Lakshay Garg is a full time post graduate candidate at Indian Institute of Management, Calcutta. This article was submitted as part of his selection process as an IndiaGlocal - Young Leader. The views and opinion in the article are solely of the author.
Back in 2000’s era, a fab manufacturing unit was conceptualized to be set up by Intel in India. It had almost decided to establish the unit but the company never really got beyond Indian government’s approval process. Intel got drenched in government delay’s and unclear policy on Semi-Conductors that the fab unit was, eventually, decided to be shifted to Vietnam or China.
Bureaucratic hurdles have often been blamed for its slow and reactive attitude. But as a sprawling, developing country like India, China seems to have conquered that part very well. In 1980, China recognized the vitality of the role of bureaucrats in bolstering their economy. Even now, the bureaucrats are given greater autonomy with which comes greater and palpable accountability. Moreover, they are given low fixed formal salary along with a performance based variable pay. Bureaucrats are incentivised to perform good.
Undoubtedly, India also has a deep vertically decentralized system of bureaucracy. In reality, this so-called decentralised system is actually a quasi-decentralised one where for every new initiative an obligatory permission has to be taken from the higher authorities. This time taking and complex procedure makes India a less lucrative place for business. There is also a dearth of motivation in the bureaucrats. High formal salaries and a set career path pave way for a laid back attitude.
Source: Lokniti-CSDS Survey on Politics and Society between Elections (2017-18)
This graph is short depiction of how general people feel about getting work done by bureaucrats implies. The position of businesses seem worse. Starting a new business requires an ecosystem of cooperative authorities. Otherwise, a lack of business attractiveness leads to persistent unemployment in the nation. Deliberating on a bureau-franchising seems to be the need of the hour.
The Chinese model of bureaucracy gives more autonomy and inculcates the habit of initiative taking. Undoubtedly, this comes with high risk. But as Peter Drucker says, “with great risk comes great reward”. The flourishment of Chinese Economy through bureaucratic reforms can be witnessed by the innumerable, successful and once so-called ghost towns present around the country. Pudong, for example, was once one of the emptiest city of China. Now, it is one the most vibrant business centres in Shanghai.
India is considered as a lucrative market because of its large market share. In fact, according to a poll on Business Climate Survey covering Norwegian businesses revealed that 62 percent firms in Norway consider the present business climate favourable in India. However, the Norwegian Ambassador to India also commented that bureaucracy and corruption were the two “biggest hurdles” for the firms. Even Cairn had complained, in 2017, about the bureaucratic hurdles delaying the approvals for routine matters that are crucial for operations at properties such as gigantic Rajasthan oilfields. CSMT-Panvel high-speed-corridor and Panvel-Virar suburban corridor, aimed to cut down the commute time, was delayed because the state government put its file on hold. Moreover, even the NRI’s refrain from investing in manufacturing units in India because of “bureaucratic hurdles and the lack of transparency and accountability at all levels”. So, had the bureaucratic hitch hikes been on the leeward side, India would have received better business opportunities.
Can a performance linked pay structure reform Indian bureaucracy to promote industries and development. In the past, many senior bureaucrats have already suggested that linkage of compensation with competence can lead to improvement in the system. Even the Sixth Pay Commission had recommended the introduction of a new performance-based pecuniary benefit for Central Government employees, over and above their regular salary. Therefore, there is definitely some scope for improvement.
The Indian economy requires a symbiotic relationship with the bureaucracy. Following suggestions are enlisted for the achievement of same;