Indian Bureaucracy a legacy of British Colonialism By Binod Singh

 The bureaucrats in India are called "Babu" in Hindi which also means father in the same language. They enjoy a father-like status across the country since the colonial era. In the independent India, they are credited with holding back the Indian economy for more than four decades by curtailing the entrepreneurial spirit of many Indians.

In fact India has been performing very poor until recently when it comes to economic freedom. People do enjoy the freedom to speak but not to start their own business. Politicians come and go after five years or so with few exceptions but a "Babu" retires after his full term and no one can fire him without running a trial at one of the lengthiest judicial court of India where one case may take 20 years to be disposed.

When China was liberated in 1949 it almost got rid of the old system and totally created a new bureaucracy from top to bottom. As the famous saying of chairman Mao goes: xian da sao fang jian. zai qing ke". Clean the house before inviting guests.

But the case was just the opposite in India. The country inherited an administration which was created by its British rulers to serve the interest of their Queen and the British parliament. The whole set of Indian Civil Services was designed and trained by the British with the aim of extracting maximum revenues from the local Indians. The same was the case with the Indian army which was trained to sing the song "Long live the Queen".

India's red-tapism started under the colonial rule when then British government held competitive examination in London to select some of the smart Indians to work as servants of British government. Now after 63 years of Indian independence, the country's native rulers have not much tempered with the colonial legacy gifted to them which was known for its "rule of law" and centralized administration.

The only reform we have seen is some positive discrimination against the upper caste candidates (mainly Brahmins) who were supposed to be promoted by the Colonial government as well as the Congress party under Nehru and Indira.

But still some of the top bureaucrats in India hail from top class Brahmin families who seem to inherit the post as their natural right. The 'Menon' family originating from the southern state of Kerala is one of the prime examples of family legacy in the officialdom of New Delhi.

Unlike China, the one thing good about India's bureaucrats is that there is no foreign worship when it comes to foreign nationals. They are equally good at curtailing foreign investment coming into the country.

A project may take years to get approval in India which would have been done in a month in China. In some cases the concerned minister (local or central) has to be approached to get the project approved. It was only recent reforms that some direct windows facilities were created for the foreign investors just to avoid the bureaucratic hackles.

The point we take back home is that it is difficult to overpass an Indian bureaucrat. After all these bureaucrats are selected by a very competitive examination process which has no parallel in the world. In fact some say that it was implemented by the British in India on the pattern of Chinese Imperial Examination to choose the Mandarin scholars known as "keJu zhidu".

India still practices the so-called" rule of avoidance" practiced in the Qing dynasty of China which required that a bureaucrat will not work in a region where their family lived, or where members of their family were in office. Every three odd years they are transferred which was also practiced during the Qing Empire.

Each year India selects its civil servants through a rigorous examination conducted in three stages: mainly the preliminary exam, the main exam and final interview. Each stage is equally important and the whole examination process lasts for more than a year. One is always advised to check his self-confidence before taking this exam as it may land you in a state of frustration if not successful in the four attempts allowed before the age of 30 years.

Out of hundreds and thousands of candidates each year, only between 200 to 300 candidates are finally selected to be sent for two year training in a hill station located in north India. This is the reason that Indian bureaucracy is still not as huge as China. The country has one of the lowest numbers of per capita officers and it believes in the concept of small government.

The minimum qualification for the exam is to be an undergraduate. But many of the top bureaucrats have higher degrees including doctorates, which they yearn after taking leave from the services. Most of Indian bureaucrats are self-proclaimed intellectuals or even possess a PhD degree or MBA from abroad in what is now becoming a trend in China too. But Chinese bureaucrats are supposed to buy degrees and not supposed to yearn it. If you happen to encounter an Indian bureaucrat you can drag him for a coffee and he will deliver a lecture for hours.

Last year Lant Pritchett, a professor at the John F. Kennedy School of Government of Harvard University published a manuscript on the efficiency of Indian bureaucracy and exposed the reality of intellectual bureaucrats in New Delhi. He was there to work for the World Bank and found the pathetic situation of the implementation of government policies planned at the Lutyens Delhi. He rightly decided to put a title to his report as "Is India a Flailing State? Detours on the Four Lane Highway to Modernization." His paper concluded that India has all the best policies and welfare major but it exists only on paper.

