|
THE
NEW ECONOMY: GUEST COLUMN
Overhaul
Overdue
The entire
edifice of policy making must change for better growth
By
P. Chidambaram
 |
|
The
author is a former Indian finance minister and a leader of the Tamil
Maanila Congress.
|
For
nearly 40 years, planning, plan expenditure, loans and grants to States
and public sector investment constituted the "making of economic
policy". In this milieu, every scheme and every programme attained
the dubious status of policy. Growth was a mere by-product. If it remained
at only 3.5 per cent
(GDP growth) per year for 30 years, that was borne with surprising stoicism
and equanimity. Mercifully, this era of policy making came to an end in
the 20th century.
In the 21st
century, it is my hope that economic policy making will acquire a different
meaning and dimension. I visualise the following key features:
1. The role
of the government will be that of a facilitator. Government will also
intervene decisively in favour of certain sections of society like children,
the aged, the disabled, dalits, tribals and victims of natural calamities.
2. The government
will be required by law to adhere to targets concerning borrowing, inflation
and money-supply. The government will also be responsible for providing
an environment for the free flow of capital and technology.
3. All regulatory
functions will be assigned to independent regulatory bodies functioning
under carefully drafted laws which will lay down the jurisdiction and
such powers of such bodies.
4. Markets
will determine the allocation of resources and the production of goods
and services, and their prices. A Competition Commission will ensure markets
remain free, open and competitive.
5. Besides
performing its sovereign functions, the government will invest in production
of public goods, especially education and healthcare. In all other areas,
the private sector will take the lead role, and government will provide
need-based supplements.
6. Successes
and failures are inherent in a free market. The government will not bail
out the failures.
7. Power
will flow down to the lowest administrative bodies. Empowerment of panchayats,
panchayat samitis and municipal bodies-including powers of taxation-will
ensure that the rulers remain close to the ruled.
8. At every
level of government there will be scope for public-private participation.
For instance, a hospital may be established and "owned" by a
municipality, but it may be run by a team of private doctors, nurses and
technicians.
 |
|
Jayanto
|
9. Non governmental
and non-profit organisations will be allowed to assume greater responsibilities
in key areas such as higher education, sports and culture. For example,
the management of heritage sites, museums and zoos may be entrusted to
such organisations.
I have no
hesitation in admitting that the changeover from the present structure
of economic administration to the model that I have outlined will be difficult
and not without costs. However, after 10 years of implementing economic
reforms, often in fits and starts, it is imperative that we make the transition,
substantially, in the next five to 10 years. The political and the administrative
framework that we have today is outdated and ill-suited to the requirements
of the transition and thereafter.
We have
one of the weakest executive governments in the world. We also have a
Parliament that shows little concern for making laws or for enforcing
accountability. We also have the most powerful judiciary in the world
which is frequently tempted to enter the arena of executive government.
The permanent civil service is a huge burden on the exchequer and provides
little value for the money spent on it. All this must undergo a drastic
change.
We can make
a beginning with Parliament and executive government. There is no need
to choose between responsibility and stability; we can have both. Let
us keep the territorial constituencies. Let the people vote for the member
of Parliament and the prime minister. Let the Lok Sabha have a fixed term
as well as the power to remove the prime minister by a resolution supported
by two-thirds of the members present and voting. This way we can have
both stability and responsibility.
Let the
prime minister appoint one-half of his cabinet from among MPs and the
other half from non-members. This way, we can have a government of political
leaders as well as experts.
Let us abolish
the Planning Commission as it now exists and create, instead, an Economic
Advisory Council to be appointed by the directly elected prime minister.
Let the government place its economic policies, including the budget,
before the Economic Advisory Council for its "advice and comment"
before seeking Parliament's approval and appropriations. This way, we
can de-politicise economic policy-making without losing Parliament's control.
We can make
a similar arrangement in the states.
By re-defining
government, by empowering the executive government, by inducting knowledge
and expertise into the administration and by enlarging the role of the
market and the private sector we can bring about a qualitative change
in governance of the country, particularly the economy.
|
METRO TODAY
Web
Exclusives