Policy Wise

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A Question of Incentives

The latest issue of Pragati: The Indian National Review looks at the some of the important challenges facing the Republic as it gets ready to celebrate its 60th birthday. The challenges are myriad: urban reforms, education, politics, public health e.t.c but the underlying theme is the same: poor governance. India’s inexorable match towards becoming a developed country faces hurdles in the form of the failure of the public delivery system.

Indians constantly bemoan the fact that they have one of the corrupt political classes in the world. While the brazenness of Indian politicians may indeed be unique, politicians are corrupt in almost every country. The only difference is that in countries like America, political corruption is more sophisticated, and in many ways institutionalized

While political corruption is indeed a problem, it is not something which affects the citizen directly. Even the most egregious example of political corruption in the last two decades–Bofors–cost the nation only 60 crores. What is really detrimental to India’s growth, and the quality of life of her citizens is corruption at the functional level of the government. Studies have demonstrated that Indians pays thousands of crores of bribes every year to the police and municipal authorities, to give just two examples. And yet, the system is amazingly slow, refuses to respect the common citizen, and its general inefficiency and lethargy adversely affects the day to day existence of every Indian.

And this is what really distinguishes governance in India from more advanced countries. Take the traffic cop as an example. In India, it is almost given that traffic tickets can be waived for small bribes; in contrast, it is well nigh impossible to bribe the patrolman in the American police system. The same cop who may accept money from the bar owner to let him run his services unhindered would refuse to condone traffic offenses. The difference is palpably clear on the ground: Despite the much greater number of vehicles in America, traffic flow is much smoother compared to the madness one witnesses on Indian roads.

But why is the Indian politician so unconcerned about the abysmal quality of governance? After all, improved governance seems to make better political sense. Or does it?

Here the example of Delhi Metro Rail Corporation may be helpful. By all accounts, DMRC is a resounding success. In a country where delays in government projects are the norm rather the exception, DMRC has not only finished its projects on time– that too without cost overruns, but also delivered a product which is world class and comparable, if not better than metro systems in advanced countries. It is an excellent example of how one man’s (E. Sreedharan) hard work, perseverance and personal integrity can still make a difference.

What is even more remarkable is that despite thousands of crores worth of of contracts, there hasn’t been the slightest suspicion of corruption. Sreedharan has achieved this mainly by choosing a highly professional team and keeping the politicians out of the decision making process. But why has the political class meekly capitulated?

The Delhi Metro system was first conceptualized in the 1960’s. Practically nothing happened over the next thirty years while Delhi continue to grow. Finally, in 1997 Sreedharan was hired to head DMRC. Within five years, he had delivered a world class metro system to Delhi. On the day of its first run, millions of Delhites came out to ride this new marvel.

And that is the key. What Sreedharan delivered was something tangible and whose benefits could be seen and not just felt. Overnight, he became a middle class hero, and the political class, more eager to derive political benefits from the expanding metro system, has largely left him alone.

On the other hand, the tackling the primary issues of governance, with their long gestation period provide no immediate benefits. Worse, their benefits are less clear, and the politician may not even be credited for it. It would also require a major shake up of the status quo which most politicians with their safety-first class approach are disinclined to do. Hence the marked disinclination for reforms.

(to be continued)

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