Won’t help much unless accompanied by good policy
By: The Financial Express | March 25, 2016 12:08 AM
Given how bureaucratic lethargy kills off even the best plans/schemes, the government has done well to think about reorganising the bureaucracy around its flagship schemes like Make-in-India, Jan Dhan Yojana, Swachh Bharat, Digital India and Skill India. According to a report in The Economic Times, at least one in five bureaucrats at the Centre will work for the top priority schemes and, if need be, outsiders will be roped in as well. Just the difference a Nandan Nilekani made to the Aadhaar programme—it would probably not have taken off without him—makes it obvious just how important it is to get talented outsiders to work in the government system.
But getting the flagship programmes to work better will require more than mere reorganising of the bureaucracy. In the case of the Jan Dhan Yojana, for instance, though the scheme was launched in January 2013 as a game-changer, the government managed to disburse just R44,000 crore subsidies and entitlements through it in FY15—in FY16, R20,139 crore had been disbursed till October 2015—and the major part of this was LPG subsidies. While the effort in doing this has been commendable, moving to food and other subsidies will require working with the states to ensure the names in their SECC list are seeded with Aadhaar numbers. Getting the states’ cooperation may then require not just better coordination but also building in an incentive for them. And for DBT to really deliver—to help reduce the wastage of thousands of crore of rupees due to excessive procurement and stocking in FCI—the government will need to take policy action and decide that subsidies will be given in the form of cash, not wheat and rice.
Similarly, in the case of Make-in-India, less red-tape is welcome, but a two-year delay of the sort we saw in the case of bringing gas prices to near-market levels has ensured that no investment took place in exploration for two years—prices have been raised now, but with global oil/gas environment nowhere as rosy, even this may not enthuse investors; similarly, no decision has been taken for years on extending the licence of explorers like Cairn for the Barmer fields. Digital India, similarly, suffered a big setback with the government delaying putting more spectrum on the block —this ensured auction bids skyrocketed—and there has still been no action when it comes to lowering annual levies on the telecom sector. The arbitrary price controls on Bt cotton seeds, similarly, frightens investors as does the lack of action on the retrospective taxation, including the demand notices given to Vodafone and Cairn while arbitration is still on. Administrative tightening is very important if India is to grow, but it cannot be a substitute for sensible policy.