. Over regulation is a killer. In Canada, you cannot water your lawn when it is raining. A Florida law requires vending machine labels to urge the public to file a report if the label is not there! Sarbanes Oxley had made it difficult for companies to stay listed in the US. The new Dodd Frank law is so long that nobody is able to even read it, and so complex that nobody can understand it. Brazil has faced political scandals like in India. President Dilma Rousseff defended as many as seven cabinet ministers against corruption charges but finally had to dismiss every one of them. Brazil has its own saga of Raja.

While politics and governance look hopeless everywhere, there are visible signals of change and the opportunity must be sensed and grabbed. The prosecution of two heads of state (Iceland and Ukraine) for failure to govern, the Occupy Wall Street movement, the Arab Spring, the Greek street riots, the Moscow protests against Putin’s election, the Indian Lok Pal movement and assembly election results are all linked. They are all peoples’ expressions exasperation and impatience with public governance. The mere occurrence of these events or recognising their linkage will not solve any problem. If politicians confront the emerging realities and fundamentally change their approach to governance, there is much hope, especially for India.

Ukraine and Iceland
Consider the startling criminal prosecution of two former heads of state, Iceland and Ukraine, for negligence and failure to act. The unprecedented prosecution carries a message. Legal pundits opine that the judiciary is over-reaching. They may be right. Even in India some cognoscenti regard judgments like Vodafone and Spectrum Auction to be judicial overreach. But the words behind the song are worth reflecting upon.

In Ukraine, former Prime Minister Yulia Tymoshenko has been jailed. The charge is that she misused her position and showed poor commercial judgment while concluding a long-pending gas deal with Russia. There are definite indications of political rivalry, but at this stage, moral turpitude is not evident. The Iceland case is baffling. In 1905 a provision to set up a special court was enacted to prosecute elected officials. That provision was never been invoked for 105 years. A parliament-commissioned ‘truth report’ in 2010 accused several political leaders, including former Prime Minister Geer Haarde, of “gross negligence” in their oversight of the Iceland banks. Haarde is now being criminally prosecuted by the Iceland parliament for negligence and failing to prevent the 2008 financial crisis.

Imagine how much jail space would be required if there were successful prosecutions against all the rating agencies, bankers and financial jugglers involved!

In India, government dithers over many economic matters requiring urgent remedy: for example, the unsustainable subsidies on oil, the mendacity of fertiliser policy, the indiscipline in the crucial electricity sector, and the precariousness of the Railways. Is it imaginable that such cases can be fit ones for prosecution in Iceland style?

Failure of the western model
In 1989, economist John Williamson had described ten policies for economic reform, often called The Washington Consensus. His model had six principles: quality governing institutions, free markets, rule of law, liberal democracy, open markets and good corporate governance. Unfortunately even the west has fallen shy of these standards. Democracy everywhere tempts politicians to make unaffordable promises and dissuades them from attempting difficult reforms.

Over the last three decades, nations and banks live beyond their means for extended periods of time; imprudent debt seems to be a symbol of machismo. It is as much a disease in Greece and Portugal as among the states in America. As Illinois Governor Pat Quinn said a few days ago, “We have to face a rendezvous with reality and tackle our dysfunctional budget habits.”

In The Iron Lady, one memorable scene is when the Mrs Thatcher tells a protesting Geoffrey Howe that “we have been elected to act and to solve real problems, not to keep winning elections.” There is no Iron Lady left.

East Asian leaders like Lee Kuan Yew and Mahathir Mohammed have long advocated the Asian Way. China has shown exceptional and dramatic growth through its model of authoritarian capitalism, a term coined by Stefan Halper in The Beijing Consensus.

Indian governance
The public discourse on Centre versus State is set to change. The regional parties rule or influence many states: the eastern states of Bihar, Bengal and Orissa, UP and Punjab in the north, Tamilnadu in the south. To do business, the centre-state dialogue must develop a new tonality.

Roman satirist Juvenal wrote his Satires in the early Christian era. Juvenal mourned the plight of absent Roman husbands because they had to entrust the chastity of their wives to the vigilance of guards. But who would guard the guardians?

The great Indian hope is that there are pressures to change concurrent with the emergence of a fresh and younger leadership. Three suggestions:

  • First, the two national parties must develop and implement an agenda for their organisational self-renewal. The lack of inner party democracy, the opaqueness of party accounts and the atmosphere of sycophancy are serious flaws. Neither party has a choice but to adopt a Change or Perish mindset.
  • Second, the centre has to act with the speed of a surgeon with regard to dispensing speedy justice. Veerappa Moily had prepared an action-oriented white paper, but shockingly he was separated from his charge of the law ministry.
  • Third, renewing trust and consensus-building between states and centre is as important as building external relations with our neighbours. The devolution power to states requires serious implementation. The ostrich-like attitude of the centre has been a big governance failure in the post liberalisation era because the days of the centre talking down to the states are long dead.