Clever Diplomacy And Good Governance Go Hand In Hand

The concept of Good Governance has, in recent times, caught the imagination of governments and administrations around the world. The World Good Governance Day, an annual feature, is celebrated on December 25, the same day on which India also observes her own Good Governance Day.

Ideally, governments should only handle things considered essential in the national interest and cannot be entrusted to the private sector like defence, maintenance of internal security, managing currency, and handling external affairs.

Surely, manufacturing products, such as handbags and saddlery, as the public sector enterprise Bharat Leather Corporation (currently under liquidation), used to do, or soaps and detergents, as the state-owned Karnataka Soaps and Detergents (known for the world-famous Mysore Sandal Soap), cannot be considered as a priority for governments! Another organisation, now under liquidation Cycle Corporation of India, a government of India owned company, was also in existence for some years. All other matters should be left to the private sector, save those in which a measured presence by governments is considered essential, with a view to ensuring that the goods and services provided in those fields are made available and accessible to the underprivileged sections of society and the backward regions of the country.

In a welcome departure from the traditional approach, telecommunications, production, transmission and distribution of electricity, civil aviation and, to some extent, the railways have also figured in the Union Government’s plans for exit and privatisation.

Exiting governments, however, need to ensure proper and effective regulation of the activities of the private sector in those areas. The establishment of regulatory mechanisms, in sectors such as telecommunications, electricity and civil aviation, are good examples.

Some methods of making a partial exit from selected sectors, while continuing to retain a stake in the field, with a view to making the best use of the resources available with the government, and the expertise and technology, which private sectors enterprises bring, have become common in recent times.

The concept of Joint Ventures (JVs) has, for instance, proved very successful. Governments extend assistance by way of initial capital investment to reduce the financial burden of the entrepreneur. There are other forms of assistance like accessing raw material and finding markets.

So has been the Public Private Partnership (PPP) arrangement. The government make available important resources, such as land and infrastructure (electricity, water and short-term relief), while the entrepreneur brings in expertise and experience, to execute the work.

The Rajiv Gandhi International Airport (RGIA) at Shanshabad is one such example with the GMR group being the private entity. Another remarkably successful venture has been the Hyderabad Metro Rail Project (HMRL) with Larsen and Toubro being the private partner.

Strangely enough, while on the subject of exits and privatisation, one has to refer to the phenomenon of governments, often needlessly, moving into areas where the private sector is already doing well.

Nationalisation of banks is one such example. No doubt, it may originally have been inspired by a desire to ensure that directed lending becomes possible where two neglected sectors, regions, and sections of people reached by institutional finance. Still, it was a retrograde step. So was the recent amalgamation of commercial banks in the public sector, opening up the possibilities of needless government control.

Let us see why in certain sectors like education and health, only a partial withdrawal by governments is desirable.

In the education sector, for example, one finds that private educational institutions offer better-quality instruction apart from having the requisite infrastructure for extracurricular activities. Those managed by governments, however, and local bodies have a much wider reach and are accessible even to the less affluent sections of society. Also, profit remains a main objective for private institutions and leads to a certain degree of exploitation.

The situation is very similar in the case of institutions providing health and medical services. Those in the private sector are more in demand.

Politics driven unionization has also been the bane of government institutions, whether in the medical or educational fields.

The recent introduction of Direct Benefit Transfer (DBT), an innovation meant to bypass traditional channels and intermediaries, ensures direct reach to the intended destinations. It is disappointing, however, that doles continue, in place of the creation of remunerative livelihoods.

As the Chinese philosopher Lao Tzu said, 'Give a man a fish and you feed him for a day. Teach him how to fish and you feed him for a lifetime'.

Now for a look at the incentives which governments extend to institutions, and agencies, for manufacturing goods, and providing services, are considered essential.

Subsidies play a crucial role in any economy; especially in a developing country such, as India.

Ideally subsidies should only be used to encourage the promotion of institutions such as cooperatives, cooperative companies, SHGs and farmers producer organisations.

There is, thus, a strong argument in favour of revisiting the regime of subsidies in the agriculture sector in the country and re-distributing the available support.

One calculation has shown that if fertilizer and food subsidies are stopped, the money thus saved would be enough to complete all incomplete medium and major irrigation projects in the country.

Just look at the numbers: Currently, the government of India incurs an expenditure of Rs 2.05 lakh crore on food subsidy; and Rs 1.75 lakh crore on fertilizer subsidy. It is estimated that about Rs 77, 595 crore is required complete all 99 pending major and medium irrigation projects, prioritised under the Accelerated Irrigation Benefit Programme of the government of India.

Clearly, inefficient management of subsidies can result in magnifying the distribution that is already skewed, of the benefits of development, over sectors of the.

Speaking of good governance, readers fond of Hollywood pictures may recall the most hilarious movie ‘Romanoff and Juliet’, of 1961 vintage. The enchanting plot is about a tiny European country, Concordia. When the United Nations holds a vote on the issue of disarmament, which can tip the balance of power, between the United States and the Soviet Union, during the Cold War days, Concordia decides to abstain. As a natural result, its President gets wooed by the ambassadors of both superpowers who hope to gain his favour for their countries. In the meanwhile, the son of the Soviet Ambassador, and the daughter of the US Ambassador, fall in love. And the story ends on a happy note with the lovers marrying and, consequently, the superpowers declaring a truce. And Concordia remains friends with both.

Clearly, clever diplomacy is as good an instrument of good governance, as any other!

(The writer was formerly Chief Secretary, Government of Andhra Pradesh)