Nalsar Governance Feb 16-2016

India: A Nation in search of a State.

Mohan Guruswamy

The nature of the regime.

05/03/23

The case of the two halves of Nogales.

• An institutional divergence took place in the early days with the implications lasting into the present day.

• One system evolved to milk the land for the colonial masters in Europe, while the other evolved due to the colonization by the settlers and for their benefit.

• While economic institutions are critical for determining whether a country is poor or prosperous, it is politics and political institutions that determine what economic institutions a country has.

• Standing in sharp contrast to the nations dominated by extractive political institutions are the nations based on inclusive political and hence economic institutions.

05/03/23

A sum of Rs.1,74,081 crore had been earmarked to pay the central government's employees the financial year 2014-15 - about 10.45 per cent of its overall expenditure.

Combining pay, allowances and travel expenses for central government and railway employees, the State spent just under Rs.1,00,000 crore in 2011-12, a number that ballooned to Rs.1,13,785 crore in 2012-13 and Rs.1,24,646 crore in 2013-14.

Cost of Government - trends.

05/03/23

Cost of Government.

05/03/23

05/03/23

Central Govt. salaries % GDP

05/03/23

Higher salaries. But better Governance?

05/03/23

Insufficient Governance.

05/03/23

Number of people in the Service of the Nation!

05/03/23

The estimated wage bill of government at all tiers is

around Rs.12.00 lakh crores

or

about 7.5% of the estimated 2015-16 GDP of Rs.160.00

lakh crores.

05/03/23

Why more Government gives us little Governance?

• We have 185 lakh public servants at the three tiers of government.

• Only one out of six is with the local government institutions.

• Which simply means we have six persons telling us to do this or do that, for every one supposedly serving us?

• Who are these people answerable to?

05/03/23

India has 1,622.8 government servants for every 100,000 residents. In stark contrast, the U.S. has 7,681.

The Central government, with 3.1 million employees, thus has 257 serving every 100,000 population, against the U.S. federal government's 840.

This figure dips further if the 1,394,418 people working for the Railways, accounting for 44.81 per cent of the entire Central government workforce, are removed. Information technology and communications services account for another 7.25 per cent of the Central government's staff. Then, there are only about 125 central employees serving every 100,000 people.

Do we have too much Government?

05/03/23

Who gets more Government and possibly less Governance too?

05/03/23

For the most part, India's relatively backward States have low numbers of public servants. This means staff members are not available for the provision of education, health and social services needed to address the worst kinds of poverty.

Bihar has just 457.60 per 100,000, Madhya Pradesh 826.47, Uttar Pradesh has 801.67, Orissa 1,191.97 and Chhattisgarh 1,174.62. This is not to suggest there is a causal link between poverty and low levels of public servants: Gujarat has just 826.47 per 100,000 and Punjab 1,263.34.

Who gets less Government and less Governance?

05/03/23

Centralization in India: Administrative Expenditure

Central Govt.

State Govt. Local

Govt. Central Govt. share in Total

Administrative Expenditure

(%)(in Rs. Crores)

1960 365 525 141 35.001965 990 881 339 44.801970 1514 1540 630 41.101975 3072 2935 993 43.891980 4589 6029 1702 37.251985 11112 13075 3047 40.801990 22815 28653 6410 39.421995 44850 55746 12746 39.572000 99965 120190 27250 40.412004 101045 141334 32535 38.10

Source : National Accounts Statistics 2005

05/03/23

Decentralization in China till 2004

0

10

20

30

40

50

60

70

80

90

Year

Shar

e of

Cen

tral

Gov

t.exp

endi

ture

in to

tal e

xpen

ditu

re (%

)

Source: Chinese Statistical Yearbook 200505/03/23

Decentralization in India till 2004

0

10

20

30

40

50

60

Year

Shar

e of

Cen

tral

Gov

t. Ex

pend

iture

in T

otal

Adm

inis

trat

ive

Epen

nditu

re (%

)

Source: National Accounts Statistics, Government of India, Various Sources05/03/23

Population according to standard projections 1991-2051

05/03/23

Budget Estimates 2015-16

05/03/23

Non-Plan expenditure is estimated at Rs.13,12,200 crore.Plan expenditure is estimated to be Rs.4,65,277 crore.Total Expenditure is estimated at Rs.17,77,477 crore..Gross Tax receipts are estimated to be Rs.14,49,490 crore. Devolution to the States is estimated to be Rs.5,23,958 crore. Share of Central Government will be Rs.9,19,842 crore.

Non Tax Revenues are estimated to be Rs.2,21,733 crore.Fiscal deficit will be 3.9% of GDP, and Revenue Deficit will be 2.8% of GDP.

The consequences of this.

05/03/23

So what do we have here?

• The STATED nation.• The STATELESS nation.• The GATED nation.• The NEXT nation

05/03/23

“The interference of the state power in social relations becomes superfluous in one sphere after another, and then ceases of itself.

The government of persons is replaced by the administration of things and the direction of the processes of production.

The state is not “abolished,” it withers away.”

Freidrich Engels in Part 3, Chapter 2, of Anti-Dühring.

05/03/23

Now think of this:

05/03/23

• India is the third largest economy in the world in PPP terms and it is predicted that by 2050 it will be a $30-55 trillion economy.

• This is not daydreaming. In 1990-91 when PV Narasimha Rao initiated the first dismantling of the centrally planned state the GDP of India at current US$ was a little over $200 billion.

• Twenty-three years later it is ten times that. Increasing twenty-fold in 36 years is really not a tall order

The government tries to downplay the numbers by having a somewhat self serving index (now 22%), other measures such as the UNDP’s $1.25 a day suggest that almost 37.5% of Indians live in dire poverty.

At $2 a day as much as 70% of India is below an internationally determined basic standard of living index.

Others indices are just as damning. India's abysmal track record at ensuring basic levels of nutrition is the greatest contributor to its poverty as measured by the new international Multi-dimensional Poverty Index (MPI).

About 645 million people or 55% of India's population is poor as measured by this composite indicator made up of ten markers of education, health and standard of living achievement levels.

The incidence of poverty in India.

05/03/23

Provisions as to the Administration and Control of Scheduled Areas and Scheduled

Tribes

• Report by the Governor to the President regarding the administration of Scheduled Areas.

• Tribes Advisory Council. It shall be the duty of the Tribes Advisory Council to advise on such matters pertaining to the welfare and advancement of the Scheduled Tribes in the State as may be referred to them by the Governor.

• Law applicable to Scheduled Areas.— Notwithstanding anything in this Constitution, the Governor may by public notification direct that any particular Act of Parliament or of the Legislature of the State shall not apply to a Scheduled Area or shall apply to a Scheduled Area

• No regulation shall be made under this paragraph unless the Governor making the regulation has consulted the Council.

05/03/23

“And the Gods were greatly troubled/ in their heavenly courts and councils/ Sat no Gods of Gonds among them. /

Gods of other nations sat there/ Eighteen threshing-floors of Brahmins/

Sixteen scores of Telinganas/ But no Gods of Gonds appeared there/ From the glens of Seven Mountains/ From the twelve hills of the valleys.”

05/03/23

Thank you!

05/03/23