The Narendra Modi government must fundamentally reform the management of India’s government

May 19, 2014

The stage is now set for a new set of top managers of India’s government. The new BJP led government will start work in another week’s time.

During the last twenty three years of liberalisation, India has seen a sea change in the management of the private sector. Almost all aspects of management have changed, by and large, for the better: organisational structure, competitiveness, quality, performance, recruitment, training, remuneration. There is clearly room for improvement – especially in governance, manufacturing employment, agricultural productivity and environmental betterment.

However, this is not the picture when we look at the management (or the term commonly used       “administration”) of government. Do we have a structure and personnel of government that can deliver services, both social and economic, for a fairer society and an economy growing at 7-10%? (By government I also mean the public sector and regulatory authorities.)

The answer, to my mind, is no. The management of government has hardly changed in the last twenty three years, and consequently is under heavy stress. In these twenty three years, successive governments have tinkered with the system, but no serious attempt has been made to make it fundamentally more responsive, transparent, cleaner, and performance driven to serve a fairer society and a high growth economy.

The government gets the credit for initiating and continuing with economic reforms since 1991. This has played no small part in India’s progress in the last twenty three years.  Government’s success has been more at the policy level. But success at execution has been far less forthcoming. This is where management of government is critical to a better India.

I believe the Narendra Modi led BJP government should take their victory as a great opportunity to start on the task of improving the management of government. It is not going to be easy given the multiple layers of government in India. It is a long term task that requires steady commitment even as the government is beset by tactical day to day problems that require solutions.

Much of what ails India rests with the inability of government to perform in tune with a 21^st century India. The new government must make a start in fundamentally reforming the way government works.  Otherwise, performance and fairness will be personality driven and erratic.

Let’s start with the Centre, and one pilot State. India has no shortage of experts and experience that the Narendra Modi government can call upon to start and complete the reform process.

Regional Offices of RBI should have full-fledged Economics and Statistics Departments: Regional data and studies could give leads on national GDP and price trends

May 7, 2014

RBI Watch                                                                         Organization Development

Data and its interpretation play a key role in formulating policy at the Reserve Bank of India. In recent years, RBI has had apparently a difficult time forecasting GDP and inflation trends: generally, inflation has been higher and GDP has been lower than expected.

The RBI is primarily organised with centralised economics and statistics departments in Mumbai at its head office (it also has a regional office). To get better insight into what is happening in the economy at the national level, RBI needs more insight into the trends in the economy at a regional/state level.

To begin with, the RBI could start gathering data and conducting research on the major economic clusters in India. One way to look at this is in terms of the States that contribute to the predominant share of India’s GDP. This fits well with the way the RBI is organized: it has regional offices in the States.

To start with, I would suggest that the RBI should gather regional data from those states that are major contributors to India’s economy, e.g. Maharashtra, Uttarakhand, Tamil Nadu, Andhra Pradesh, Gujarat, West Bengal, Karnataka and Delhi. For this the RBI needs to develop full-fledged economics and statistics departments at its Regional Offices in these States, example, Mumbai, Dehradun, Chennai, Hyderabad, Ahmedabad, Kolkata, Bengaluru and Delhi.

Staff at these Offices should conduct research primarily on their region, and the linkages between the region and the national economy. Staff should be encouraged to write Working Papers as does the Staff at the Central Office.

Or RBI could pick the top three or four states that contribute to each of the three major sectors: services, industry and agriculture. Then pick the offices where regional economics and statistics departments need to be developed.

I would urge the RBI to explore the suggestion made in this note.