The reforms India needs PM Modi to courageously undertake

With the re-election of Prime Minister Narendra Modi, fears are again being expressed of creeping authoritarianism in India. But i worry about the opposite problem. I do not fear a strong state but a weak and ineffective one. A weak state has frail institutions, especially a feeble rule of law that takes a dozen years to give justice and has 3.3 crore cases pending in the courts. A weak state does not protect the weak against the strong. A weak state creates uncertainty rather than predictability in peoples’ minds and allows policemen, ministers and judges to be bought. It also prevents quick action by the executive and slows reforms to a snail’s pace because of warped incentives within the bureaucracy.

One lesson that Modi should have learnt in the past five years is about the limits of the Indian prime minister’s power. A liberal democratic state rests on three pillars: an effective executive, the rule of law and accountability. We obsess over the third pillar when the real issue is the first. With the nation always in election mode, India’s problem is not accountability, it is about the ability of the state to get things done.



The Indian prime minister is weak also because real power resides with state chief ministers, who are the real rulers of India. Ironically, it was Modi’s performance as chief minister that got him elected in 2014, and we assumed that he would carry that magic when he became prime minister. It didn’t happen. Although Indira Gandhi came close to becoming a dictator, she too discovered the limits of her power.

In 2014, Modi asked the Indian people to give him 10 years to transform India. Well, here is his chance. That transformation must begin not with economic reform but with reform of governance. Modi can take inspiration from Margaret Thatcher, who saved up the more difficult reforms – the reforms of the state – for her second term. It will not be easy to enhance state capacity because India has historically been a weak state unlike China. Our history is that of independent kingdoms while China’s is a history of unitary empires. The four empires of India – Maurya, Gupta, Mughal and British – were weaker than the weakest Chinese empire.

Our first loyalty is to society – our family, our jati, our village. Although the state was mostly weak, India always had a strong society. Hence, oppression did not come from the state but from society – from the Brahmins, for example, and it needed a constant stream of renouncers and saints, like the Buddha, to protect us from oppression. Because power was dispersed historically, India could only have become a federal democracy 70 years ago and China could only have become an authoritarian state. The lesson from history is that we need a strong state to get things done and we need a strong society to make the state accountable.

China’s government today is ironically more popular than India’s because it has delivered outstanding performance. Not only has it wiped out poverty, making a poor country middle class, but it has relentlessly improved day to day governance. In the end, China has delivered better education, health and welfare to aam admi. The secret of its success is not authoritarianism but the fact that it has focussed on state capacity. While elections have given the Indian people more freedom (and this is a great achievement) the Chinese state has given its people a more predictable day to day life through better governance. This is not to suggest that Indians will exchange their system for the Chinese (nor should they) but if you try and put yourself in the shoes of the Indian and the Chinese aam admi, you must feel disappointed with our democracy.

China has succeeded in enhancing the capacity of its state by making its bureaucracy more motivated and effective. This means closely monitoring and rewarding the performance of officials. Promotions in the Chinese bureaucracy are not based on seniority but upon superior delivery of services to citizens. These incentives in turn motivate Chinese bureaucrats to be more pragmatic – unlike rule bound Indian officials – and they search for and re-apply the best practices that deliver on the ground.

India’s bureaucracy has suffered for decades because no political leader has had the guts to implement the crying reforms that everyone has agreed upon for 50 years. An honest and transparent tax collecting machinery will collect more taxes in the end. The same thing applies to reforms in the three other parts of the state – the judiciary, the police and the Parliament – where countless reform commissions have endorsed the same blueprints for change.

Will Modi be the strong leader who has the courage to take on vested interests and enhance the capacity of the Indian state? He certainly has plenty of experience, both in Gujarat and in the Centre, and he also knows the pitfalls in taking on vested interests. The way to begin is to catch low hanging fruit. This means to first implement existing laws; then only create new laws. When it comes to policy, it is not about the ‘what’ but about the ‘how’. Everyone knows what is to be done; the real question is, how to do it. India has plenty of laws but China has order. You need both ‘law and order’, as the American TV serial says.

Reforming institutions will be much tougher than economic reform but the rewards will also be greater. If he succeeds, Modi will go down in history as the one who fulfilled his promise of ‘minimum government, maximum governance’. India has done well when it has bet on its people; it is about time to bet on its government.