Like their then US counterparts, Indian bureaucracy is still to understand the force of markets. In fact, you cannot insure your car for a “competitive rate” in this country. Thanks to this lack of understanding of markets by the Insurance Regulator - IRDA, we have a strange spectacle of insurance companies offering a uniform rate for vehicle insurance. No wonder FDI is not flowing into this sector. Another Regulator who has acted ignoring the market forces recently has been the Telecom Regulator Authority of India (TRAI). How else would you explain the recent order of TRAI fixing the rate at Rs 5 for every pay channel? Something is surely wrong with our bureaucracy’s understanding of markets and its potency.
“What do you make out of these developments?” I asked John, the senior economic journalist. “Narada, remember that every Government servant by virtue of his training believes in the interference of the State. Only the extent varies. Whether it is IRDA or TRAI, the mindset hasn’t changed.” Old wine in the new bottle I thought. “Regulators must only lay the rules of the game and not play it. Unfortunately, people in charge find the temptation too hard to resist,” John added. “But aren’t we pleading for more Regulators – in Railways, in Petroleum and other similar sectors,” I enquired. “Yes, we must be an exceptional country where we find the traffic constable along with the electronic signals.” What John obviously meant was that while we are keen to have the Regulator, we have not developed the necessary will to shrink the Government. I smiled on John’s simile. His ability to convey to the layman impressed me. He seemed to notice it and quipped, “Our bureaucracy is trained over the years for state control. But there is no formal training for migrating into the liberal atmosphere of today and graduate as a Regulator. Hence the conflict.” “But aren’t you too superfluous with your diagnosis?” I asked with an intention to provoke John. “Narada, though liberalisation and globalisation are accepted as inevitable, we are faltering as we are yet to have a roadmap to a smaller and efficient government. After all god is in details.” “Are you suggesting that our bureaucracy is yet to believe in the potency of markets,” I enquired as a natural sequel to John’s comments. “Narada, small and efficient government is the end game that we need to achieve and for that we may even need to even privatise bureaucracy as has been done in countries like New Zealand.” My raised eyebrows were a dead give away. Obviously India cannot be compared, especially in her present stage of development to a small and a more developed country like New Zealand. Years of hard-nosed journalism ensured that John noticed my body language, which conveyed that I was uncomfortable. “The operating word is endgame and this need not be done overnight,” John clarified. “But aren’t we moving in that direction?” I enquired. “Narada, we assume that we are a liberalising economy. Yet we still have a Planning Commission of Soviet vintage. This is a paradox. No wonder, as somebody remarked that is was not the first draft of the approach paper to the 11th Plan but the 11th draft to the first plan itself.” This comparison had me in splits. After a couple of days I got the import of his cryptic comments.