In this excerpt from ‘Can India Grow?’, authors V. Anantha Nageswaran and Gulzar Natarajan drive home the point that decentralisation is imperative to both the execution and formulation of public policy in India
Let a million ideas and models proliferate
India’s continental size, large population, and vast diversity, coupled with its inherently complex nature, mean few universal strategies exist for addressing public policy challenges. Context matters, and policy and implementation designs have to be tailored accordingly.
Multiple pilots or multiple policy experiments should be conducted simultaneously, greater decision making discretion during implementation is likely necessary, and one-size-fits-all approaches should be avoided.
No single answer will emerge that can be applied everywhere in India—far from it. Instead, a plurality of solutions should be anticipated, encouraged, and even demanded. The bureaucracy, because it must enforce uniformity, might find a plurality of policies and approaches difficult to accept. Officials first need to become aware of this gap between their conditioning and what the situational reality demands. That is the first step toward accepting and then mastering the situation.
Lacking precedents, role models, or templates from others’ experience, India’s policymakers and politicians should have the courage to craft policies based solely on what, in their best judgment, is likely to work in the Indian context or contexts, rather than on whether the policies comply with prevailing wisdom or Western practices. Having the courage to buck trends, fashions, and fads in the best interests of India is vital.
India needs to encourage new models of development across sectors in small pilot programs. Central government departments and states should be encouraged to innovate with policy design and implementation, using technology and external expertise, through public-private partnerships, collaborations with nonprofits, and so on.
Innovation is critical because the public systems are acutely enfeebled: in many cases, the prevailing service delivery models and systems are irreparably damaged, and Indian policymakers may need to junk them completely and embrace new models of engagement.
In every field, the government of India should make available, in an accessible manner, various models of intervention and all actionable templates and supporting documents that states can readily adopt and implement without further tweaking.
In a large sample of districts, at least a few would embrace any initiative, and at least one or two would effectively implement the intervention over a five-year period. These districts could in turn become potential champions of the intervention and models for emulation by others, and so spearhead the gradual nationwide rollout of the intervention.
Several such positive deviances across a wide spectrum of interventions, coming together over a period of time, stand the best chance of achieving nationwide implementation of innovative public service delivery interventions. In more politically complex reform areas, such as banking, this form of experimentation has the potential to generate an inexorable tide in favor of reforms.
Here the evolution of China’s economic growth, as chronicled by Ronald Coase and Ning Wang, is instructive.
The authors examined Chinese growth since the late 1970s and challenge the conventional wisdom that it was driven by an omnipotent Communist Party through tight central planning and the benign leadership of a group led by Deng Xiaoping.
They point instead to a decentralized and flexible model of growth that allowed experimentation with several ideas, a “million marginal revolutions.” All the major initiatives now lauded as great successes—including the decollectivization of agriculture, the establishment of special economic zones, town and village enterprises, and financial market deregulation—emerged as bright spots from among the numerous variants of each that were experimented with across the country.
Most of these experimental versions failed, but because they were not yoked to high-profile central programs there was space for the experimentation and risk-taking so essential for refining the implementation design of large-scale policy interventions. Deng famously exhorted his constituents to “try bold experiments, blaze new trails.”
Such decentralization will inevitably cause disequilibrium and disruption for some time. But it stands a far better chance of producing new, sustainable public service delivery models than the current top-down norms- and components-based strategies.
Practice cooperative and competitive federalism
Philosophically, the empowerment of states and local governments is the linchpin of India’s future growth strategy.
If India is to scale up its fragmented agricultural and industrial production, states should not only embrace policy changes made by the federal government, but they should also actively propose their own. Issues pertaining to land, labor, and education are the concurrent responsibility of the central government and the states.
However, the failure or reluctance of states to adopt proposals promulgated by the central government is a major obstacle in a competitive democratic framework. Therefore, it will be better if states are encouraged to initiate changes of their own, with the central government stepping out of the way.
The central government should pursue the twin strategies of both cooperative and competitive federalism. It needs cooperative federalism to obtain support from the states for the land acquisition bill, labor codes, and similar bills that make up a large part of its parliamentary legislative agenda.
It would also need their support for the effective implementation of the federal government’s various flagship programs. But this would have to be complemented by triggering healthy competition among states in the achievement of various program objectives.
The federal government will have to mobilize support among states for reforms and program implementation through continuous formal and informal engagement with chief ministers. It must consciously debunk the entrenched notion of the federal government as the sole authority for formulating plans and providing funds.
Frequent informal meetings with the chief ministers, preferably at the regional level, and visits to states other than for ceremonial purposes (such as ribbon cutting or inaugurals) would help.
The National Institution for Transforming India (NITI Aayog), a government-established think tank, should be entrusted with the responsibility of creating a framework for fostering competition among states.
