The swine flu scare has forced people like us to face the bitter truth: India’s public health system is an unholy mess.

The first swine flu infections have mostly been among people who are better off than the average Indian. Testing and treatment have been restricted to select public hospitals and institutes. So people who have had no reason to enter a public hospital in many years have suddenly been forced to do so. This has led to moments of epiphany.

This is a symptom of a larger problem. Essential public services are in disarray. This is not a problem that the middle and upper classes have been bothered about till now.

This column has previously cited the work of the highly original economist Albert O. Hirschman. He has argued that people respond to organizational decline in two ways: voice and exit. Voice involves attempts to engage the system and change it. Exit means opting out. There are no prizes for guessing what path the Indian elite that lives in gated communities, sends its children to private schools, never takes a bus to work and visits only swank hospitals has chosen: voice or exit?

The deterioration in governance is a problem that is rarely given its due. Bimal Jalan has been one of the few public policy experts writing and speaking about India’s governance crisis. In his book The Future of India, Jalan has cited fears expressed by reputed civil servant S. Bhoothalingam that the bureaucracy had become ossified as early as 1961, a mere 14 years after Independence. Matters have gotten worse since then.

Why does this matter? The lack of state capacity matters for issues that are more long-term than the current swine flu panic. It means that ministries and government departments are chronically unable to spend the money allocated to them in the annual budget. It means that fiscal stimulus packages focus on higher revenue expenditure rather than building new public works. It means that inefficient police and judicial systems raise the costs of doing business.

In short, the lack of state capacity is a drag on long-term economic growth.

One short-term test case of state capacity could soon be evident. India is edging close to its first drought in five years. Prime Minister Manmohan Singh did well to make clear on Saturday that the big policy goal in case the monsoon does not revive is to ensure “no citizen will go hungry". But millions who are most likely to go hungry in times of drought also happen to live in districts that have poor connectivity and poor governance. Reaching food to them will be a challenge for the food security system.

The poor live with a dysfunctional government system every day: schools where teachers rather than students play truant, public hospitals and health centres without basic equipment and local officials who do not care.

The 1 August issue of the Economic and Political Weekly has a chilling account of what happened at Khairlanji, a village in Maharashtra where a Dalit family was killed by a mob of so-called higher castes in September 2006. The official response was callous. What is particularly troubling is that “a majority of the police (and) medical officers across ranks handling the case were Dalits. But they showed a negligent attitude towards their official duties..."

Swine flu fears, the long shadow of drought and the killing of a Dalit family: each story points to the same underlying problem. The Indian state is failing in its basic duties to protect citizens, provide justice and help the poorest.

There are two lessons here. One, a lot of the debate on government programmes tends to focus on how much money is being thrown at a particular problem. Corruption is a constant. But equally important is the incapacity to use taxpayer money well and deliver basic services.

Two, a system that cannot do its basic job well enough still wants to stretch itself and do stuff that the private sector is quite capable of doing, especially running enterprises that in the case of the public sector are usually loss-making.

Jalan has this to say in The Future of India: “The burden of weak administration naturally falls mainly on the poor because of the indifference of government staff to them… The insensitivity of the administrative system to the needs of the poor, even to prevent starvation, has been confirmed by first-hand surveys and reports by journalists and non-governmental organizations."

It has often been said that the Indian state does too little in some areas and too much in others. That is the whole point of economic reforms: A free economy can boost growth and thus provide the government with tax revenues to spend on what should be its key functions.

Administrative reforms and rebuilding of state capacity have to be important parts of this transition.

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