However I must remind here that what many believe that 'India has failed itself when it comes to governance and it is the private sector and NGOs who are running the show' are wrong. Some people do exaggerate the situation because of their frustration from the system. It is true that some middle class people may get stuck in the system and may not get the work done in time. But things are improving fast and people are becoming conscious of their rights.

There have been some honest officers who can run the one man show and things get moving. As the recent example of the Commonwealth Games in India displayed that despite various concerns the country did display an impressive show to the world.

Another successful example was the construction of Delhi Metro under the leadership of Mr. E. Sreedharan. who was figured in the TIME magazine for his excellence management of the Metro Project. New Delhi today boasts a world class new international airport and also a beautiful well connected Metro rail transport.

Despite all the pros and cons of Indian bureaucracy today each young Indian keeps it as his first choice when he decides his career plan. Some even decline Harvard and MIT offers just to serve the nation. Each year, the topper of the Indian civil services examination becomes a national hero and inspiration for others. Then he gets married with the daughter of a politician and thus the nexus is complete.

The writer is a PhD scholar at Peking University and teaches at Beijing foreign Studies University. He can be contacted at binod@126.com

Courtesy: https://www.chinadaily.com.cn/opinion/2010-11/08/content_11515582.htm

An Indian Entrepreneur Talks Growth, Regulation and Corruption: BY MUDIT JAIN & ATUL SINGH

 A seasoned industry leader explains how India was and remains a hostile environment for manufacturing. Due to onerous regulations, entrenched corruption, feudal bureaucrats and venal politicians, India has failed to industrialize in contrast to China.

udit Jain is a third-generation entrepreneur and a manufacturer of industrial chemicals in India. He discusses the causes of India’s unnecessarily sluggish manufacturing growth with Fair Observer’s Editor-in-Chief, Atul Singh.

The British ran India with a colonial bureaucracy designed to extract wealth, not to create it. When India won its independence in 1947, many Indians expected the dividend of independence to come in quickly. In some ways, it did — during the 1950s and 1960s, India expanded into nearly all manufacturing sectors, save for high tech and aviation. But the expansion did not survive the 1970s.

While India’s first prime minister Jawaharlal Nehru espoused many socialist policies, inspired by the then-successful Soviet Union, he was still relatively favorable to business. When his daughter Indira Gandhi assumed power, she lurched left and decimated business. During her reign in the 1970s, India became a socialist state ruled by officers of the Indian Administrative Service (IAS) and their underlings. These sycophantic officials imposed onerous regulation, high taxes and extortionate bribes, suffocating industry and squeezing growth.

Socialism killed Indian business

Under Gandhi, India nationalized key industries and heavily regulated the others. The IAS became solely in-charge of formulating and executing policy. Note that the IAS is the successor to the British Raj’s colonial Indian Civil Service (ICS). The original mission of the ICS was to collect taxes and deindustrialize India. After independence, control over the economy gave politicians opportunities for graft and rent-seeking. Together with their bureaucrat lackeys, they created a system that was altogether hostile to business.

The infamous license-permit-quota raj decimated business. In this Kafkaesque system, entrepreneurs had to run from pillar to post and grovel before bureaucrats if not bribe them. Approval from dozens of offices was necessary to do anything. After months and, at times, years of running around offices, entrepreneurs received licenses that were narrowly tailored to specific activities with strict limits on productivity. If their production exceeded the limits imposed by their license, bureaucrats levied hefty fines and extracted heavy bribes.

Gandhi was voted out in 1977 but the hodgepodge Janata Party that took charge was socialist as well and business did not get a break. India’s socialist DNA permeates all political parties, including the ruling Bharatiya Janata Party (BJP). Having tasted blood, politicians and IAS officers cannot let go of the commanding heights of the economy.

Politicians have to appeal to a poor and uneducated populace. So, populism akin to the Latin American variety is always a temptation. Until recently, labor unions were affiliated with political parties, making manufacturing tricky. 