Included should be standard mechanisms, such as comparative ratings, third-party assessments, and even financial incentives. The success of the World Bank’s Ease of Doing Business rankings in fostering competition among states should be emulated to develop similar indices for agriculture, education, healthcare, and law and order. An annual festival of the states culminating in awards for best performance on these indices and a few national programs can be a powerful means to encourage competitive federalism.
The multiple-round Challenge competition to select cities under the Smart City Project is a good example of cooperative and competitive federalism at work. The project cost is shared between the central government and the states.
Instead of being prescriptive, the central government allowed cities to identify and prepare reports on their preferred set of technology and other interventions. The cities then competed among themselves for funding based on the strength of their respective proposals.
Finally, the Ministry of Urban Development provided support with model bidding and contracting documents, technical specifications, and so on. This could form a template for sectoral and program engagement between the central government and the states.
But devolution, too, must go deeper. Substantial devolution of authority, responsibility, and resources to the states, and then from the states to corporations, to municipalities, to gram panchayats (village government), and to municipal and panchayat wards, is urgently needed.
Some or most of these lower administrative units may fail. They may be too overwhelmed by the sudden change in their situation to cope. They have to be open to accepting new ideas, getting new people in, and assigning new powers and responsibilities. Some may buckle under the pressure. The Peter Principle is powerful. But some will succeed, and over time, others may start to emulate them.
To sum up, federalism must be an important part of India’s sustainable growth strategy. The central government has to make it its top priority. A top-down strategy is ill-suited to addressing India’s reduced and fragmented production sector.
Step back from the ring: manage both strategic priorities and hygiene factors
Reflecting the grip of short-termism, it is often said that decision-making at listed firms occurs on a quarterly basis. Similarly, governments are captive to the demands of electoral cycles.
In countries like India, with separate state and local government elections, electoral cycles can be extremely short. This, coupled with the intense media scrutiny, means that public policy decisions are dictated by the immediate and the quantifiable, often at the cost of the important and the structural.
For example, while building schools and bathrooms and recruiting teachers are important activities, they count for nothing unless the learning outcomes are adequate. Similarly, getting healthcare outcomes right requires going beyond making primary care centers function better or unveiling universal health insurance plans to produce more fundamental reforms of the medical education and health regulatory systems.
Building public housing for the poor is important, but affordable housing depends on the presence of critical market enablers, such as a mortgage market and making low-income housing attractive to developers.
Coal-block auctions are not the same as creating a liquid and broad-based market for coal. Labor market reforms are not just about changes to a few labor regulations but should also address the deeper causes of the predominance of the informal sector.
In all these cases, the immediate and the quantifiable, in addition to being important policy ingredients, are essential for the political economy.
Popular narratives on each of these issues are woven around the immediate and quantifiable. Governments doubtlessly need to do the immediate and the quantifiable more effectively.
But the important and the structural, which involve strategic choices, lay the foundation for more sustainable growth. The latter are as diffuse and transactional as the former are focused and logistical or decisional.
Furthermore, even as the former are the business of individual sectoral departments, the latter require very close interdepartmental coordination. They also entail making difficult trade-offs, taking on strong and entrenched interests, and embracing a long and tough slog—all of which require mobilizing broad-based coalitions.
The central government should view the former as hygiene factors, to be rigorously monitored for their effective implementation. This would placate the opinion makers and political constituency, besides ensuring achievement of program outcomes. Even though the near double-digit growth would not materialize, the government would most likely win another term in office. But what would elevate the government’s legacy to a different level would be its commitment and ability to plan and execute the strategic reforms.
While the immediate and quantifiable can be a large laundry list, the list of strategic reforms would have to be more carefully thought out.
The ministries may be empowered and motivated sufficiently to lend leadership to the effective implementation of their programs. But the success of the important and the structural would require political leadership at the highest level. In fact, given the nature of these reforms, tackling them would require considerable political capital and systemic bandwidth.
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The United Nations has shaped so much of global co-operation and regulation that we wouldn’t recognise our world today without the UN’s pervasive role in it. So many small details of our lives – such as postage and copyright laws – are subject to international co-operation nurtured by the UN.
In its 75th year, however, the UN is in a difficult moment as the world faces climate crisis, a global pandemic, great power competition, trade wars, economic depression and a wider breakdown in international co-operation.
Still, the UN has faced tough times before – over many decades during the Cold War, the Security Council was crippled by deep tensions between the US and the Soviet Union. The UN is not as sidelined or divided today as it was then. However, as the relationship between China and the US sours, the achievements of global co-operation are being eroded.
The way in which people speak about the UN often implies a level of coherence and bureaucratic independence that the UN rarely possesses. A failure of the UN is normally better understood as a failure of international co-operation.
