MAY 28, 2014

By Naresh Minocha, Our Consulting Editor

IT is time for introspection for almost every entity against the backdrop of the unbelievable verdict of the Indian electorate. Introspection can help the vanquished party embrace failure as the stepping stone for its resurrection. The same failure can also serve as a warning signal for victor who often loses vision due to heady success. After all, wisdom is the art of learning from the mistakes of others and avoiding a repeat of one's own follies.

The new ruling party BJP wants to first learn about the pitfalls of bad governance from UPA's trusted civil servants. The Cabinet Secretary has reportedly asked secretaries of all ministries to specify what went wrong with the UPA regime and what they would have done if they had the full freedom to perform.

It is good for BJP to get an insight into self-created hurdles that led to the UPA's ignoble exit. It is equally or perhaps more important for the BJP to draw lessons from its past failures committed during the previous NDA regimes. We will discuss the list of don'ts for NDA later in his column.

Milind Deora, a Congress leader who served as a Minister in the UPA, has pitched for "ruthless introspection"by his party. The Congress President, Sonia Gandhi, has reportedly acknowledged that there was "widespread anger against us which we failed to adequately gauge". The other day she stated: "we have to individually and collectively draw the appropriate lessons from this unprecedented setback".

Aam Aadmi Party (AAP) is also drawing lessons from crashing of its dream to catapult to the Centre on the strength of its impressive show at Delhi Assembly polls. Regional political parties including the castes-driven ones are also in the soul-searching mode.

There are certain lessons that should be valued both by losing parties and the NDA that has got a chance to govern by cashing in on the aspirations and frustrations of the masses.

For this, they should all turn to a Planning Commission's working paper captioned titled ‘ Lessons of Government Failure: Public Goods Provision and Quality of Public Investment' authored by reputed economist, Dr. Arvind Virmani in February 2006. The paper was perhaps written with a foresight about precipice of disaster towards which the UPA was heading under the guidance of parallel and super-cabinet, National Advisory Council (NAC) chaired by Mrs. Sonia Gandhi.

After analyzing the country's macro-economic policies and growth from 1950 onwards, the first lesson that Dr. Virmani deduced is : "The government is neither omniscient (all knowing) nor omnipotent (all powerful) nor omni-competent. Even with the best of intentions and motivations it can and does fail spectacularly. More commonly it has traits that are the opposite of those commonly assumed by those who expect government to solve any and all problems."

BJP should take this lesson as the guiding mantra for good governance keeping in view the fact that political power breeds arrogance. It must institutionalize channels of feedback from all sources.

The omni lesson aptly applies to UPA, which haughtily believed that impoverished Indian masses liked to eat from the hands of the Congress. So it banked heavily on National Food Security Act and an increase in number of subsidized LPG cylinders, etc. as the powerful allurements for the public to gloss over the bad governance and endemic corruption.

The Congress Party exuded confidence that it could win the next two Lok Sabha elections due to ‘pure magic' called Aadhar-enabled transfer of benefits to the poor people. It believed its dole-outs strategy was panacea for its failure to create work opportunities for the unemployed and under-employed youth.

With Rajmata syndrome, the UPA ministers had become highly arrogant. The Government hardly ever acknowledged the fact it passed off wrong information as facts to the public. It excelled in distorting facts. It excelled in giving an erroneous picture about its achievements.

All these charges have been elaborated and backed with concrete instances in previous ice cubes columns over the last few years.

UPA only selectively adopted public consultative process for policy formulation. Crucial policy decisions were taken or reversed without any public consultation. UPA never practiced sincere and effective communication. It only wallowed in propaganda.

Some of the UPA stalwarts were allergic to rational criticism. Recall UPA's Communications Minister Kapil Sibal's zero loss theory to trash CAG report on 2G scam. Recall how Finance Minister P. Chidambaram dismissed presumptive losses computed by CAG in 2G and Coalgate scams as "myth."

