It Is Not True That Privatisation Is Off; It Is More Time-Consuming: Bibek Debroy

With just 15 days left for the Narendra Modi government to complete three years in office, with a mixed bag of achievements and failures, there’s huge disappointment among some of its ardent supporters on one score – the lack of administrative reforms and the downsizing of government. The latter was expected to be the natural consequence of the ‘minimum government, maximum governance’ slogan. Bibek Debroy, member, NITI Aayog, however, points out that a lot has indeed been done. Debroy, who oversees the NITI initiative on legal reforms, says states are also getting their act together on this. Excerpts from an interview:

Far from getting minimum government, we seem to be continuing with an all-pervasive government. . .

I don’t think it is a fair criticism because when you are saying that, you are looking at it with a certain lens. Which may be a valid way of looking at it, but there are certain things you are missing out because they don’t seem big enough to you. At random, let me give some examples.

Firstly, the union government statutes numbered around 2,500. Through repealing Acts, about 1,300 statutes have just been deleted. So today you are left with 500 or less union government statutes. There are another 230 which have to be repealed by states because of the Seventh Schedule [which sets out the union, concurrent and state lists]. So the union government has asked the state governments.

Two, there were around 35 tribunals. These are being rationalised into about 15. Some are required legislatively. Ratan Watal [principal adviser at the NITI Aayog] is heading a group looking into this.

Three, after repealing laws, there is a need to consolidate and harmonise the remaining ones. There is a process going on to consolidate all labour statutes [more than 50] into four codes relating to safety, social security, industrial relations and wages.

So if you say you are doing the easy bits first, of course. But you can’t say the hard bit is not happening.

Next we move on to the rules area. The commerce and industry ministry website has a long list on what they have done on rules, with the existing statutes, moving to online processes, self-certification, reducing human interface. Even that, I would say, is reduction in government. Something along similar lines in states is being driven by the department of industrial policy and promotion.

Then there is e-procurement – the Government e-Market (GeM), which initially did not include the railways but now does. That is a pretty huge thing.

And then there is ending of interviews for entry-level posts. Is that reduced government? It is.

Some years ago you had written an article about the need to abolish certain ministries at the centre, merge others and the savings that this would bring. Isn’t that something that needs to be done? Do we need an agriculture or rural development ministry at the centre?

When people say enough is not being done, what they mean is this. On that my argument is that we are going through an institutional change. The Plan-non Plan distinction, there are the Fourteenth Finance Commission recommendations, the Shivraj Singh Chouhan report on rationalising centrally sponsored schemes. Now all of this leads to a change in public expenditure at the state level. State governments have not yet adjusted themselves to the new situation. All of this is a kind of shock to which the system needs to adjust. Until the system has readjusted, I think it is premature to expect the ministries and departments to go away.

It is all very well to say, what does the ministry of rural development do, there is no money going through it. But many of these ministries have very powerful dashboards. Pradhan Mantri Gram Sadak Yojana – how many roads have been built, where have they been built, who is monitoring them, what are the kind of contracts given? Once we evolve into a system where the state governments do it, you don’t need the ministry of rural development.

Why do you need a whole ministry for a couple of dashboards? Can’t this be done in NITI Aayog or the Prime Minister’s Office?

Yes, NITI has just started the dashboards. I am not contesting the doing away with ministries and departments as a terminal goal; what I am saying is if you were to ask this question in 2019 it is a good question. Today, if we just removed it, I think that the monitoring thing will also collapse. Because where does NITI get it from? From the ministries. I am not saying every ministry is doing a great job of this. But wherever the dashboards exist, it is because the ministries are driving the states.

Also, what happens to all the employees in these ministries? You can’t sack all of them in one go.

There’s a similar situation in the states. Another thing which NITI has flagged off is rationalising the number of departments in states. We did back-of-the-envelope estimates that no state should have more than 25-30 departments. Jharkhand has reduced the number of departments from 43 to 31. But we backed off because all of them are adjusting to this new system. Because of all this going on, it is perhaps too early.

The Prime Minister has said that the government should not be in business. That should have seen the government exiting public sector enterprises (PSEs) in a big way. Instead, you only talk about the decision on reviving PSEs only on the basis of sound commercial principles, closing down only loss-making ones etc.

NITI is now the counterpart of the Disinvestment Commission. This is a continuing process. NITI put PSEs in different buckets. First there were ones where revival plans were already going on, particularly if they were mandated by courts; you needed to treat them differently. Secondly, there were the those that had lawsuits that were basically related to labour issues. So long as there were pending cases, you needed to look at them differently.

Thirdly, you needed an inventory of land that all PSEs had. This inventory did not exist till very long ago. Often one has the impression that this land is owned by the PSE. It isn’t. In the vast majority of cases, it is owned by the state government and has been given on lease with certain conditions. When I am valuing a PSE, probably the largest bit of value may be because of the land. So if it is owned by the state government, you have to ask if it wants the land back. So you also need to break them up depending on who owns the land.

After this, there are PSEs which are listed and those that are not. Since you have valuation problems, it makes everyone’s task easier if you at least list it. After this, there are instances where you might want to bring the government equity to below 50 per cent before you sell it. There might be ones that you want to hawk off as it is. But sometimes the market is such that it is not a great time to be hawking it off. You may not have a large number of buyers in any case.

So it is not true that the distinction is based on profit making and loss making. These are all artificial numbers because even if I am earning a profit of 2 per cent, the question that needs to be asked is, what is the opportunity cost of those resources? We do a recommendation, after which the implementation has to be done by the line department. The process takes a little bit of time. The report is the easy part, seeing it through is the more difficult part.

But the philosophical basis is not there. It is all about earning revenue than about getting the government out of business.

No, because there are instances when you are actually selling them off. So it is not true that privatisation is off. Not philosophically. What is true is that from the implementation point of view, privatisation is a little bit more time-consuming because it is a little bit more controversial.

Why?

Because these are essentially going to be all strategic sales. There is a history of controversies around strategic sales. All that means is that one will have to be a little bit more careful.

NITI Aayog has been pushing for legal reform in states. What has been the progress?

Rajasthan has reduced the number of Acts from 900 to 250 after repeal and rationalisation. There are a few pending tasks after which it will be down to 200. And then, everything will be put up online, not just the Acts but also the rules. That was, originally, not part of the plan but now is.

The really successful one in Rajasthan was the higher education law. There was a court judgement that caused a bit of a problem. It essentially said that any private university needed to be set up through a statute. So there were over 70 statutes on higher education alone. How do you rationalise it into a single statute? Eventually what we did and also satisfied the court was to have a single statute with several schedules. It sounds like a trivial thing, but it was a huge victory, so to speak.

In the case of Jammu and Kashmir, we are rationalising all their labour and employment-related laws. We have got requests from Maharashtra and Uttarakhand. Maharashtra has repealed around 70 Acts. The repealing part is easy. The more difficult is the rationalisation and harmonisation. Assam has also approached us for help on laws relating to land.

But if one starts looking at it from an ideological position on the role of the state, then a further reduction of laws is possible. In Rajasthan, there is a statute called the Boating Regulation Act. Do you want the state to do that? Maybe not. But it requires a debate on the role of the state. Working with all these states and their laws, I think, roughly, no state should have more than 100 statutes given the Seventh Schedule. Provided you accept this ideological position. But first let’s do this part [repealing, harmonising, rationalising], then let’s come to that.