Towards more government, less governance

Despite promising less government, the Bharatiya Janata Party (BJP) led Central dispensation is only expanding. Departments have increased. With around 65 ministers and 100 departments, the size of the Narendra Modi government is among the largest in democratic India. The functions of many departments have vastly increased and  spread in recent times without much impact on economic growth, though they may have improved financial inclusion. Barring the formation of the NITI Aayog, which replaced the erstwhile Planning Commission, nothing much has changed in the government. The 2014 Lok Sabha election verdict provided the Prime Minister a great opportunity to cut the ministry and government to size and improve governance through better performance of the five Raisina Hills Ministries and their adjuncts.

The size of the government will soon become a matter of some concern as it gears up to implement the awards of the new pay commission that vastly raised the basic earnings of the Union government employees – from Rs. 18,000 per month at the bottom to Rs.2,50,000 at the top. In other well-managed economies, the wage disparity between the bottom and the top is nowhere near India. The pay commission may have overlooked the aspect. The award will put the government into more hardship, leaving less investible funds on economic and social development. The government could have handled the wage or salary payout burden better by cutting its size.

Nearly, 24 years ago, the Narasimha Rao government did make an attempt to abolish a few government departments but failed to sustain the effort under pressure from the bureaucracy and the Congress party. It seems Narendra Modi too has lost the initial enthusiasm about reducing the size of the government. As a result, the pledge of better governance continues to suffocate under a large, unwieldy government. The Modi government has done little to improve the lives of majority of the poor, who continue to suffer under a severe rise in the prices of food articles and daily dire unmet necessities. But, it has done a lot to meet the never ending desire of the rich to hoard gold and precious metals by repeatedly reducing the import levies. Unsurprisingly, India wears the crown of the world’s largest gold importer.

Ironically, the “more” of the Modi government had forced a ban on Maggie instant noodles, manufactured by Swiss global leader Nestle, on health grounds. Meanwhile, junk noodles prepared on makeshift food stalls on the footpath to feed the poor and the labour class goes unchecked. After several months, the Maggie ban has been vacated by the Bombay High Court following clearance by government accredited labs. However, food inspectors are not convinced. They have the scope of taking action now against Nestle’s pasta. The Modi government seems like a helpless spectator to his government inspectors going after well-known brands while it spares the worse.

On the contrary, governance is increasingly becoming a victim of an unpleasant political dogfight between the government and its opposition even on issues that are entirely economic. The case of the GST Bill, already passed by the Lok Sabha, is the best example in question. A comprehensive indirect tax regime on the manufacture, sale, and consumption of goods and services, replacing the multi-point taxes levied by the central and state government, should have been part of the country’s first major economic agenda initiated by the Narasimha Rao government in 1991-92. Instead, India allowed itself to lose 24 years to reform one of its most important tax structures for the benefit of its people and economy. The economic think tank of the Congress party under the leadership of Manmohan Singh did prepare the ground for the introduction of such a national value-added tax in the form of goods and services tax (GST). But, it could not be done in a hurry since it could be achieved only through an amendment of the Constitution.

Had the Congress party returned to power in 2014 Lok Sabha election, the GST would have hopefully been in place by now or by the next financial year. Unfortunately, the country’s economic interests have always been the first victim of its petty party politics. The original authors of GST now want to have it fractured and factored to suit their political agenda at the cost of the national economy. Such a scenario also explains why a less industrialised China in 1950,  is now the world’s second largest economy and India holding on to a 10th position behind some countries that are smaller than some of its states. The reports are that the government is willing to accommodate by the principal opposition in  the Rajya Sabha, Congress, and AIADMK in Tamil Nadu, a BJP ally in NDA, by reshaping the GST bill to meet their demands. So much for good governance! If India has lived and grown without GST for so many years, it can probably continue for a few more years with a historically imperfect taxation system until political parties agree on something more comprehensive.