The Public Sector
The operation of the public sector is a matter of general interest in every country in the world, because all countries have one. The size and extent of the public sector do, of course, vary from country to country, but despite these variations, the problem of achieving accountability in the public sector arises everywhere. Particular to India is the combination of insistence?for entirely plausible reasons?on
having a large public sector, combined with a fairly comprehensive neglect of accountability in operating this large sector. Given the size of the public sector and the crucial role it plays in the Indian development strategy, it is particularly important to ask how the accountability of the public sector should be developed and strengthened. The unfortunate fact is that the overwhelming focus of the
public-private debate up to now has been on the extent to which the economy and the people ?need? a well-run public sector, rather than on exactly how the supposedly
required public institutions should be run, and what would make the decision makers and operators involved accountable and responsible.
The presumption that there is something politically reactionary about raising the question of accountability in the public sector is far too common. It also reflects a serious confounding of two different questions:
1. In what areas can the public sector, given feasibly good arrangements, serve the interests of the public better than the private sector?
2. How can public sector institutions be made accountable so that they can serve well the purposes for which they are set up?
Pages 81-82
Public Policy and Spending Priorities
Among other serious consequences of this asymmetry of voice and influence of different groups are corresponding biases in the allocation of public revenue, which are, of course, influenced by group interests. One of the benefits of rapid economic growth is that it tends to generate larger public revenue which can be used for different purposes?varying from reducing the deprivations of the underdogs to serving the interests of the relatively privileged. Indeed, public revenue in India has tended to grow as fast as?sometimes more so than?the growth of GDP in the recent past. This has had the result that the gross tax revenue of the central government is about four times as large today, at constant prices, as it was just twenty years ago.
In addition to drawing on the resources generated by the fast expansion of the GDP, it is possible to further expand the contribution of GDP growth to public revenue in many different ways, varying from preventing tax evasion, which is very large in India, to removing arbitrary exemptions and widening the tax base. Indeed, many constructive recommendations to raise India?s tax-GDP ratio (which is quite low by international comparison), without choking off economic efficiency, have been made by successive expert committees. But even as things stand today, with public revenue growing more or less at par with GDP, the resources available for public spending are expanding fast in India.
This is a valuable opportunity to make good use of public revenue for enhancing living conditions, through public services and support. But it has also allowed the continuation?and sometimes expansion?of spending patterns that are not particularly easy to justify.
Pages 269-270
On the Poverty Line
What is really startling is not so much that the official poverty line is so low, but that even with this low benchmark, so many people are below it?a full 30 per cent of the population in 2009?10, or more than 350 million people. How are these people supposed to live? The shocking discovery that it is impossible to have anything like a dignified life on or below the official poverty line draws attention to the appalling living conditions of the Indian poor, which receive so little attention in public discussion and go largely unnoticed (in more privileged circles). This is at least partly because poor people have learnt to live precariously with such deprivations, and keep, rather fatalistically, a low profile. This basic message about the terrifying yet hidden nature of mass poverty?its enormous size?has been quite lost in the din of the recent debate.
Page 190
Change is Possible
If one were to go by media reports, one would get the impression that corruption is increasing by leaps and bounds. And certain types of corruption, notably corporate-driven corruption, have indeed acquired unprecedented proportions. But it is also to some extent the case that corruption has become more visible, because of growing public scrutiny as well as the new powers to expose corruption (notably due to the Right to Information Act).
There is little evidence that the public?s general exposure to corruption in daily life is growing. In fact, according to the Centre for Media Studies? latest India Corruption Study, the proportion of Indians who felt that corruption had ?increased? in the previous year came down from 70 per cent in 2005 to 45 per cent in 2010; the proportion who felt it had ?decreased? rose fivefold, from 6 per cent to 29 per cent.
More importantly perhaps, the proportion of rural households that had paid bribes during the previous year had also come down sharply, from 56 per cent in 2005 to 28 per cent in 2010. There is no ground for smugness here, since both surveys point to rampant corruption, as well as to a still-dominant perception of rising corruption; nevertheless, it is important to take note of some significant signs of improvement, particularly the apparent decline in the proportion of households actually having to pay bribes.
It would be naive to assume that the battle for transparency and accountability is about to be won, but at least there is a serious battle taking place. Not so long ago, any attempt to build a campaign against corruption would have been seen as a case of hopeless romanticism.
Today, millions of people are part of this battle in one way
or another. Its outcome has a crucial bearing on the prospects for a more constructive influence of?and help from?the state in the lives of Indian citizens.
Pages 102-103
Excerpted with permission
from Penguin