We see this recently in the UN’s inability to deal with crises from the ethnic cleansing of the Rohingya Muslims in Myanmar, to civil conflict in Syria, and the failure of the Security Council to adopt a COVID-19 resolution calling for ceasefires in conflict zones and a co-operative international response to the pandemic.
The UN administration is not primarily to blame for these failures; rather, the problem is the great powers – in the case of COVID-19, China and the US – refusing to co-operate.
Where states fail to agree, the UN is powerless to act.
Marking the 75th anniversary of the official formation of the UN, when 50 founding nations signed the UN Charter on June 26, 1945, we look at some of its key triumphs and resounding failures.
Five successes
1. Peacekeeping
The United Nations was created with the goal of being a collective security organisation. The UN Charter establishes that the use of force is only lawful either in self-defence or if authorised by the UN Security Council. The Security Council’s five permanent members, being China, US, UK, Russia and France, can veto any such resolution.
The UN’s consistent role in seeking to manage conflict is one of its greatest successes.
A key component of this role is peacekeeping. The UN under its second secretary-general, the Swedish statesman Dag Hammarskjöld – who was posthumously awarded the Nobel Peace prize after he died in a suspicious plane crash – created the concept of peacekeeping. Hammarskjöld was responding to the 1956 Suez Crisis, in which the US opposed the invasion of Egypt by its allies Israel, France and the UK.
UN peacekeeping missions involve the use of impartial and armed UN forces, drawn from member states, to stabilise fragile situations. “The essence of peacekeeping is the use of soldiers as a catalyst for peace rather than as the instruments of war,” said then UN Secretary-General Javier Pérez de Cuéllar, when the forces won the 1988 Nobel Peace Prize following missions in conflict zones in the Middle East, Africa, Asia, Central America and Europe.
However, peacekeeping also counts among the UN’s major failures.
2. Law of the Sea
Negotiated between 1973 and 1982, the UN Convention on the Law of the Sea (UNCLOS) set up the current international law of the seas. It defines states’ rights and creates concepts such as exclusive economic zones, as well as procedures for the settling of disputes, new arrangements for governing deep sea bed mining, and importantly, new provisions for the protection of marine resources and ocean conservation.
Mostly, countries have abided by the convention. There are various disputes that China has over the East and South China Seas which present a conflict between power and law, in that although UNCLOS creates mechanisms for resolving disputes, a powerful state isn’t necessarily going to submit to those mechanisms.
Secondly, on the conservation front, although UNCLOS is a huge step forward, it has failed to adequately protect oceans that are outside any state’s control. Ocean ecosystems have been dramatically transformed through overfishing. This is an ecological catastrophe that UNCLOS has slowed, but failed to address comprehensively.
3. Decolonisation
The idea of racial equality and of a people’s right to self-determination was discussed in the wake of World War I and rejected. After World War II, however, those principles were endorsed within the UN system, and the Trusteeship Council, which monitored the process of decolonisation, was one of the initial bodies of the UN.
Although many national independence movements only won liberation through bloody conflicts, the UN has overseen a process of decolonisation that has transformed international politics. In 1945, around one third of the world’s population lived under colonial rule. Today, there are less than 2 million people living in colonies.
When it comes to the world’s First Nations, however, the UN generally has done little to address their concerns, aside from the non-binding UN Declaration on the Rights of Indigenous Peoples of 2007.
4. Human rights
The Human Rights Declaration of 1948 for the first time set out fundamental human rights to be universally protected, recognising that the “inherent dignity and of the equal and inalienable rights of all members of the human family is the foundation of freedom, justice and peace in the world”.
Since 1948, 10 human rights treaties have been adopted – including conventions on the rights of children and migrant workers, and against torture and discrimination based on gender and race – each monitored by its own committee of independent experts.
The language of human rights has created a new framework for thinking about the relationship between the individual, the state and the international system. Although some people would prefer that political movements focus on ‘liberation’ rather than ‘rights’, the idea of human rights has made the individual person a focus of national and international attention.
5. Free trade
Depending on your politics, you might view the World Trade Organisation as a huge success, or a huge failure.
The WTO creates a near-binding system of international trade law with a clear and efficient dispute resolution process.
The majority Australian consensus is that the WTO is a success because it has been good for Australian famers especially, through its winding back of subsidies and tariffs.
However, the WTO enabled an era of globalisation which is now politically controversial.
Recently, the US has sought to disrupt the system. In addition to the trade war with China, the Trump Administration has also refused to appoint tribunal members to the WTO’s Appellate Body, so it has crippled the dispute resolution process. Of course, the Trump Administration is not the first to take issue with China’s trade strategies, which include subsidises for ‘State Owned Enterprises’ and demands that foreign firms transfer intellectual property in exchange for market access.
