The face will not change just by spending more, on which issues will the new government have to focus

How will the ‘car’ grow in the changed conditions?

In many ways, the Indian nation is like a 1950s Ambassador car. Political parties therefore compete over who will drive it, which passengers to prioritise, and where to drive it. However, the car itself is outdated! Increasing sectoral budgets without improving government efficiency is like putting fuel into a 1950s car. It may move the car, but the distance covered by this fuel will be extremely limited. However, party manifestos and policy discussions tend to focus on the direction of the car, with little attention paid to the functioning of the car. Therefore, an important message for the new government is that higher public spending alone will not solve our huge social and developmental problems. Instead, we need to focus more on improving the effectiveness of the Indian nation.

The new government will face many challenges including GST and inflation, it will have to face these policy issues

These areas need attention

The good news is that we have both the knowledge and technology needed to implement governance reforms to strengthen public systems. Such reforms will greatly enhance India’s ‘state capacity’ for service delivery and support governments to place a strong focus on citizens at any level of spending. This reform requires the government to focus on key systemic areas.
(a) Information about data and results
(b) Public per sonnel management which includes recruitment, training, posting and rewarding of performance
(c) Creating better expenditure and purchasing capacity to make markets work better
(d) Increasing the quantity and quality of tax revenue
(e) Greater decentralisation of funds and functionaries for service delivery
(f) Building better regulatory and procurement capacity to make markets operate better, and harness private benefits for the public good.

How will you benefit more

High quality research across diverse fields has shown that investing in governance and state capacity can yield a return (ROI) ten times greater than the cost. So, we have a way to accelerate India’s growth by investing in strengthening our public systems for better service delivery. Building a more effective state should be a top priority for all Indians across the political and ideological spectrum. It will enable us to deliver basic services and welfare more effectively to the poor and vulnerable. It will promote the equality and justice valued by the economic left. But it will also increase public spending and create a sustainable basis for long-term growth.
This time, think carefully… Why does BJP need to strike a balance with introspection?

Reforming public expenditure

Traditional policy debates focus more on the ‘top line’ of budget allocations to different sectors, rather than on how the allocations improve the lives of citizens. However, this focus distracts us from a more important issue. Improving the effectiveness of public spending – regardless of what we spend on. Budget debates come to naught because increased allocations to any sector come at the cost of cuts (or more debt) to other sectors. However, investing in better public systems can improve outcomes across all sectors, leading to greater improvements in the lives of citizens, rather than increasing the budget to spend more ‘governmentally’.

Equality among citizens

Improving the effectiveness of government is an economic and moral imperative. India’s constitution ensures equality among citizens through universal voting rights. Yet, weak public service delivery limits the ability of the poor and marginalised to transform the political equality of ‘one person, one vote’ into greater equality of opportunity through better education, health and essential services. This is why building a more effective state is the greatest unfinished task of Indian democracy.

Government has been trying for decades

This agenda will require broad political consensus and a long-term vision. India’s great achievements, from our nuclear and space programmes to delivering welfare benefits through digital infrastructure, have taken decades of effort by many political parties and governments. Similarly, building more effective public systems is a long-term project that will require close cooperation, collaboration and trust between central, state and local governments.

Who will be the important driver of the country’s development

Just as a car driver’s performance in a race depends on the quality of his/her car, the effectiveness of political leaders is limited by the government machinery they rely on to serve voters. This is why upgrading the Indian state car by investing in better public systems should be a top political priority for the new government. This will be a key driver of accelerating India’s growth.

(Muraleedharan is the Tata Chancellor’s Professor of Economics at the University of California, and the author of Accelerating India’s Development: A State-Led Roadmap for Effective Governance.)