India News and Features Alliance (INFA) - More Economic Reforms:CHANGE MINDSETS PLEASE, by Dr. Vinod Mehta,7 February 2008

The process of economic reforms has taken roots in the past 15 years. The CPM too cannot deny its necessity. Deng Xio Ping was the first Chinese communist to have understood the importance of market economy and economic reforms. He knew these could catapult China into a major economic power and put the economy on the reform path. It was in the 80s, much earlier than India did. Look where the Chinese economy stands today.

And, if we even after these long years were to ask: what is the greatest hurdle in the way of economic reforms the answer would be the bureaucracy. Yes, even today. That is to say, those who are responsible for liberalizing the economy have still somewhat outdated mindsets and are unwilling to implement the reforms in spirit. But they are a hurdle not by any design but by a mindset, which has been nurtured over the past six decades i.e to say the least anti-developmental.

Let’s go step by step. The first point to be noted is that the main duty of any bureaucrat is to provide efficient government administration -- in all aspects, such as maintenance of law and order, provision of welfare measures, including education and health care, provision of clean drinking water, maintenance of land and other records, collection of taxes etc. And, this calls for a particular mindset and a different kind of administrative training.

But, when you put such administrators to take economic or business decisions they would in all probability mess up the whole situation by applying the same yardstick as in basic administration. A person good at maintaining law and order or in running a good system of schools will not necessarily run economic enterprises with same efficiency.

This is because the Indian Administrative Service produces general administrators, who are rotated throughout their tenure in various departments or ministries. An officer could well be posted one day in the Law Ministry, the next day in Commerce Ministry, the next in the department of animal husbandry (Ministry of Agriculture), or the next to the Department of higher education (Ministry of Human Resource Development) and eventually retire in the Department of surface transport.

Therefore, when such people are asked to man economic enterprises majority of them would mess up. One can list a number of examples, but let’s take the case of Air India and Indian Airlines, which stand merged today. While the world over, airlines are run by professionals, it is in India that the bureaucrat has been given the day-to-day charge of Air India; elsewhere airline companies have expanded at a feverish pace, whereas Air India and Indian have yet to grow (of course some have closed down). Airlines such as Singapore or Thai are popular with travelers, however, Air India is opted by those who have no other option or when the Government forces its employees to fly only this carrier.

So, bringing untrained bureaucrats to man business-related units will not only mess up the whole unit but may also bring a bad name to bureaucrats. Thus, the best way out for the Government would be to get out of the business of running economic enterprises and concentrate on governance alone. If this is not possible in the immediate future, the Government could consider at least retraining them. It would help change mindsets so that they are capable of running economic units.

At the same time, the Government needs to re-look the structure of ministries; a comparison with other countries would show that some of the ministries existing here don’t exist elsewhere. For instance, countries such as the U.K. and Thailand have no ministries as Civil Aviation, Information and Broadcasting, Food Processing. Further, many countries do not have like us the department of banking under the Ministry of Finance as commercial banks come under the supervision of the central bank.

Then there are so many additional ministries that bureaucratization of every activity appears to have taken place. Abroad, say the Ministry of transport would cover all modes of transport, whereas here we have the three ministries-- railways, transport and civil aviation, which have little coordination amongst each other. Likewise, when there is a ministry of industry where is the need to have separate ministries for steel, for textiles and food processing? Add to this, equal number of bureaucrats in each ministry. Let us, therefore, rethink structures of our ministries and wonder why any ministry should be running hotels, steel mills or textile mills?

On the question of mindset, it is equally, if not more important to change the mindsets of people at the junior level – say of directors, deputy secretaries, undersecretaries and section officers. This is because it is they who put up the cases before their seniors --joint secretaries, additional secretaries and secretaries. In all likelihood, the senior officers do not have the time to go through all details and to quite an extent would accept opinions and take a decision on the notes put up by their junior staff.

Tragically, the ministry of finance, which is supposed to be pioneering the economic reforms, is too a victim of this mindset. Ask staff in the autonomous bodies under various ministries whether the babus in the finance ministry have forced them to have sleepless nights over questions which could pass off as irrelevant. The answer may well be a resounding yes.

This apart, it needs to be emphasized that most of the ministries have their fingers in every pie. Though there are autonomous bodies, statutory bodies or special organizations created under an act of Parliament, at the end all would ultimately be controlled by the babus in ministries. Unless we make efforts to change mindsets, which don’t go well with the philosophy of economic reforms we shall not be able to implement economic reforms, even if we seriously wanted to.

Given the developments of the past 15 years, it is clear that unless we spell change the process of implementation of economic reforms is going to be tardy. Outdated mindsets, which we have inherited, shall unintentionally continue to put spokes in the wheels of economic reforms.---INFA