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Low on steam State

As I mentioned in my last post, Atul Kohli’s book “State DirectedDevelopment” is a must read to understand the historical reasons for a low capacity state in India. In brief:

  • The British, especially after 1857, realized their limited capacity to uproot traditional structures of ownership of productive resources in India, and also, their ability to extract rent beyond a point. They overcame this issue by entering into agreements/arrangements with Indian elites of the time to act as the agents of the British. Therefore, as long as certain functions were performed by Indian elites in place of the British, the British did not have to invest in state capacity.
  • Consequently, the colonial state in India was a laissez-faire state, with low investments in state capacity. It should be noted that the nature of investment here is markedly different from investments in economic sectors. At issue here is the lack of investment in the capacity to extract and utilize these resources.
  • Independence did not fundamentally alter this laissez-faire model. While we opted for an interventionist approach to the national economy, it was not sufficiently complemented by investments in state capacity. As Kohli points out, the Indian National Congress additionally co-opted many of the same elites within its folds, therefore creating a political class opposed to greater penetration of the state into society.


All these factors have historically contributed to a low-capacity state in India. Additionally, things have not been helped by the lack of understanding of effective manpower planning in independent India. As per conversations I have had, as part of an austerity drive in the late 80s and early 90s, the departmental divisions responsible for manpower assessment were abolished!!

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The desperate need for more people

My previous post highlighted the in-principle requirement for more, not less manpower in state departments. My research in the last month or so highlights the following points:

1. All through the 20th century, and for most of the period under British India, Indian administration has been starved of capacity. Post-independence, this has been starkly at odds with its interventionist ambitions to remove poverty, and increase social indicators. However, the consensus on such interventionist policy has not translated into a consensus on building state capacity. My next post will address this in detail.

2. Notable scholar, politicians are all commenting on the starvation of capacity at all levels. Prominently,

a. Shashi Tharoor, “In the Ministry of External Affairs

b. Devesh Kapur, “The Indian State and India’s future

c. Devesh Kapur and Arvind Subramaniam, “Rebuilding the Indian State

d. The Minister for Finance, P. Chidambaram, “Recapturing India’s Growth Momentum: A conversation with Finance Minister Chidambaram

There is therefore, no pressing need to have a first-principles debate on the need for improving state capacity.

3. The question is how, and at what levels. Obviously, all levels of government – central, state and local government require capacity addition. However, metrics for capacity addition are not transparent, consistent, or for that matter, easily available. This puts a huge transaction cost on existing administrators to invest resources in a scientific method of manpower assessment. The Ministry of Finance has a Special Inspection Unit whose job it is to assess manpower across departments. It is however unclear as to how effectively they function, and what their exact mandate is.

4. The next step then obviously is to get this information on the existing method of manpower assessment, before any analysis of their methods, and comparison with other jurisdictions can be made. Premature development of metrics may defeat the purpose of their exercise since it is advisable to realign and fix the existing system rather than propose drastic alternatives, given the inherent aversion to large-scale change within the government.

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Can the state handle it?

A minimalist theory of state functions explains the main functions of the state as being (a) the function of collecting revenue, (b) the maintenance of law and order, and (c) the protection of a nation’s boundaries. State capacity is a pre-requisite to perform even these essential functions. The roles of states in contemporary times is not limited to these minimal functions. Most states perform these, as well as other roles, sometimes as facilitators, regulators, or direct market participants. In India, there is a broad existing consensus in favour of the state acting in all these capacities. Indeed, there is no clear consensus yet, on whether the state needs to withdraw from certain functions, towards a more liberal construct of the role of a state.

In this context, it is essential to connect the legitimacy of the state, to its capacity to deliver. As a social-welfare democracy, our constitutional goals mandate that the state perform roles that very few developed democracies were tasked with at their inception (the eradication of mass poverty, illiteracy and starvation). Therefore, the legitimacy of our state apparatus has never been measured merely against how well it provides the three minimal services of collecting revenue, maintaining law and order, and protecting our borders. These diverse and competing expectations from a fledgeling state apparatus may in fact have compromised its ability to deliver the essential three services in the first place. In short, because we asked our young state to do too much too soon, it may not have been able to deliver basic services expected of every state.

Therefore, if the state is to attain legitimacy, it has to perform its functions more efficiently. And since there is an existing consensus on asking it to do a multitude of things, there has to be a comprehensive analysis of the capacity of the state to deliver. In some instances, such as when police-population and judge-population ratios are measured, it is easy to estimate our current numbers, compare it with states who deliver law and order, and justice more efficiently, and estimate how well our current police-population ratio and judge-population ratios measure up against these countries. The police and the judiciary are however relatively homogenous departments that perform a limited number of tasks i.e. the police exists to prevent crimes from occurring, and investigating crimes which have already occurred, and judges exist to interpret the law, examine the facts and deliver justice.

But what about the state departments of health? They oversee and regulate private hospitals. They also own and supervise government hospitals. They have to ensure the genuineness of medicines, the operation of emergency health services. They also have to implement  food safety laws and standards. If the central government starts the National Rural Health Mission, they also have to implement the mission. In many cases, the same individuals comprising part of the bureaucracy may be performing these multiple tasks which require very different skills and much more manpower. If this is indeed true (and many commentators feel it is) then contrary to the pop-policy debate on reducing the role of the state, there is an argument for substantial investment in state capacity. In other words, most bureaucracies perform multiple, and heterogenous tasks. However, their internal design, and capacity has not evolved to take on the burden of the ever-expanding regulatory state.

One alternative would be to insist on a drastic overhaul of the bureaucracy, as many do. Another would be to insist, or formalize mechanisms for ensuring that any addition to the tasks of a state agency is complemented by an increase in state capacity. The law, rule or regulation that delegates a particular administrative function on a particular agency should do so only if it can justify that the agency is best placed (in terms of skills and resources) to perform this additional task. The latter may in the long run create a virtuous cycle leading to an internalization of the principle of manpower costs before new laws and rules are created.

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