P V Narasimha Rao (RAVEENDRAN/AFP/GettyImages)
Snapshot
  • The Modi government pioneered 10x improvement in public administration was Centre-led, pan-India, broad based and truly systemic.

When reviewing governance, the media often tends to focus on a government’s ideology. A more pragmatic and useful approach is to focus on its administrative competence. Lee Kuan Yew was guided by “reason and reality” to deliver positive outcomes, without concern for ideological tags. Administrative competence is the ability to substantially improve citizens’ quality of life while operating within real-world constraints. Improvements to public health, safety, infrastructure, farm productivity, education and livelihood are measurable dimensions on which governments should be judged.

An evidence-based, holistic, historical assessment reveals two types of governments at opposite ends of the competence spectrum. As a descriptive shortcut, these are referred to as ‘10x’ and ‘10%’ governments.

Venture capitalists (VCs) love the phrase 10x, not merely as a reference to returns they hope to make but as an allusion to a dramatically newer and better way of doing things. VCs refer to 10x-impact-hires as one of the things they bring to start-ups. The 10 in 10x is more metaphorical than numerical. It implies a step-jump, a new way of doing things, a clear break from prior trend-line or status quo, an organisation reaching a new level of performance.

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10x isn’t limited to high-tech or to start-ups, although technology-led disruption can increase odds of such leaps happening. Alcoa, Walmart, Haber-Bosch, Uber, iPhone and Toyota had a 10x impact on their respective domains. Countries too have witnessed 10x, led by the likes of Lee Kuan Yew, Deng Xiaoping and the Meiji Restoration.

10% on the other hand is an ode to Pakistan’s Asif Ali Zardari, a man who made more money than any VC. Notwithstanding its literal reference to endemic corruption, the 10% label refers to a much broader set of administrative deficiencies than corruption alone. 10% refers to an anachronistic way of running a country with a mindset that is crony-capitalist, nepotistic, rent-seeking and distortionary. 10% goes beyond delivering poor outcomes for current stakeholders. It locks in generations of future stakeholders into a quagmire of poor outcomes through deep-rooted, widespread and long-lasting institutional rot. 10% is a negative-sum game that enriches undeserving agents at the expense of true stakeholders.

10% is easy to spot, especially as it’s much more prevalent across developing countries. 10x is rare because it requires delivered, measurable, sustainable and substantially improved outcomes that better lives of large sections of population.

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In theory, 10% and 10x are neither mutually exclusive nor collectively exhaustive. In practice, 10% and 10x are valid descriptors of the overarching thread running through two very different systems of governance.

Phases Of Independent India, As Viewed Through This Framework

a. Jawaharlal Nehru, Indira Gandhi and Rajiv Gandhi: 10% becomes India’s default setting

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Nehru, Indira Gandhi and Rajiv Gandhi were appallingly incompetent public administrators. In terms of input metrics, they fostered a culture of red tape, sloth, over-reach and complete lack of accountability. In terms of output metrics, they delivered public services that ranged somewhere between non-existent and abysmal. These are best illustrated by the state of India’s primary education system that ruined prospects for many a generation. A few institutes of higher education did become global brands but this was on account of automatic filtering of the best minds from a large population in the absence of other options. Poor economic growth and high inflation became the norm in what should have been labelled Nehru-Gandhi rate of growth. Corruption started early (Jeep scam of 1948) to spread wide and fast. As a finishing touch, Nehru inducted Indira Gandhi to place Indian politics inevitably on a dynastic path.

While the rot started under Nehru, who was more philosopher than administrator, Indira Gandhi deserves special mention for delivering numerous 10x outcomes in the wrong direction. Let us call it negative 10x! She personally led 10x leaps in corruption, sycophancy, government overreach (bank nationalisation), politicisation of all administrative machinery (bureaucracy, police, judiciary) and systematic undermining of public institutions. She set dangerous precedents on several fronts such as exercising unfettered power without accountability (Sanjay Gandhi), toying with national security for political gain (Punjab) and a blatant disregard for law.

Not to be outdone, Rajiv Gandhi frittered away a four-fifths parliamentary majority to deliver 10x leaps in minority appeasement (Shah Bano), undermining electoral sanctity (1987 J&K) and foreign policy overreach (IPKF).