Change because of external shock

Despite the economy growing at the proverbial Hindu rate of growth, India did not change course. In the end, an external shock changed the Indian system. In 1991, the Gulf War increased oil prices. By this time, the Soviet Union was on the verge of collapse and could not send cheap oil to India to bail its socialist de facto ally out. This led to a severe balance of payments crisis and India had no choice but to turn to the International Monetary Fund (IMF) and embrace market reforms.

The IMF forced India to liberalize its economy, lower its tariffs and open its markets. Many expected Indian businesses to fold in the face of foreign competition. Instead, India’s economy grew faster than ever before. It turns out that socialism, not Hinduism, was holding back the economy. Foreign investment and capital goods flowed into India. Manufacturing got a second wind after the first burst after independence. 

The boost of 1991 petered out for manufacturing in 2001 when China entered the World Trade Organization (WTO). India liberalized trade but did not lift restrictions on domestic business. The government also did not invest in infrastructure. This meant that businesses like Jain’s manufacturing operations could not keep up with their Chinese competitors. 

Rare Story of a Global Indian Manufacturing Success

Chinese manufacturers were able to make things with speed and scale. Chinese imports flooded Indian markets. Even as this economic tsunami was hitting the economy, India’s bureaucrats sat on files forever, demanded nonstop bribes and strangled business with red tape. High costs on inputs such as water, power and transportation made it far more expensive to manufacture domestically than import from China. As a result, many industries collapsed entirely. Liberalization internationally and overregulation domestically proved to be an unmitigated disaster for the manufacturing sector.

The toxic politician-bureaucrat nexus

After independence in 1947, India’s economic model was inspired by the Soviet Union. In this communist Mecca, experts did the economic planning and engineers implemented their plans. In India, economic planning and execution are both in the hands of an omniscient and omnipotent bureaucracy with IAS officers as feudal barons and politicians as de facto rulers. The IAS officers are invariably generalists, with little professional knowledge or deep interest in economic policymaking or the sectors they control. Bureaucrats occupy their position not because of expertise but because of loyalty to politicians and are answerable to no one.

Politicians continue to see business not as a driver of the economy but as a cash cow to squeeze for personal fortunes and election funds. In spite of the rhetoric about pro-manufacturing policies and promoting growth, the Indian system is still essentially one in which politicians dole out freebies to get votes and squeeze industry to pay the bill with heavy taxes. Ultimately, the poor are not helped either, because they see these taxes get translated into higher prices. They also miss out on manufacturing jobs and increased productivity because Indian industry is cut off at the knees and cannot compete with its foreign counterparts. Ultimately, neither the poor nor the entrepreneurs are enriched. Only politicians and bureaucrats laugh all the way to the bank. In India, this Batman-Robin duo is not robbing Peter to pay Paul, but instead robbing both Peter and Paul.

Businesses routinely find themselves compelled to make campaign contributions to politicians, lest they punish business owners with bureaucratic harassment. Such is the convoluted and complicated law of the land that it is impossible to follow it even after making superhuman efforts. So, bureaucrats can shut down any business for alleged breach of the law. As innumerable entrepreneurs and manufacturers know only too well, every bureaucrat inspector finds some grounds to find an infraction, leaving them a choice between a bribe and a fine. Inspectors can also arbitrarily shut down factories. 

The Indian system does not allow corruption inadvertently. It is corrupt by design. Today, Indians impose a new colonialism on their fellow Indians. Indian politicians and bureaucrats operate in a system designed for extracting wealth, not creating it.

Here Is Why Indian Manufacturing Is Struggling

Unfortunately, Jain sees no change on the horizon. If things continue as they have, India will fail to achieve a manufacturing boom that emulates the 1991–2001 period.

Jain believes that India must take a page out of Japan’s book and outsource decision-making power to professionals. Boards of experts should craft regulations in consultation with industry in the interests of long-term growth, not short-sighted political gains. It is good governance, not natural resources or comparative advantage, that made Japan an economic superpower. India can be an economic superpower too if it enlists policymakers with expertise who act in the national interest instead of petty self-interest.