Recall the fact that Chidambaram smothered prospects of probing questions at his press conferences by disallowing supplementary to a question. Most of the press conferences and interactions of the UPA top brass were managed in such a manner so as to avoid ticklish issues and thus present a good image about the working of the Government. Can anyone recall one tough question ever put to Mrs. Gandhi? But many citizens will recall how the country's two leading TV channels vied to confer award on Mrs. Gandhi, thereby crossing Lakshman Rehka of ethical journalism.

Those who can ask probing questions were systematically denied an opportunity to put a question. Some of them were simply not invited for interaction. A few journalists have thus opted out of such interactions whose sole objective is spruce up the image of ministers and not communicate to the public through the media.

UPA thus believed that it could manage public opinion through Goebbelian tactics and by pinning faith on its band of trusted journalists.

To be fair to the Congress, some of the BJP ministers also behaved in a similar fashion especially during the second term of the NDA Government.

The Prime Minister Mr. Narendra Modi thus needs to reinvent the entire Government's decision-making and communication process to avoid losing the public's enviable faith in his leadership.

Unlike the UPA, NDA should not pay lip-service to transparency. It should make public consultation-driven decision-making process its governance mantra. It ought to proactively disclose all information excluding defence and home secrets. The system of open governance can ensure that the NDA does not operate like an omniscient, omnipotent and omni-competent authority.

The second lesson drawn by Dr. Virmani is that "The role of Private consumption in economic growth and poverty reduction can be more important than that of Government/Public Consumption."

If we apply this lesson to UPA, it would mean that UPA erred by being obsessively focused on increasing investment on social welfare without any improvement in the effectiveness of such investment. It increased the dimensions of subsidies including outright grants. It wasted money by repeatedly funding certain public enterprises that are basket cases. It covered up public sector banks' non-performing assets (NPAs) with fresh infusion of Government money. It pampered environmental and leftist activists who viewed projects as symbols of corporate greed and not as job avenues.

Such over-indulgence in the misconceived inclusive agenda reduced the size of investments in creation of productive investments that would have not only generated job opportunities but also resources in the form of taxes and dividend.

An important observation made by Dr. Virmani in his paper is that: "Pet theories and vested interest can drive public investment not only into the most unprofitable activities but also into the most socially unproductive channels, with everything being justified in the name of the poor and the public."

An apt instance of this observation is the proposed project for reintroduction of Cheetah in the country at reported cost of Rs260-300 crore at the behest of a few wildlife enthusiasts. Nobody in the UPA asked whether this money can be utilized profitability to reduce poverty and generate employment.

Cheetah, which became extinct in the country at the time of the Independence, is just one instance of the many dubious investments that UPA made by showing utter contempt for zero-base budgeting.

NDA must weed out unproductive and wasteful expenditure by ruthlessly applying zero-base budgeting principle to all schemes and programmes. The thumb rule for continuation of any investment or sanction of new schemes should be what would happen if the Government does not invest and whether the money can be invested in better ways elsewhere.

As put by Dr. Virmani, "the solution to this problem of governance is to free the people, non-profit organisation, entrepreneurs and companies to do what they can do best and to focus the government's limited resources, attention span and time on functions that only the government can do. This is to supply public goods & services and to ensure the supply of quasi-public goods (particularly those having production externalities) up to a level at which the social benefits equals cost of provision."

Coming to the pitfalls the NDA should avoid, it must shed or at least whittle down the ostentatious style of working that became the trademark of the UPA. The swearing-in ceremony of the NDA should be the first and last decision of the NDA to splurge the public money on image-building.

NDA must create an institutional mechanism of internal audit of the conduct of its ministers. This would help Mr. Modi nip in bud any minister's impropriety. He should not hesitate to drop a few tainted ministers as and when any tangible development about their past misdeeds surfaces. Unlike Dr. Manmohan Singh, Mr. Modi cannot flaunt the coalition dharma to rationalize indecisiveness in tackling corruption in the top echelons of the Government.

Above all, NDA and BJP in particular must be wary of sting operation that Congress-aligned journalists would definitely conduct to ‘expose corruption' in the new Government.

Another big challenge before Mr. Modi is to rein in the loud mouths in the BJP and its supporting entities from making statements that give setback to the achievement of the historic mandate for work, prosperity and peace for all.