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While India’s overarching thread was clearly one of a 10% administration, it is worth asking whether there were any 10x achievements during this long phase? One could argue that India continuing to be a functioning democracy with peaceful transitions of power was a 10x achievement on Nehru’s part, although his daughter did her best to negate even this. One could give credit to Nehru for a constitution more progressive than any preceding set of laws India had seen.

However, dysfunctional police and judiciary ensured that this achievement remained more in theory than in practice. India’s white revolution in milk and green revolution in grains could be viewed at 10x. However, these are more idiosyncratic than systemic, since agriculture remained a high-risk, low-reward, over-regulated, monsoon-dependent activity over this entire period with distortions from especially badly run entities such as Food Corporation of India and Public Distribution System (PDS). Further, both these revolutions trace their roots back to Lal Bahadur Shastri, whose tenure was unfortunately too short to stem India’s continuous decline.

Circa 1991, Indian public administration was firmly entrenched in 10% mode and could hold its own against the finest banana republics of the world.

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b. Rao: 10x, though limited to ‘stroke-of-the-pen’ domains

With his fortuitous ascension to the highest office in the land, P V Narasimha Rao drove India’s first break with 10% culture, albeit along a single dimension that could be labelled ‘stroke-of-the-pen’ changes. This label is descriptive rather than judgmental, as Rao deserves unambiguous praise for pioneering India’s first break from its hitherto disastrous trajectory. It took non-trivial courage, intellect and effort to even attempt to dent the institutional inertia caused by 44 years of rot. Rao judiciously used political capital, pragmatically picked winnable battles, cleverly tackled areas of maximum impact and cunningly manipulated the executive and legislature to push his plans through.

One could loosely segment attempts to substantially improve public administration into two categories: (1) stroke-of-the-pen and (2) systemic overhaul. Stroke-of-the-pen only requires legislative change or executive orders and is usually limited to reducing government’s role, discretion or levy. This is usually limited to domains of federal power where a single centralised ‘stroke’ will do, rather than in more unwieldy domains of state or concurrent power. Doing away with industrial licensing or reducing import tariffs are examples of stroke-of-the-pen changes.

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Systemic overhaul efforts usually require coordination across multiple arms of government as well as an extended ecosystem (e.g. PSUs, contractors, financiers, local bodies) and require changes that are distributed and ‘physical’ in nature. Switching the majority of India from firewood to cooking gas, building world-class infrastructure or improving the state of Indian agriculture would be impossible merely using stroke-of-the-pen and would require systemic overhaul in the face of an established 10% culture and well-entrenched vested interests across an entire value chain.

Rao’s 10x achievement lay in twin gains of fundamentally reversing government overreach and unshackling India’s private sector from a morass of interference, cronyism, tariffs, distortions and trade barriers. This trend reversal in government’s role and industry’s freedom has been central to India stepping up to a new growth trajectory and hasn’t been reversed despite many subsequent 10% governments at the centre.

Rao’s economic achievements were so revolutionary that they overshadow his 10x achievements in national security and foreign policy. Rao cleaned up the situation in Punjab and contained problems in Kashmir. He drove India’s nuclear doctrine to its logical conclusion, effectively navigated a post-cold-war world and publicly formalised relations with Israel as a key defence partner.

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Rao was to Indian administration what Sourav Ganguly was to Indian cricket. Despite inheriting a broken, demoralised system ruined by inept and corrupt leadership, both leaders trusted, unshackled and backed meritorious players through tough times to take the team to a new level of confidence and world-beating performance. In doing so, they eased the road for the captains who followed. All things considered, India’s debt to Rao is immeasurable.

c. Vajpayee: first attempt at systemic overhaul at centre

Vajpayee continued Rao’s legacy of stroke-of-the-pen changes to achieve 10x outcomes. His new telecom policy of moving from fixed-fee to revenue-share as well as Electricity Act of 2003 materially changed subsequent trajectories of their respective industries for the betterment of consumers. However, he went one step beyond Rao in attempting, for the first time in Indian history, centrally driven systemic overhaul to achieve 10x outcomes. While he wasn’t personally a hands-on administrator, he managed to place competent administrators like B C Khanduri, Arun Shourie and Suresh Prabhu in key ministries and provided them with political cover.

