The eroding sanctity of institutions in India
It is time Indians question their political leadership and rebuilt institutions
The overriding theme of governance in India over the past decade has been a sustained attack on the very institutions that bind the Indian state. Whether it be apex investigative agencies such as the Central Bureau of Investigation (CBI) or financial regulators such as the Securities and Exchanges Board of India (Sebi), very few institutions have managed to protect their autonomy and credibility during the nearly decade long reign of the United Progressive Alliance (UPA) government, as it went about demolishing the checks and balances that limit the abuses of power.
While the root of the institutional rot lies at the very top of the political decision-making in the country, the scenario appears equally bleak at the regional level. Recent events in Gujarat and Maharashtra underline the growing trend of political elites trying to subvert key institutions to suit their narrow interests.
After the Supreme Court dismissed a petition by the Bharatiya Janata Party (BJP) led Gujarat government challenging the appointment of justice (retired) R. Mehta as the Gujarat Lokayukta, Mehta declined to take charge and wrote a letter to the governor saying the controversy over his appointment has “denigrated" the office of the Lokayukta. Mehta pointed to the systematic efforts at undermining the effectiveness of the Lokayukta’s office in Gujarat and expressed his dismay over the fact that the Gujarat government considered him biased, if news reports about the content of his letter, leaked last week, are true. In Maharashtra, the tussle over the right to transfer officers between the police establishment and the political executive on the one hand, and the two ruling parties: the Congress and the Nationalist Congress Party (NCP) on the other hand, illustrate how even routine administrative decisions can fall prey to petty politicking, eroding trust in the fairness of administration.
The two western states and their political class are not exceptions. Disparate political groups across the length and breadth of the country seem united in their utter disdain for the integrity of key institutions. The roots of the all-pervasive malaise lie in the 1970s, when Indira Gandhi, in her quest for unbridled power, first launched an offensive to decimate the autonomy of important institutions. Since then, her strategy has gained widespread acceptance among India’s political class. The very style of governance that regional satraps promote relies on bypassing institutions to “get things done". The expediency of short-term gains often triumphs over the long-term commitment to build resilient institutions, making their success less enduring.
The stubborn refusal of the political class to fix key institutions and their plummeting credibility has paved the way for judicial interventions even on issues that are the traditional preserve of the political executive. There has been a steady erosion of trust in institutions that were supposed to balance the claims of competing interest groups while framing policies. Whether it is on the decision to allow field trials of genetically modified crops or the issue of allocating telecom spectrum, the government of the day is forced to submit to the directives of the court.
It is the government’s inability to build strong institutions that has acted as the key constraint to fast growth. As economist and the chief economic adviser to the finance ministry, Raghuram Rajan argued in these pages, strong growth tests economic institutions’ capacity to cope, and India’s were found lacking. The inability to allocate natural wealth such as mining rights or telecom spectrum in a transparent manner led to intervention by the courts, and precipitated a policy paralysis. As the links between key government officials and crony capitalists came to the fore, even legitimate business activities came under a cloud, and slowed investments.
The momentum for reforms suffered for the same reason. Research by economists such as Daron Acemoglu and James Robinson has shown that the average voter will tend to prefer populist left of centre policies when corruption levels are high, and reforms are perceived to be benefiting the rich disproportionately. In India’s case, the failure to implement governance reforms in step with macroeconomic reforms has meant that the constituency for genuine reforms remains extremely small despite liberalization’s role in raising the average incomes of Indians.
Although the lack of economic and governance reforms stymies growth and limits the destinies of a billion Indians, such a low-level equilibrium is actually a perfect breeding ground for patronage-based politics and venal politicians.
It will not be surprising to see politicians of all hues paying lip service to fighting corruption in the run up to the general election. But we must ask of our parties what mechanisms do they have in mind to restore the credibility of damaged institutions and to rebuild the institutions that modern India needs. The health of our economy, and indeed, of our democracy, will rest on the strength of the commitment to institutional reform.
How can the autonomy and credibility of key institutions be restored? Tell us views@livemint.com
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