The health of India’s public institutions—not so good28 Oct 2018
On August 26, 2016, Prime Minister Narendra Modi said:
There was a time when development was believed to depend on the quantity of capital and labour. Today, we know that it depends as much on the quality of institutions and ideas.
Following Modi’s speech, a Mint editorial noted that Modi’s comment seems to be partly inspired from the 2012 book Why Nations Fail by Daron Acemoglu and James A. Robinson. “In their thought-provoking book, Acemoglu and Robinson argue that institutions, and they alone, determine the prosperity of a nation.”
Does the Prime Minister really believe so? Looking at recent events, the answer is: not really.
The incidents of this week highlight problems brewing in India’s two major public institutions:
First, the Central Bureau of Investigation (CBI): a sort of war erupted between the two top officials (#1 and #2 in the hierarchy) in India’s premier investigating agency.
Second, the Reserve Bank of India (RBI): In a hard-hitting speech, the deputy governor of the otherwise reclusive RBI, flagged concerns about government interference in the functioning of India’s central bank.
The big picture: It is important to read the two stories in the larger context of the state of India’s public institutions. Equally crucial is to note that the problem is not limited to the rule of the current Modi government; these are historical challenges. What’s clear is how little things have changed under the present regime. Critics argue that the situation has become worse.
In an op-ed for Mint, Vaishnav looked at incidents in the preceding years to show how the credibility of three big institutions— Election Commission of India, the Supreme Court and the RBI—had come under question. Just add the latest tensions to the growing list of such incidents.
If you consider these aberrations, you are missing the big picture, Vaishnav wrote. It rather points to multiple systemic challenges India’s core federal institutions face. Four major points:
Human capital: “First, across the board, Indian institutions continually struggle with managing human capital, as evidenced by the unending morass concerning judicial appointments.”
Quality of external accountability: “Second, exogenous actions, like the passage of the Right to Information Act, have compelled greater accountability to the public. Yet the quality of external accountability is in doubt, as evidenced by how all three institutions have struggled to balance the demands of public justification with the temptation to hold on to discretion.”
Centralised power: “Third, internal accountability mechanisms have largely foundered. In nearly all Indian institutions, power remains far too centralized in the hands of the chief.”
Political interference: “Fourth, political interference remains an ever-present obstacle. Much of this interference comes down to subverting behavioural norms rather than actual violations of the law.”