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Khanduri’s national highway construction effort was the most significant and daunting 10x that India had attempted and achieved till then. This was no stroke-of-the-pen magic. This required coordination across multiple government agencies in structuring and awarding contracts, coordination between central and state governments, using carrot-and-stick to drive timely execution and managing tedious processes such as land acquisition, environment clearances and local approvals. For the first time in six decades, Khanduri proved that India could build world-class infrastructure at scale and drive systemic overhaul across a messy concurrent subject.

Shourie’s privatisation programme counts as a 10x for its scope and daring. This also required a lot more than mere stroke-of-the-pen as the government had to involve multiple stakeholders, convince unions and run a complicated yet transparent process of sale. While this deserves credit for going where no babu had gone before, it is unclear whether quantum of benefit justified the political capital expended herein. This was a laudable idea, perhaps ahead of its time.

Vajpayee also delivered a 10x on the macroeconomic front. He ran India’s first 5 per cent inflation government in history, driving a step-drop in interest rates to unprecedented lows. For the first time in India’s history, capital became both available and cheap. Vajpayee achieved inflation control by eschewing populism and demonstrating fiscal discipline. Despite sanctions and an economic down-cycle, he delivered higher economic growth than any PM before him. Holistically viewed, Vajpayee’s economic management was more prudent and competent than that of any of his predecessors. He is best judged by what he inherited and what he passed on – he doubled gross domestic product (GDP) growth over this tenure while controlling inflation to drive interest rates to fall by half. When he left office, India was truly shining.

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d. State CMs: taking the lead in systemic overhaul, over the past two decades

For the first five decades after Independence, public administration in the states simply mirrored the 10% culture set by the Centre. In fact, states were worse since Indira Gandhi’s and Rajiv Gandhi’s primary criterion for appointing state chief ministers was fawning sycophancy. Non-congress states too followed a similar culture across India from casteist-socialists of north India to the Dravidian parties of the south. With more choices at the state level, India’s populace responded to this 10% culture with an anti-incumbent voting pattern. However, since all choices were 10% ones, states merely alternated between marginally different 10% governments. Ironically, this anti-incumbency trend may have worsened 10% culture since each grouping knew that they had five years to fill their personal coffers before their turn was up.

Somewhere between late 1990s and early 2000s, this trend started to change across a range of states and eventually heralded a state-level governance revolution that in turn led to sharply reduced anti-incumbency effects in those respective states. Chandrababu Naidu was the first to focus on improving quality of public administration and marketing the same, though he did better at the latter than the former. However, he gets a guarded 10x tag for being the first state CM to improve areas such as e-governance and proactively attracting corporate investments in the state.

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More substantial 10x improvements at the state level started in the early 2000s as multiple CMs systematically overhauled public administration to deliver a clear break from the past. Bihar’s law and order saw a 10x improvement after Nitish Kumar took over. Madhya Pradesh and Gujarat saw agriculture grow at an unprecedented 10 per cent annually for a decade, on the back of structural changes in irrigation, procurement, rural infrastructure, electricity and agri-input ecosystems. Chhattisgarh saw material reform of its PDS system to reduce leakage and improve service delivery to the state’s poor. Gujarat’s electricity reform at the last mile to reduce theft took both technical efforts like feeder separation and political will. Across this slew of illustrations, changes were brought about through the hard grind of systemic overhaul and not merely stroke-of-the-pen. As validation of their 10x outcomes, these state governments were repeatedly returned to power by an informed and appreciative public.

This state-level step-change in public administration was truly revolutionary, both in its direct and indirect effects. While direct effects improved the lives of that state’s residents, the most significant indirect effect was the pressure it placed on all other states to up their game. State governments who couldn’t improve public administration suffered both electorally in the face of heightened expectations and administratively as investors simply chose better governed states. Tata Nano didn’t merely move a factory from Bengal to Gujarat, but catalysed the creation of independent India’s first greenfield automobile manufacturing hub around Sanand. This indirect effect also had an inter-generational dimension, as incoming CMs can now see a viable path to fulfilling their political ambitions through administrative competence rather than populism or casteism.

