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Good governance 101

It is not about size, scope or ideology. Rather, it is about getting things done.

modi-m By removing independent directors from PSU boards, the government is signalling its disdain for corporate governance, due process and institutional integrity.

The prime minister has hoisted his administration’s flag on the masthead of good governance. This is a welcome and timely objective. The question is, what does the prime minister mean by “good”? He campaigned on the slogan of “minimum government, maximum governance”. This would suggest that he equates “good” with “small”. There is merit in this equation. Our government is bloated, inefficient and wasteful. It needs to be slimmed down. But I am sure this does not capture the totality of the PM’s intent. He knows that governance is not about big versus small, maximum or minimum. The financial crisis that roiled the Western world in 2008-09 was at least in part the result of slackened government supervision over the financial community. The crony capitalism that led to the 2G scam and “coalgate” was also partly due to the institutional and power vacuum created by delicensing.

“Good” governance 101 for the 21st century is not about size, scope or ideology. It is about getting things done. It is about narrowing the distance between the governor and the governed. It requires strong institutions, rule of law, technology, information and talent. The executive must be empowered; the judiciary unencumbered and capable of providing timely justice; and Parliament functional for debates and legislation. It requires entrepreneurial decision-making and a systemic receptivity to new ideas and innovative solutions. It requires a government that encourages lateral entry of talent and the forging of partnerships and collaborations with business, academics and civic society. It is a government that is “smart” and biased towards action. These are different requirements from those when the world was not so connected, competitive and challenged by problems like global warming that do not respect national boundaries.

The question is, do the prime minister’s political and party colleagues understand the nature of these requirements? Do they recognise that good governance can only be built on the above pillars? I ask these questions because I am perplexed by the logic of decisions that are reportedly under consideration, or have been taken. I do not understand why, for instance, the government would wish to compel the resignation of the independent directors on the boards of large public sector entities simply because they were appointed by the previous government, or why it would wish to circumscribe the autonomy of the IITs by bringing them under the umbrella of the University Grants Commission (UGC). The only explanation I can think of is that some members of the government have not fully appreciated the need to adapt to these new requirements and are stuck in the groove of siloed and self-serving politics.

I know that several ministers have reshuffled their senior civil servants simply because they did not want to deal with appointees of the previous government. I can understand this decision, although I do not support it. I understand it because ministers have the prerogative to choose their own teams. I do not support it because civil servants should be insulated from political exigency. Else they cannot proffer unbiased and professional advice. What I cannot understand or support is the decision to remove the independent directors from the boards of economically significant PSUs like ONGC and Indian Oil. The reason I do not understand or support the decision is because the government gains little but loses, potentially, a lot. After all, it is not as if these directors have substantive influence. They are not involved in management and are outvoted by the government representative. On the other hand, they provide a strategic sounding board, act as a check against corporate malfeasance and inject gravitas. Most directors are individuals of eminence and integrity. By removing them, the government is signalling its disdain for corporate governance, due process and institutional integrity. In a similar vein, I do not understand the logic of subserving the operational and academic integrity of world-class institutions like IITs to a bureaucratic and procedure-bound organisation like the UGC. In and of themselves, these two examples are trivial, but when seen through the lens of “good” governance, they show that the narrative of governance is not contemporaneous with the demands and complexity of a digitised, global and competitive world.

The prime minister could take a major step towards “good” governance by removing the deadweight of the prevention of corruption act that is presently on the shoulders of civil servants. As I have written before, this act exposes officials to the charge of corruption if they take a decision that is deemed to have benefitted a private entity. There is no statute of limitation and so a person can be hauled up by the CBI long after she has retired. It is no wonder, therefore, that civil servants have preferred to sit on files or simply pass them on to the next desk rather than put signatures to paper. The “act of omission” has been a safer bet than the “act of commission”. The prime minister has already lightened somewhat the weight by meeting the 70-odd secretaries to the government of India and by assuring them of his safeguard. But if he wants to galvanise his bureaucracy into an action and problem-solving mode, he should remove the weight totally by amending the act through an ordinance.

The prime minister is also looking to redefine the Planning Commission. If he does decide to reincarnate it as a government-financed think tank, he should task the new entity to find answers to questions such as: What must be done to modernise governance? What changes must be made to improve the delivery and quality of service? What needs to be done to inject a spirit of entrepreneurialism and innovation into decision-making? What, in short, must be done to create a government that is contemporaneous and “works”, to borrow from US President Barack Obama? These are not easy questions, but the new body could be the forum where big data on the subject of governance is collated, organised and disseminated, new ideas are generated through crowdsourcing, public-private collaborations are forged, relevant e-governance technologies are leveraged and lateral talent is located. It could be a strategic planning tool for incentivising productivity, efficiency and innovation. It could be the body that puts flesh around the word “good” and in the process, aligns everyone around the promise that the prime minister made from the ramparts of Red Fort on August 15.

The writer is chairman, Brookings India, and senior fellow, Brookings Institution

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