Monday, Oct 03, 2022

Sizeable matters

The clamour for smaller states should ignite a debate on the nature of the state

The debate over smaller states has once again highlighted the farcical character of the debate over the shape of the Indian state. All political parties agreed to form Telangana in their manifestos; a few months later there is supposedly no consensus. The demands for separate statehood are made in the name of greater participation and representation. Yet the most potent instruments for achieving these objectives,the 73rd and 74th Amendments,are woefully underused,particularly in Andhra. Third,can the structure of the polity be genuinely federal,when the hierarchies within political parties are not? Whatever the truth in the conspiracy theories about the origins of the Telangana crisis,the fact is the Congress handled its own internal party processes pretty badly,with the party not taking ownership of its own policies. Farce has its uses; but it can also distract from the serious issues.

Two issues in particular need attention. The first is dealing with legitimate concerns over state size. Mayawati’s proposal for further dividing UP merits serious consideration for a number of reasons that have been reiterated on several occasions. But more than creating states,the focus should be on building states. The success of a state depends not on size,but on state capacity. This varies widely across India. But we understand little about the conditions under which different states are likely to acquire the requisite state capacity.

The contemporary Indian state represents a paradox. On the one hand,we may be entering a golden era of state-building in India. If at the end of this government’s term,we have universal ID well established,GST and tax reforms up and running,modest progress in administrative reforms underway and increasing capacity to administer larger welfare schemes,the Indian state will be very well positioned. It will,for the first time in its history,be able to identify its citizens and target benefits more precisely. And if tax reforms,without raising tax rates,increase the tax to GDP ratio,it will allow the state to operate at a scale where its marginal impact is more than negligible.

This will have two consequences. First,we underestimate the effect of scale on government efficiency. By most international comparisons,the Indian state is actually quite small: it has a shortage of everything from statisticians to health workers,to judges. And therefore it is perpetually caught in the Raag Darbari syndrome “itna kaam hai ki sab kaam thap pada hai.” Second,the scale of government spending is beginning to alter politics as well. Ten years or so ago,governments had a dilemma. Even the best performing government could make a marginal impact in a state and therefore performance had no impact on electoral outcomes. Now the scale of government spending on roads or welfare programmes like NREGA are of a different order of magnitude,helped in part by growth in government revenue. This scale of spending makes the stakes in government performance higher. It is not an accident that at the state level,performance is beginning to be rewarded. There is still a long way to go. The scale of our challenges also makes it easy for us to be cynical. But for the first time we are going to be near having the technological and taxation preconditions for creating a better state.

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On the other hand,the variation in state capacity at the level of states has probably grown,with some states teetering on the verge of state failure. Amongst other things,

bureaucratic capacity matters and is a critical difference between Gujarat and Tamil Nadu on the one hand and Orissa and Jharkhand on the other. And the lower down the level of government we go,the more capacity variations begin to matter. In our decentralisation debates,there was never any sensible roadmap of how to build local capacity. In the second phase of reorganisation of states,there was also no corresponding clarity over state capacity. If,for argument’s sake,Mayawati’s demand for carving out Poorvanchal is conceded,Poorvanchal’s success will depend upon state capacity,perhaps even more than state size.

More than a States Reorganisation Commission,we need a State Capacity Commission that can assess,with some real analytical bite,exactly what each state might need to perform the functions it is being asked to perform. Even the official data on who exactly our government employs and for what purpose is completely disorganised; and there is virtually no strategic planning for appropriate human resources at the state and local level.


There are three structural reasons why we have not paid serious attention to state capacity. First,whenever we think of reform of the state,we focus largely on process. Second,bodies like the Planning Commission have virtually no skills to think about implementation capacity issues. These bodies may themselves be prime examples of how the state has not invested in thinking about its own capacity. Just take one fact. Compared to China,Indian policy-making is dominated by economists and civil servants with marginalisation of engineers and scientists.

Exceptions apart,dispositionally the former lot are not probing about design and implementation issues,which is what good engineers gravitate to. Although only anecdotal,it is not entirely an accident that our most celebrated contemporary

policy-makers may turn out to be Nandan Nilekani and Sam Pitroda. In their domains their comparative advantage is thinking about channels of transmission of effects,not just enunciating first principles as our policy-makers often do.


And the third is a puzzle. You would imagine that in a supposedly populist and patronage democracy politicians would be clamouring to expand the size of the state. There are tens of thousands of legitimate government jobs that need to be created,from data managers to safety inspectors. The real political economy puzzle is why the Indian state is not bigger. Part of the explanation may have to do with the fact that politicians love capital investment more than investment in human resources. Part of it may have to do with fiscal constraints. But part may simply have to do with the fact that there is no intelligible roadmap of state capacity. Most bills in Parliament tell you how much it is going to cost; almost none tell you what kind of augmentation of human resource capacity will be required for executing them.

Whatever the size of the state,and whatever the level,the core issue is capacity. We understand less about state capacity,and how to match state objectives and human resources much less than we think. Size matters,but not in the way we are debating.

The writer is president,Centre for Policy Research,Delhi

First published on: 16-12-2009 at 02:40:17 am
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