The existence of the UN has created a forum where nations can discuss new problems, and climate change is one of them. The Intergovernmental Panel on Climate Change (IPCC) was set up in 1988 to assess climate science and provide policymakers with assessments and options. In 1992, the UN Framework Convention on Climate Change created a permanent forum for negotiations.
However, despite an international scientific body in the IPCC, and 165 signatory nations to the climate treaty, global greenhouse gas emissions have continued to increase.
Under the Paris Agreement, even if every country meets its greenhouse gas emission targets we are still on track for ‘dangerous warming’. Yet, no major country is even on track to meet its targets; while emissions will probably decline this year as a result of COVID-19, atmospheric concentrations of greenhouse gases will still increase.
This illustrates a core conundrum of the UN in that it opens the possibility of global cooperation, but is unable to constrain states from pursuing their narrowly conceived self-interests. Deep co-operation remains challenging.
Five failures of the UN
1. Peacekeeping
During the Bosnian War, Dutch peacekeeping forces stationed in the town of Srebrenica, declared a ‘safe area’ by the UN in 1993, failed in 1995 to stop the massacre of more than 8000 Muslim men and boys by Bosnian Serb forces. This is one of the most widely discussed examples of the failures of international peacekeeping operations.
On the massacre’s 10th anniversary, then UN Secretary General Kofi Annan wrote that the UN had “made serious errors of judgement, rooted in a philosophy of impartiality”, contributing to a mass murder that would “haunt our history forever”.
If you look at some of the other infamous failures of peacekeeping missions – in places such as Rwanda, Somalia and Angola – it is the limited powers given to peacekeeping operations that have resulted in those failures.
2. The invasion of Iraq
The invasion of Iraq by the US in 2003, which was unlawful and without Security Council authorisation, reflects the fact that the UN is has very limited capacity to constrain the actions of great powers.
The Security Council designers created the veto power so that any of the five permanent members could reject a Council resolution, so in that way it is programmed to fail when a great power really wants to do something that the international community generally condemns.
In the case of the Iraq invasion, the US didn’t veto a resolution, but rather sought authorisation that it did not get. The UN, if you go by the idea of collective security, should have responded by defending Iraq against this unlawful use of force.
The invasion proved a humanitarian disaster with the loss of more than 400,000 lives, and many believe that it led to the emergence of the terrorist Islamic State.
3. Refugee crises
The UN brokered the 1951 Refugee Convention to address the plight of people displaced in Europe due to World War II; years later, the 1967 Protocol removed time and geographical restrictions so that the Convention can now apply universally (although many countries in Asia have refused to sign it, owing in part to its Eurocentric origins).
Despite these treaties, and the work of the UN High Commission for Refugees, there is somewhere between 30 and 40 million refugees, many of them, such as many Palestinians, living for decades outside their homelands. This is in addition to more than 40 million people displaced within their own countries.
While for a long time refugee numbers were reducing, in recent years, particularly driven by the Syrian conflict, there have been increases in the number of people being displaced.
During the COVID-19 crisis, boatloads of Rohingya refugees were turned away by port after port. This tragedy has echoes of pre-World War II when ships of Jewish refugees fleeing Nazi Germany were refused entry by multiple countries.
And as a catastrophe of a different kind looms, there is no international framework in place for responding to people who will be displaced by rising seas and other effects of climate change.
4. Conflicts without end
Across the world, there is a shopping list of unresolved civil conflicts and disputed territories.
Palestine and Kashmir are two of the longest-running failures of the UN to resolve disputed lands. More recent, ongoing conflicts include the civil wars in Syria and Yemen.
The common denominator of unresolved conflicts is either division among the great powers, or a lack of international interest due to the geopolitical stakes not being sufficiently high. For instance, the inaction during the Rwandan civil war in the 1990s was not due to a division among great powers, but rather a lack of political will to engage.
In Syria, by contrast, Russia and the US have opposing interests and back opposing sides: Russia backs the government of the Syrian dictator Bashar al-Assad, whereas the US does not.
5. Acting like it’s 1945
The UN is increasingly out of step with the reality of geopolitics today.
The permanent members of the Security Council reflect the division of power internationally at the end of World War II. The continuing exclusion of Germany, Japan, and rising powers such as India and Indonesia, reflects the failure to reflect the changing balance of power.
Also, bodies such as the IMF and the World Bank, which are part of the UN system, continue to be dominated by the West. In response, China has created potential rival institutions such as the Asian Infrastructure Investment Bank.
Western domination of UN institutions undermines their credibility. However, a more fundamental problem is that institutions designed in 1945 are a poor fit with the systemic global challenges – of which climate change is foremost – that we face today.