Paradigm shift needed to achieve $5-tn economy

Amitabha Bhattacharya
Former Bureaucrat

On October 31, Sardar Vallabhbhai Patel’s birth anniversary, observed as Rashtriya Ekta Diwas, Prime Minister Narendra Modi addressed trainees of the IAS, IPS and other higher civil services under the Statue of Unity at Kevadia, Gujarat, asking them to work effectively as an organic whole, and strive towards transforming India to a $5-trillion economy. The little discussed document of the NITI Aayog titled Strategy for New India @ 75, brought out in November 2018, had laid down the framework of how this vision could be actualised. Criticised then as a list of lofty intentions, too ambitious and impractical to be taken seriously, it, perhaps, requires to be revisited now.

In the current economic scenario, it is rather tempting to be pessimistic. Former PM Manmohan Singh has argued that the climate of fear amongst businessmen and public functionaries is one main reason for the present state of affairs. Most economists and public intellectuals have been painting a depressing picture, with no possibility of an early revival. Arguably, each assessment contains some degree of truth and suggests some ad hoc measures. But hardly any of them shows a practical and comprehensive way to get out of the syndrome of lowering growth and increasing inequality. The urge to spur the economy to a startling new level has to be examined in this context.  

It is evident that metamorphosing an economy of about $3 trillion to a $5-trillion one in about five years demands revolutionary changes in the way we have been functioning. What is the feasibility of achieving such a quantum leap in a democratic set-up like ours? In a truly multi-party federation, how much does the will of the central leadership count? How can the fight against corruption and movement towards a more formal economy affect growth prospects? Also, are our higher civil services equipped to act as crucial movers of the changes envisioned? These are some questions that require to be addressed.

Democracy demands that the citizens be thinking and, therefore, be questioning. Every major action by the executive, legislature and judiciary should, therefore, be within the ambit of public scrutiny. However, if there is waning public trust in these institutions, such criticisms often tend to be motivated, dilatory and counter-productive. How to enhance trust in the process of governance should, therefore, engage serious attention of our political leadership. The key lies in inclusion — social, political and religious, and not in divisiveness and triumphalism. Since sustained growth in GDP requires imaginative interventions at both macro and grass root levels — not through centralised wish or direction — rearrangement of power distribution up to the gram panchayat level, as constitutionally envisaged, should perhaps be a crucial step forward.

Second, the growth rate anticipated for an aspirational economy cannot be achieved through a system that has traditionally not focused adequately on providing universal access to quality basic education and primary health. Public investment in health and education, both by the states and the Centre, has been so sub-optimal till now that to wait for a spectacular growth rate to enable the government to almost double its present allocation to these sectors would be unwise. If the Centre fails to persuade the states in this regard, and the adversarial politics continues unabated, business will continue as usual, and the idea of accelerating to a sustained double-digit growth rate would appear utopian.

Third, the hypothesis that a fear psychosis has been acting as a deterrent to the entrepreneurs and the investing class, among others, requires a closer examination. It is also being systematically argued that demonetisation, inefficient implementation of GST, and the overzealousness of investigating and tax authorities have been responsible for instilling this fear all over. Admittedly, demonetisation has not resulted in the unearthing of the anticipated black money. Implementation of GST has also been far from ideal. Whatever be their impact on the GDP growth, both these actions sought to ‘formalise’ the economy. The ‘other path’, the informal one that bypasses the governmental system, had no doubt contributed to our GDP. Therefore, these interventions have caused disruptions that might have dented the growth potential in the short run. But can this be a justification to move away from the desired direction?

Instilling the fear of law amongst its violators is legitimate. But unthinking and selective application of law to silence the ‘other’ can create an unsettling atmosphere which affects growth. Unfortunately, using investigative agencies for harassing the opposition or threatening the dissenter is widely perceived as a tradition of Indian polity. It is about time the Lokpal, appointed with much fanfare, be more active to show that there is no need for people in business and other walks of life to be afraid if their actions have been bona fide. Therefore, steps to further formalise the economy while ensuring that the government appears firm and not vindictive, should be high on the agenda. 

This brings us to the PM’s high expectations of the civil servants. The idea of reintroducing the common foundation course, Aarambh, for the entrants to the civil services, in the true spirit of togetherness, as originally envisaged, is praiseworthy. However, the need for more meaningful reforms in higher services deserves immediate attention. For instance, at the stage of recruitment, some of the ‘best and brightest’ should again be encouraged to join the services. Reducing substantially the age of entry and number of attempts allowed for each social group, drastically shortening the examination process, and mounting a campaign at major educational institutions to motivate students for a career in civil services should be contemplated. With this should be linked the issues of periodic trainings as also the scheme of career progression. What is required now is the political resolve to undertake measures to invigorate the civil services.

William Gladstone defined the proper function of a government as “to make it easy for the people to do good and difficult for them to do evil.” The nation’s success to achieve the desired growth trajectory will depend on how the political and bureaucratic leadership eases life for all its people to do good.