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BW Businessworld

Reform The Process

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World Bank (WB) President Jim Yong Kim returned impressed with the new Prime Minister of India. It wasn’t just the personality of Narendra Modi that led to adulation. A few days ago, the BRICS meeting had finally approved the launch of its New Development Bank (NDB) that would sooner or later begin to compete with WB.

More importantly, the BRICS bank has been structured in a far more egalitarian way than WB. While the International Monetary Fund is seen as a protectorate of European Union, WB is seen as a US body.

Kim realises that India and China together can change the power balance that has been dominated by WB and IMF. He was here also to suss out the actual commitment and strength of the new government. And he found enough to be impressed.

In the last few days the government has been busy clearing old projects. From FDI proposals to defence projects to highways, the government has been taking rapid decisions to improve industrial activity. Many of these were on hold because of the sheer lethargy of the previous government.

As the government readies for new project applications and prepares to deliver on its promise of “minimum government maximum governance”, it will realise the hurdles ahead.

More than 20 years after delicensing, businesses continue to suffer under petty inspectors of myriad departments. Industrial units have to tolerate inspectors from 57 departments. Despite the promise of single window clearance, there are many approvals to be taken by new entities.

Kim mentioned India’s position in WB’s Doing Business rankings. India is at a poor 134 out of 189 countries having slipped in recent years. Kim said that Gujarat would be 50 ranks higher in the list if it was a country.

Here is the key challenge for Modi. Changing government processes at the central and state level will meet stiff resistance. Despite his faith in the bureaucracy, Modi will find that officers don’t want simpler systems. Much of the power of the bureaucracy emanates from complex procedures that only they understand.

While Modi can force his ministers to simplify clearances in the central departments, convincing the states to do the same will be very difficult. Even the chief ministers of ruling party are likely to go slow on any attempt to bring transparency in government business.

The only hope for Modi is to use technology to push through transparency and speedier decision making. The national egovernance plan will have to be enforced on states. Process reform targets will have to be linked to the demands state make on the centre.

For the moment, visiting global leaders like Kim are impressed. But if the Modi government is unable to climb the charts of rankings like the Doing Business report, India will be mocked again.

Most importantly, citizens who are hoping for a more efficient government will be deeply disappointed.

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