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Business News/ Opinion / Columns/  Opinion | We need a quality revolution in public policy decision-making

Opinion | We need a quality revolution in public policy decision-making

Policymakers should pursue better policies rather than just those that achieve goals cheaply


As a second Narendra Modi government takes office, the demands it will face to deploy its renewed political capital will be immense. In every area of policy priority—from education and financial inclusion, to health and infrastructure, and energy and defence—an impatient electorate will expect it to deliver. But every policy challenge must necessarily confront trade-offs, even before further complications arise from bureaucratic or party politics.

There’s a popular adage in the tech world: “Cheaper, faster, better. Pick any two." This applies widely to Indian policy, a field where it sometimes assumes the form of a variant: “Cheaper, more, better. Pick any two."

Given India’s human development imperatives, the natural policy impulse has usually been to rush towards providing healthcare, energy access, infrastructure and education on a vast scale. Most evaluations of policy have focused on input measures: How much of a certain public good can be built, deployed, or delivered? Recent examples include the opening of bank accounts as part of Jan Dhan Yojana or household electrification. How such bank accounts are being used or how consistent the supply of electricity on a new connection is, are understandably not the immediate priority.

Moreover, given historical resource scarcity, a second Indian government priority has been to focus on achieving its objectives cheaply. In public tender issuing and procurement—which dictates a lot of public service delivery in India—this has manifested itself in a rigid focus on the lowest-cost bids, known as L1. Together, the emphasis on “more" and “cheaper" has almost always meant that “better" has been sacrificed.

But India has changed. In many policy fields, the challenge of “more" is now being addressed: school enrolment is near full potential, there is surplus power generation supply, housing is readily available but remains vacant, allocated capital budgets for defence are not spent in their entirety, and agricultural yields in certain crops have exceeded demand (resulting in drops in prices and farmer distress). The question of limited financial resources, while still a constraint, is less relevant today, in part due to better tax revenue collection, a natural consequence of the goods and services tax (GST) and digitization. The India of 2019 is no longer as resource-starved it was in the 1970s or 1960s.

Perhaps, then, the time has come for the Indian government to modify its objectives to explicitly plan for “better". This could result in policies that are more secure, inclusive, sustainable and, in many ways, more cost-effective, especially when viewed on a lifecycle basis (Total Cost of Ownership in corporate-speak). But shifting from simple L1 to more sophisticated measures in turn creates a much more difficult challenge: how does one measure output? It is relatively easy to measure achievements in quantity and cost; by contrast, measuring quality is hard. If colleges are being built, how is the quality of their research scholarship or teaching being assessed? If smart meters are deployed for power consumption, can we truly measure how much energy has been saved or shifted from peak to off-peak use?

The L1 model has already had a corrosive effect on Indian public policy, and it will be hard to shake that off because it has become so deeply ingrained. In the defence sector, for example, it was designed to minimize subjectivity in the acquisition process, so as to curtail corruption. Nonetheless, the process continued to favour certain entities—often public sector units—over others. Rather than streamlining decision-making, it has made it unduly complex. The same story can be told, with variations, of other public or public-private partnership initiatives, whether in the railways, highways, or electricity distribution.

How does one shift away from the system? One option is a services delivery model, already being used through outsourcing or contracting. The number of cars on the road matters less than the volume and satisfaction of people being transported. Smart meters could make it possible to pay service providers a consumer charge linked to savings. This aligns the incentives of stakeholders, although there are still challenges such as who bears how much of the risk, not to mention issues of benchmarking.

Going forward, the government should mandate the use of life-cycle and systemic cost-benefit analyses for all planning and regulations. This may sound obvious, but it’s much harder than just comparing rupees spent versus saved (or earned). One challenge is to capture all impacts across diverse stakeholders, using cost-benefit analyses of social gains, instead of just investor-centric returns on investment.

No bureaucracy, not least India’s, makes qualitative decisions easily. It requires an acceptance of nuance and trade-offs. It also requires evaluation and decision-making capacity, compared to which L1 is so much easier to justify. But there are many public-policy success stories to rely upon—including airports and metros—to demonstrate how quality (in these cases, safety) can be factored into competitive contracts. This will require taking risks, but in many cases they will be upfront, small, and part of the learning experience. For a better India, there may be no other way.

Rahul Tongia & Dhruva Jaishankar are fellows of energy sustainability and foreign policy studies at Brookings India

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Published: 30 May 2019, 11:05 PM IST
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