Wednesday, December 13, 2017

The problem of state capacity in India

Lant Pritchett famously labelled India a flailing state—one where “the head, that is the elite institutions at the national (and in some states) level remain sound and functional but that this head is no longer reliably connected via nerves and sinews to its own limbs.”

Pritchett’s diagnosis of the Indian malady has been interpreted by many scholars as a problem of institutional manpower and institutional design. There is a new revival of discussions on state capacity to execute plans, and a new focus on redesigning and staffing public institutions. [...] This problem of state capacity has an element of truth and urgency. Almost all of India’s governance problems can find links to the lack of manpower in state services. [...] 
This crisis in state capacity cannot be solved anytime soon. Though India’s population, especially the youth, should be in line for these jobs, there are two major problems. First is the old problem of state budgets. India has a very small tax base, with a minuscule fraction of its citizens paying income tax. There needs to be a reduction in government spending in other areas and an increase in revenue to support the much needed manpower. Second, the Indian workforce is not skilled enough to be recruited for these jobs.
However, perhaps the state can be trimmed back:
An alternative interpretation of Pritchett’s famous diagnosis is that with flailing limbs, perhaps the head can issue fewer commands, and engage in fewer actions. Essentially, both streamlining and shrinking the ambit of the regulatory state to a size that can actually be effectively enforced. The size of the Indian state in terms of its manpower may be small, but its size in terms of regulation is gigantic, and most of this regulation is either unenforced, or selectively and perniciously enforced.

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