Courtesy: https://www.fairobserver.com/podcasts/an-indian-entrepreneur-talks-growth-regulation-and-corruption/#

India’s Bureaucracy Requires Urgent Reforms: Dhiraj Nayyar

 The merging of the Amar Jawan Jyoti at Delhi’s British-built India Gate with the Eternal Flame at the recently constructed National War Memorial a few hundred metres away has generated a loud debate on the legacy of colonial rule.

There is nothing wrong with revisiting legacies; no nation can be forever a prisoner of its history. The one legacy of the British Raj which continues to have a hugely consequential say on India’s present and future is the Indian Administrative Service (IAS), which underwent a change in name (from Indian Civil Service/ICS to IAS) post-Independence but little change in substance.

Now, as the Centre and states do battle over a change in rules for IAS officers—both want a larger share of the country’s elite administrators—it may be worthwhile to revisit the purpose and role of the IAS, 75 years after Independence.

The logic of a generalist, all India service made sense for the British as the main purpose of the colonial government was to control a vast and diverse country through a coherent and efficient (from their point of view) system of administration. Post-Independence, the value of the IAS was reemphasised by none other than India’s first Home Minister, Sardar Patel, who described it as the “steel frame”, which would hold united a partitioned, impoverished, diverse and democratic country while also setting the wheels of development in motion.

It would be reasonably safe to argue that, for both the British and the early governments of Independent India, preservation and control came first, welfare second and economic growth a very distant third. The instinct of preservation (of the status quo) remains embedded in the DNA of the career bureaucracy.

This explains both India’s relative success post-Independence—in terms of continued democracy, territorial integrity, steady economic growth without implosion—as also its failure—to attain spectacular economic growth, to have a world-class manufacturing base, to raise sufficiently its human capital levels. The system of government is simply not designed to disrupt or take risks.

The debate on civil service reform often gets overtaken by lateral entry, a clear point of resistance for the career bureaucracy. But a holistic discussion requires an understanding of what roles an IAS officer performs over her career. Very broadly, and for the sake of simplicity, these can be broken into three, each lasting around a decade.

In one decade, usually, early in their careers, IAS officers do precisely what they are trained for administration. As SDM/DM or ADC/DC of one of India’s 700-plus districts, they are responsible for law and order and for the administration of all the relevant government (Centre and state) social and economic programmes on the ground. In the second decade, officers are posted in state capitals where they do a mix of implementation and policy design.

Unlike at the district level where they are akin to all-rounders, in state capitals, they go to a ministry and are responsible for implementing schemes and designing state-level programmes in one sector. A third decade is spent at the Centre—as Director, Joint Secretary, Additional Secretary and Secretary—in ministries framing policies and working on regulation.

This work is substantially different from administration/implementation. Career progression through these different roles is not linear, so officers go back and forth from district to state, and from state to Centre.

There is no doubting the abilities of IAS officers, all of whom have to sit through very competitive examinations to get in. But it could be the case that some have greater competence in administration while others have greater competence in policy and the third set in regulation. And in today’s highly complex and specialized world, individuals may have a talent for different types of policy: telecom is different from agriculture, which is different from trade.

So, at the very least, it may make sense to divide the IAS into different streams: administration, policy and regulation. India is moving increasingly towards a full-fledged market economy, so jobs at the Centre require policy and regulation experts. Administrators would instinctively look for a larger role for the government, which may be counter-productive.

It may make sense to divide the IAS into different streams: administration, policy and regulation.

 

But the country needs competent administrators who can address the gaps that exist in physical and social infrastructure on the ground. And regulators need to know how to keep an arms-length from line ministries and perform their tasks with some “independence”. The three should not overlap. It isn’t just about skillsets but also a conflict of interest.

Of course, there remains a strong case for an elite cadre of career civil servants. Lateral entrants can complement but not necessarily replace them. The country can actually have many more IAS officers, but they must specialize and train for the appropriate stream from the start of their careers. That would be a welcome merger of the IAS and 21st century India.

Courtesy: https://www.impriindia.com/insights/reforms-in-indian-bureaucracy/