These indirect effects culminated in a CM who could credibly market a state-administration-model as the centrepiece of a national electoral campaign. 2014 marked India’s first national election that was fought on a platform of delivering superior development through administrative competence, backed by a proven track record at the state level.

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e. Sonia: regression to 10% and worse

Sonia Gandhi’s government ran more in line with family tradition than with administrative trends of the time. Coming a decade after Rao, following Vajpayee and being contemporaneous with the 10x revolution in many states, it was especially tragic for India to have its central government regress to 10% mode. Worse, this was accompanied by a slew of 10x moves in the wrong direction.

The first signs were administrative incompetence. Shivraj Patil’s ‘dress-change’, Patil’s handling of 26/11 attacks, A K Antony paralysing defence procurement, T R Baalu shuffling National Highways Authority of India chairmen without building a single road, Mamata’s rail budget showboating, Jairam (Ramesh) and Jayanthi’s (Natarajan) environmental non-clearances are just a few illustrations. The government believed that passing poorly thought through (thanks to National Advisory Council or NAC) and shoddily drafted bills titled “right to something-or-other” was a substitute for on-the-ground changes. Right to Education, National Rural Employment Guarantee Act, and Right to Food bills were particularly damaging. NAC, Rahul and Sonia’s closest sycophants functioned as extra-constitutional authorities, taking the system into a maze of eGOM committees and policy paralysis. Pakistan got unintended multiplier from their terror attack as this chain of events led to retro-tax, 12 per cent inflation, 6 per cent fiscal deficit and 4 per cent growth by 2013.

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Sonia Gandhi capped 10x in administrative incompetence with another 10x in corruption. While corruption is endemic to political parties, India had never witnessed it in such a blatant, all-pervasive, distortionary and gargantuan form. For a decade, coal blocks were handed out in a 100 per cent discretionary manner to unqualified cronies. A back of the envelope calculation using appropriate ‘rack-rates’ indicates bribes running well into a five-digit crore figure (this isn’t a notional loss, but what was actually paid in either cash or benami ownership in coal companies). Manmohan Singh watched silently and shamelessly as H C Gupta was sent to jail for corrupt acts committed as coal secretary.

Ministries including but not limited to environment, telecom, highways, defence and railways mimicked the same behaviour. This government brought in an all-out maximising approach to corruption, whose consequences are seen even today in bank balance sheets and corporate defaults. United Progressive Alliance didn’t rest idle with 10x on incompetence and corruption but extended to damage to institutions. Minority appeasement went 10x with the Communal Violence bill. Populism gained 10x with a nationwide farm loan waiver.

Unsustainable bubbles, both global (financial markets/flows, commodities) and local (real estate, power), masked the true magnitude of damage being done by Sonia Gandhi’s government for a while. However, when the haze cleared, it was so obvious that this was India’s worst 10% government. While this government eventually experienced poetic justice, the sheer scale and scope of damage makes one wonder if it came a way too late.

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f. Modi: 10x through complete systemic overhaul at the Centre

Modi sarkar marked the confluence of disparate positive developments in public administration, witnessed across regimes of Rao, Atal Bihari Vajpayee and competent CMs. The Modi government pioneered 10x improvement in public administration was Centre-led, pan-India, broad based and truly systemic.

1. Macroeconomy: Holy trinity

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7.5 per cent growth, 4 per cent inflation, 3 per cent fiscal deficit. This holy trinity of balanced macroeconomic progress has never been achieved before, let alone during a phase of muted global growth, complex indirect tax reform and poor monsoons. Further, this trinity has been achieved without undisciplined lending and while lowering central government’s debt to GDP ratio.

2. Corruption: Dismantling 10% culture

Two early developments went unnoticed. First, Modi forbade ministers from appointing relatives as personal assistants. Second, son of a senior minister was publicly shamed for trying to ‘engineer’ postings. The unambiguous message was that it was no longer business as usual. Transparent auctions of natural resources amplified this message, as did appointing (Manohar) Parrikar and Prabhu to head the largest pockets of direct government spend.

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Modi scaled this 10x from Centre to the whole ecosystem. Direct electronic cash transfers eliminated fake beneficiaries and plugged leakage. PAN was made mandatory for most transactions. Financial transactions that could be electronically tagged with Aadhaar, PAN or goods and services tax (GST) registration rose >100x. Demonetisation and GST helped. Shell companies were closed. Regulations on bankruptcy and benami transactions were operationalised. India is 10x ‘whiter’ under Modi sarkar.

