‘Why Does the Indian State Both Fail and Succeed?’: An Excellent Paper by Devesh Kapur

Performance of Indian state is somewhat paradoxical since independence. On some front, it is woefully inadequate while on some other front, it is very impressive, that is why Lant Pritchett has described India as “flailing state”. He wrote “Measures of the administrative capacity of the [Indian] state on basics like attendance, performance, and corruption reveal a potentially ‘flailing state’ whose brilliantly formulated policies are disconnected from realities on the ground.”

Indian state performs poorly in providing basic public services like primary education,water, sanitation and public health. While simultaneously it effectively manages large armed forces, regularly conducts national election, and has completed many mammoth tasks like AADHAR and covid vaccination program effectively.

This paradoxical performance of Indian state has been bothering me since long. Recently I stumbled upon this brilliant paper by Devesh Kapur. Devesh has brilliantly explored this question and has given some answers too.

I will try to summarise the discussion in the paper.

1. Indian state’s progress is generally better in areas where state can deliver service without any hindrance of social norms.
2. Indian state performs better in activities where delivery is episodic in nature and where exit is automatic once activity is complete. Author has given example of conduct of national election by ECI, Kumbha Mela managed by Indian states, Indian census and polio-eradication drive conducted by Indian state. In above given examples, exit is inbuilt, once activity is complete.
3. After the economic liberalisation, role of Indian state has changed from direct production to regulation. This has furthered the ‘judicialization’ of indian state. Indian judiciary has appropriated the vaccume created by executive, legislature and other regulatory bodies.

Author has given the various possible reason which can explain this heterogenous nature of Indian state’s performance.

1.Inadequate local government resources is one of the reason given by the author which I find very convincing. Author has compared the structure of public employment of India with other large federal states like USA and China. In US, two-thirds of government employees work for local governments. Even in China, close to 2/3 of public employment was at sub-provincial level. Whereas in India during in 2012, share of local government employees in total government was around 12.0%. Thus the share of local government employees in total employment in the US and China is five times that of India. This skewed distribution of public employment, explains the state ineffectiveness in continuous public service delivery at grassroots level, since there are not enough resources at local government level.

2. Precocious democracy is another reason that can be held responsible for the heterogeneous performance of Indian state. Precocious democracy tends to militate against the provision of public goods in favour of redistribution specially when country pursue democracy prior to economic development. By prioritising redistribution over providing public goods, Indian state weakened its legitimacy. This has led to exit of India’s middle class in the favour of private provision feeling that they have not received enough from the government in the form of public good and is also reluctant to pay taxes. Weak fiscal ability at local level of government has further contributed to this problem. Another problem that arises due to precocious democracy is that politicians are relying more on providing freebies having more visibility and quick political return rather than providing public goods like health, education etc with long term investment. Also a precocious democracy tends to exploit social heterogeneity and create narrow club goods rather than providing public goods to broader base.

3. There is a divergence between national elites and local elites. That’s why progressive policies formulated by national elites, when went for implementation through local elites, who were in some sense rooted in hierarchical society, the differences in performance became much more visible.

Author’s insight about impact of precocious democracy and social cleavages on Indian state’s performance is very interesting and thought-provoking. These insights are very useful from public policy perspectives. I liked the author’s point about weak fiscal ability of local governments and less human resources at local level and its negative impact on the public service delivery. This can be empirically validated by the cleanliness level of Indian municipalities. This needs urgent attention towards fiscal strengthening of local government and more power decentralisation in the spirit of 73rd and 74th amendments.

Sources:

1. Why Does the Indian State Both Fail and Succeed?, Devesh Kapur, JOURNAL OF ECONOMIC PERSPECTIVES, VOL. 34, NO. 1, Winter 2020, pages(31–54)
2. Paper link: https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.34.1.31