fact not adequately emphasized in India is the relative
smallness of the secure wage-earning sector. We have in
all about 27million workers in the organizer sector, or
about 8% of the total workforce in the country. Of them,
an astonishing 20 million, or nearly three-quarters, are
in government! About 13 million are directly employed by
the government at various levels, and about 7 million are
in public sector undertakings. This number in the last decade
has actually increased by nearly a million. The problem
is not the size of government employment in absolute terms.
Many nations have a larger proportion of population employed
by government. The real issues are the productivity of those
in government, and the relative size of workforce in government
as a proportion of the total organized workforce. In many
ways both are linked. If government is productive, it creates
conditions for economic growth, which in turn promotes employment
in private sector. The ratio of government workers then
comes down in time.
productivity of government is critical for economic growth.
This assertion may seem strange in the free market era.
But there are seven vital functions a government ought to
perform to promote growth. Public order, justice, and rule
of law are the three most important monopoly functions of
government. Failure to deliver these dampens investment,
productivity and growth. A lawless society cannot enjoy
growth and prosperity. A stable, peaceful and harmonious
society is a precondition for growth. Indian governments
have largely failed to fulfil this condition. Then we have
school education and primary health care. In modern world,
these two are widely accepted as state functions. Nowhere
in the world has private sector played a dominant role in
school education. Only in India the state's role in schooling
is declining for a variety of reasons. The results are catastrophic.
An illiterate and unskilled population cannot be productive
in a modern economy. Private sector can certainly acquire
dominance in hospital care; but primary health burden has
to be borne by the state in any civilized society. Again
our public health infrastructure and services are in decline.
Finally, there are two other sectors in the development
of which the state has a vital role along with private sector
- infrastructure and sustainable natural resource development.
Private investments are necessary but government's investment,
policy framework and regulation are critical for these two
sectors. Much of rail, and road building will be in government
sector. In telecommunications, sensible policy and regulation
are vital. In power sector, public investment, policy and
regulation are all equally important. Natural resources
have to be harnessed largely by the state. It is unlikely
that irrigation and soil conservation will attract large
private investments. In energy sector there will be private
initiatives, but government has to play a proactive role.
Indian state has increasingly become a stumbling block to
our economic growth prospects. The state guzzles vast resources
and produces very little in return. The solution does not
lie in mindless downsizing. What we need is redeployment
and greater productivity. Take a large State like Andhra
Pradesh with 900,000 employees in government. About 180,000
or 20% are unproductive for the people, as they are engaged
as peons and drivers! Another 30% (270,000) are support
staff (clerks etc.,) whose only purpose is to allegedly
help the decision-makers. There are about 40,000 officials
with decision making power at some level or other, and they
could perform far more efficiently and economically with
a well-trained support staff of a total of 60,000. But we
have 450,000 of them employed as clerks, drivers and peons!
We have about 310,000 teachers, and the State probably needs
another 300,000 teachers of good quality to sustain a credible
school education infrastructure. The health care system
is inadequately staffed. We have 1200 judges in the State,
and a total of about 15000 in India. Germany, with a population
of 80 million, has 30,000 judges! We have far fewer police
personnel than needed in modern times.
mere redeployment does not guarantee high productivity and
delivery of services. We need instruments of accountability,
and decentralized structures which promote competence. All
these and more are needed to bring any degree of competence
and efficiency in government. And without government doing
its job competently, economy cannot grow fast. The spurt
in growth in the first few years of liberalization is largely
because of the sudden release of fetters which forcibly
inhibited growth. It is like a dam which was breached. Once
the reservoir is emptied, we need further sustained inflows.
Painstaking catchment treatment is necessary for that. Any
further rapid growth demands high level of competence and
service delivery by the government. Mere budget making,
fiscal projections and economic indicators will not make
a dent in poverty or promote growth. Good governance is
the key to prosperity. The sooner our parties, governments,
economists and media recognize this simple lesson, the better
it is for our polity, economy and society.