Thoughts on economics and liberty

What Would I Do If I Became India’s Prime Minister? #5

Phase 2 – Breakthrough (Second Two and a Half Years)

The midnight of the first day of the thirty-first month of my government will be a momentous occasion. Major changes will take effect at that moment. The tryst with greatness would have begun. Among the changes, the new Constitution would become effective; tenured civil services will be disbanded; and all government functionaries who were successful in obtaining Phase 2 appointments transitioned to their new functions.
On the first working day after that most public sector employees will move into sparkling and well-equipped modern offices – offices which will have no resemblance to their smelly and file-infested socialist avatars. Most of the states will also transition in the same manner, or will do so a few months later. Public servants across India will thus move into a far more dynamic, flexible and challenging – as well as more remunerative and satisfying – work environment.
All roles transitioned to Phase 2 would be deemed to be new appointments, with the relevant secretary being the appointing authority. Fully computerized service records will be started afresh and earlier records archived while ensuring that the relevant leave records, records of disciplinary proceedings, and health and safety matters are adequately transferred to the new system. All underperformers would likely have been filtered out during selection processes for Phase 2, and so it is expected that the secretaries would start with a clean slate. But among other things, each secretary would put in place an effective performance management system in consultation with staff to proactively deal with underperformance. Secretaries will explicitly work towards the earliest possible termination of tenured underperforming employees subject to natural justice (except for executives where fewer requirements on natural justice would apply).
During Phase 2 many Ministers appointed earlier to Phase 1 portfolios will no longer retain their roles due to a consolidation of portfolios. These MPs will be tasked with assisting the Freedom Minister to coordinate and complete a review of all existing policy and laws, supported by specialist teams from the IPO.

Local Government Reform

A major action for my government will be to initiate the reform of local governments in India with a special focus on urban governance. Urbanization is the natural consequence of the division of labour, specialization and innovation that arises from freedom. Free societies are urban societies. Given our model which opposed freedom and wealth, only 28 per cent of our population lives in urban areas, against 78 per cent in the USA, 84 per cent in South Korea, 86 per cent in Australia and 90 per cent in the UK. With the levels of freedom proposed in this book, India’s urbanization should exceed 80 per cent by 2100 AD. This makes urban governance very important. Our cities are congested and polluted, with significant failures of infrastructure. They need to be managed by the people directly, and effectively.
An incentives-based governance model will be adopted, givingfullcontrol to elected representatives over the employment of bureaucrats working in local government bodies. This principle will also extend to rural local governments. Today, super-sized municipalities like the Municipal Corporation of Delhi[i] or the Calcutta Municipal Corporation manage, or rather, badly mismanage, our urban areas. The reason for this misgovernance is the absence of any accountability in the system. As a result, parallel ‘governments’ have started evolving everywhere, that require citizens to pay twice for the same service such as garbage collection – once to the municipality and the second time to local groups of residents who organize the garbage collection privately. This is anarchy.The solution is to have small local governments that are professionally run and directly supervised by citizens.
This supervision would not be toothless. Today, officials are appointed for life in municipalities and cannot be removed by elected citizens for non-performance. Elected citizens are decorative, an incidental add-on. In the reformed system, elected citizen supervisors would not only be able to veto decisions made about their local environment that they do not agree with, but they would also be fully empowered to dismiss their chief executiveswho would be hired on three year contracts. Consequently, complete control would be exercised on officials down the line. This is how the models of local government work in most parts of the free world.
Since the subject of local government falls within the purview of State Governments, this reform will have to be led by the states. Within three months of my government taking charge, it will frame a package of incentives for states to create fully elected local councils (parishads) of a manageable size. The ratio of elected local representatives to citizens would be brought in line with international best practice. For instance, Delhi will get around 300 elected councillors (including Mayors or Pradhans) in about 60 independent councils. These councils will be responsible for providing world-class civic amenities and managing local libraries and community halls. User charges such as land taxes and rates will form their primary source of revenue.
Land planning and zoning will be controlled by the councils with the help of professional land planners, environmental scientists and landscaping specialists. Some state inspectorates, such as the food inspectorate, will also be transferred to the councils. States will be provided incentives to modernize associated regulation, e.g. food regulation, to reflect risk-based approaches. These changes would lead to fewer but far more competent inspectors. All these staff will be fully accountable through the contractually appointed chief executives. Each council would be able to set its own rates independently and determine the level of amenities it will provide. Councils wishing to attract wealthier residents will therefore focus on better infrastructure such as parks, while also charging more money from residents. Citizens will therefore physically move to the better managed councils and vote with their feet. Because of the natural competition between a multiplicity of councils, the costs will be kept down. Through this process, world-class services will become the norm in India’s cities.
Thereafter, districts and municipalities will be disbanded from the commencement of Phase 2. The ‘imperial’ Collectorates will be dismantled as well, and their land revenue staff transferred to these councils. India is not a colonial administration and does not need ‘political’ officers such as Divisional Commissioners and Deputy Commissioners. The concepts of administrative divisions and subdivisions will also be scrapped. Local governments will act as the eyes and ears of the State government. An overarching regulatory role will remain for State Governments in urban affairs, primarily in making enabling laws, in managing the ownership of land and in building geographical information systems to coordinate the records of land use. These local government reforms will be reviewed after five years to further refine governance at the local level.
To be continued.
[Note: This is an extract from my book, Breaking Free of Nehru]

[i] Lutyens’s Delhi comes under the New Delhi Municipal Corporation, the cantonment under the Delhi Cantonment Board and the rest of Delhi – a mind-bogglingly large area, under the Municipal Corporation of Delhi. This is extreme centralization, which is incompatible with freedom. Freedom requires people to be free to mould their local environment as they please, subject to their joint accountability.

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