3. Direct Benefit Transfer: Effective, efficient socialism

Electronic transfer from government to citizens crossed Rs 2 lakh crore this year and Rs 6 lakh crore cumulatively since 2014, up from essentially nothing before then. This has already made a 10x dent in distributed corruption. A proven, effective and efficient channel to deliver targeted benefits to the deserving will lead to many more 10x outcomes as scope expands to include fertiliser subsidies and maybe universal basic income.

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4. Insolvency and Bankruptcy Code (IBC): Finally, capitalism reaches India

In terms of fundamentally changing culture, nothing comes close to IBC. Earlier, crony promoters treated bank loans as free money and viewed their hold on companies as permanent. IBC fundamentally changed this. It rewrote lender-borrower contract, made errant promoters lose their businesses, instilled fear in borrowers and catalysed a 10x improvement in quality of lending. It is shameful that India had to wait seven decades for a functional bankruptcy code.

5. GST: Fine and federal

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A fair review of GST starts with the recognition that this a tax reform of unprecedented scale, scope and complexity. Placed into this context, GST implementation is creditable. Apart from inherent simplification and traceability benefits, GST deserves a 10x tag on two other fronts. First, the truly federal process of roll-out through consensus at GST council is unprecedented. Notwithstanding political posturing, this was an ideal way to roll out big-bang reform in an unwieldy democratic polity. Second, GST deserves credit for administrative efficacy of the roll-out itself. This may sound counter-intuitive in the face of anecdotal reports of teething troubles. On a more systemic evaluation, we’ve seen timely transition, no supply disruptions, steady tax growth, contained inflation and lower effective tax rates.

6. Public health: Preventive Care

An ounce of prevention is worth a pound of cure. Sharply improved sanitation coverage and accelerated replacement of firewood with cooking gas are the most significant public health interventions in India’s history. These indirect interventions are likely to show 10x impact on India’s public health statistics, especially for women.

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7. Jan Dhan: Formal finance reaches Bharat

Over 350 million (mostly active) bank accounts to the unbanked in under five years is a 10x achievement. However, the true 10x has been in layering a slew of financial products onto these accounts that improve income, lower cost of credit and mitigate risk. Leakage-free government transfers boost income. Health, life, pension and crop insurance mitigate risk. RuPay cards lower credit costs. For the first time, India’s masses have an electronic financial footprint that will substantially improve ease and cost of securing formal credit.

Just like the Vajpayee years, this term too has seen improved 10x across road building, village electrification, household electrification, using NREGA to build local assets, affordable-housing, waterways, airport infrastructure, smart city projects, solar power and rail capex to boost safety and comfort. The Modi government scores 10x for eschewing populism with market-linked fuel price hikes, reasonable minimum support price increases and leaving farm loan waivers to states. Even a small step such as eliminating a separate rail budget is a 10x improvement on historic propensity towards showy projects in ministers’ home state.

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Ease of doing business has seen a step-jump, not merely due to global rankings but through state-level rankings that encourage systemic overhaul across competing states. We’ve witnessed 10x across a slew of areas such as digital connectivity, digital payments, tax filers and compliance, retirement benefits through Employees' Provident Fund Organisation (EPFO), MUDRA loans to underprivileged sections and LED lighting adoption.

A cursory observation of the political sentiment in the present day reveals two things. First, an unprecedented, desperate, nationwide effort for sworn political enemies to temporarily unite. Second, a shrill Goebbelsian attempt to manufacture a corruption scandal despite an unambiguous clean chit from a Supreme Court bench led by no less than former coup-leader and current Chief Justice of India. The first reflects depth of public appreciation for India’s first 10x government and its leader. The second reflects disappearance of 10% culture, as desperate politicians and biased media struggle to find a real scam. These two trends are driven partly by dim electoral prospects, but more importantly, by an existential threat to their entire 10% way of life.

2019 election is not about Bharatiya Janata Party vs opposition or Modi vs Rahul.

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At its core, 2019 election is a contest between a 10x future and a 10% one.

Author is an applied social scientist.

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