At a time when inflation and a deficit in governance are threatening to derail the growth process, there is something worth learning from certain state governments. But the lesson is not about the governance failures that the corporate India or policy mandarins are worried about. Rather, it is about the very nature of governance, which affects both the rural poor and the middle class.
Interestingly, these states are none other than those that have so far been blamed for dragging down the growth process. The so-called Bimaru states (Bihar, Madhya Pradesh, Rajasthan and Uttar Pradesh) have for long been symbols of bad governance and poverty. In the last five years, however, some of these, as well as Orissa, have been among the fastest growing states. Along with this growth performance, there has also been a silent revolution in governance. Many of these states can now claim to hold crucial lessons for the nation’s policymakers.
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Madhya Pradesh, for example, has been the first state to pass an Act guaranteeing the timely delivery of public services. Starting with a few essential ones, the Act makes it mandatory for government officials to deliver certain services to the public within a stipulated time frame. Government servants failing to do so would be liable for penal action. Similar laws have been enacted in Bihar and Uttar Pradesh. All the three states have promised to gradually expand the legal ambit to cover more services.
Similar initiatives in other public services are being taken in other states too. A notable example is Chhattisgarh, which has successfully shown how leakages in the public distribution system (PDS) can be plugged. From 50% in 2004-05, grain leakage was almost negligible in 2007-08, the latest year for which data is available. Tamil Nadu and Himachal Pradesh, too, have managed to drastically reduce leakage, though they have followed different approaches. While Tamil Nadu has a universal PDS model, thus avoiding targeting errors, Himachal Pradesh reduces leakages by using innovative methods in PDS delivery and by using women’s groups and cooperatives in PDS outlets. Madhya Pradesh and Uttar Pradesh have also taken bold steps to eliminate ghost cards, and Bihar is experimenting with food coupons and vouchers.
Another example of state endeavour is food security. While the central government is still debating how to implement the food security Act, a majority of states have already done more than what the proposed Act will do. In Kerala, West Bengal, Chhattisgarh, Tamil Nadu, Madhya Pradesh, Andhra Pradesh and Orissa, the price of foodgrains is already lower than the prices suggested in the Act. Most of these states have devised their own methods to identify the poor. And in most cases, they have expanded the coverage to include more households than the limit suggested by the Central government.
Have these governance reforms paid off? To a large extent yes. Take the case of spiralling inflation for the last three years. State-wise data on consumer price inflation in rural areas throws up an interesting pattern. Between December 2007 and December 2010 (the latest month for which data is available), the average rate of inflation based on the consumer price index for agricultural labourers (CPIAL) was 12% per annum. But this varies across states, with the lowest rates in Tripura, Himachal Pradesh, Orissa, and the Bimaru states. In contrast, average inflation was highest in Karnataka, Maharashtra, Haryana and West Bengal.
This yields an interesting trend. Except Rajasthan, all the states that have done well in containing inflation are ruled by the opposition parties at the Centre. Among the states where average inflation was highest, two are UPA-ruled, one is ruled by the BJP, and the fourth by the Left. Karnataka, the state with the highest inflation and a BJP government, has of late been a symbol of misgovernance. And in West Bengal, political turmoil has eroded any semblance of governance in rural areas.
The message is obvious: governance matters. But it is remarkable that innovative governance reforms are being implemented in states that have traditionally been poor and badly governed. On the other hand, states that have faltered on governance are also the ones known as growth powerhouses. The established hierarchy is changing, and for good.
When you consider that the right to information and employment guarantee were also first implemented in the states, there seems to be a larger message for the Central government: Instead of blaming states for rising inflation and lack of governance, as it so often does, the government should try to learn from rapid and progressive measures they have adopted.
Himanshu is assistant professor at Jawaharlal Nehru University and visiting fellow at Centre de Sciences Humaines, New Delhi
Graphic by Yogesh Kumar/Mint
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