Economic Reforms and Public Service Delivery in India

Shahaida PArea Chair: Marketing

Administrative Staff College of IndiaHyderabad

shahaida@asci.org.in

Agenda1. Background of India's Economy2.Brief History of India's economic progress3. Steps taken by government to foster economic growth4. Current status and major economic reforms in recent times5. Public Service delivery systems in India6.Major indicators of public service delivery7. challenges and possible solutions8. Recent public service delivery enablers- Right to information act, right to guaranteed services act, Companies Act 2013, mandating corporate social responsibility, participatory planning

Background

• India suffered from Gross fiscal deficit from 1985 onwards, India had reserves to pay only for 3 weeks of import in 1991

• Government debt was 53% of GDP in 1991• Liberalisation of economy in 1991-pragmatic

route by PM, P V N Rao• Transformed from Poor slow growing to fastest

growing economy in 2016 (25 years)• World Economic Outlook, 2016- India and USA

are two pillars of strength in the sagging world economy

Brief History• Socialist theory• Public sector to grow economy• Financial Commission: Five year plans,

replaced by Niti Aayog (National Institute for Transforming India)

• India Grew by 7.4% 1994-97, 5.7% 1997-2003, 9% 2005-2008, 2011-2015: 5.6%-7.2%, 2015-16-7.6%-8%, 2016-17-7.1%

• Once a poor economic laggard, India now has the third-largest GDP ($7.98 trillion) in the world in purchasing power parity terms after China and the United States

Citizen Benefit: Per Capita Income

• Per capita income is up from $375 per year in 1991 to $1,700 today (Economic Times, July 10, 2016)

• India has long ceased to be a low-income country as defined by the World Bank, which uses a threshold of $1,045, and has become a middle-income country

Major Economic Reforms

• Foreign Direct investment: USD 21383.05 million in 2010-11 to USD 43478.27 million in 2016-17 (No.9 )

• Green Revolution- Agricultural Production

• Reducing Poverty Reforms (45.3%in 1993-94 to 21.9% in 2011-12)

• Export and trade boost• Unprecedented growth: infrastructure,

technology, automotive, financial services, healthcare

https://community.data.gov.in/total-foreign-direct-investment-equity-inflows-from-2000-01-to-2016-17/

Exports

• India's share in global services exports stood at 3.2 per cent in 2014-15, double that of its merchandise exports in global merchandise exports at 1.7 per cent

• Cumulative value of exports for the period April-March 2015-16 was US$ 261136.80 million (Rs.1708841.43 crore)

• Cumulative value of imports for the period April-March 2015-16 was US$ 379596.17 million (Rs.2481367.22 crore)

• Eighth place amongst the top ten exporters of service in the world

http://pib.nic.in/newsite/PrintRelease.aspx?relid=138961

Public and Private Sector

• Public Sector accounts for over 22 % of the country’s GDP, around 6 % of the total employment in the organized sector, and over 20 % of direct and indirect tax collections ( 2011 –2012), 14.4 Lakh employees (2011-2012)

• Private Sector accounted for 66% in 1980s, around 75-80% of GDP currently

www.springer.com/cda/content/document/cda.../9788132217619-c2.pdf?SGWID...

Sources of Revenue for Indian Government

• Taxes - all the revenue collected from various taxes (corporation tax, income tax, GST, customs duty, excise duty)

• Non-tax revenue - revenue collected from interest, assets in form of dividend and profits, fees, fines and miscellaneous receipts.

• Capital receipts - borrowings and other liabilities, market loans, recovery of loans, disinvestment

Government Spending

• Defence, Urban, Railways, Women and Child development, Power, Chemical and Fertilizers, Agriculture and Farmers Welfare, Road Transport and Highways, Rural development, Health and Family welfare, Home affairs, HR development, Consumer affairs, Housing and poverty alleviation, Communications and Information Technology etc

Recent Reforms• Unique Identity Project: Aadhar• Demonetization• GST- Goods and Services Tax• Make in India, Digital India, Start-up India, Skill India,

Urban Smart Cities Mission etc• Mandatory Corporate Social Responsibility- Companies

Act 2013• Infrastructure and Connectivity• Crop Insurance, e-National Agricultural Market• Green Economy and energy• Swachh Bharat Abhiyan

Public Service Delivery

• The World Bank’s 2016 Doing Business report puts India at 130th of 189 countries in the ease of doing business in the country.

• Earlier 142nd position still in the bottom half of countries. India ranks especially low in the ease of getting construction permits (183rd), enforcing contracts (178th), paying taxes (157th), and starting a business (155th)

Public Service Delivery

• The delivery of government services in India is pathetic, from the police and judiciary to education and health (Aiyar, CATO report, 2016)

• Slow Judicial system• Lack of enough police manpower (India has

123 policemen per 100,000 population, almost half the UN recommended level of 220)

Public Service Delivery

• Politicians with Criminal Cases: An analysis by the Association for Democratic Reforms looked at 541 of the 543 members of Parliament elected in 2014 and found 186 had criminal cases pending

• Corruption: International’s Corruption Perception Index rated India 34th of 41 countries in its first report in 1995, improving to 45th of 52 countries in 1997

• Its position further improved to 84th of 168 countries in 2015 and stood at 76th of 168 countries in 2016

Lagging Social IndicatorsIndia, Bangladesh, Bhutan, Nepal, Pakistan, and Sri Lanka

Health

Primary Education

Challenges and Possible Solutions1. Incentives for Politicians: Win ElectionsDecentralization, Affirmative Action, Performance related pay2.InformationThe poor lack awareness and inability to rate public servicesCommunity mobilization (Self Help Groups), media support3. State Capacity- weak monitoring, leakages, complex and slow legal proceedingsTechnology adoption, social audit by third parties, centre and state cohesionFostering Good Governance Principles: Transparency, Accountability, Responsiveness, legal framework, citizen engagement and right execution

Some Encouraging Reforms: Case Studies

• Legal Systems: Right to Information Act, Right to Guaranteed Government Services Acts

• Mandatory CSR – Companies Act, 2013• Participatory Planning- Rural Development• E-governance initiatives

Introduction – What is RTI? Right available to the general public to demand information from the duty-

bound Government and/or government funded bodies. Provided to citizens through the Right to Information (RTI) Act 2005. Not constitutionally protected in direct expression, but has been read

into various fundamental rights by the Supreme Court of India. Forms a crucial part of the Fundamental Right to Freedom of Speech and

Expression, enshrined under Article 19(1)(a) of the Constitution of India. Finds place in various international conventions, including the Universal

Declaration of Human Rights (UDHR). Has gained phenomenal importance as a tool for ensuring and promoting

transparency and accountability on a widespread level.

Salient features of the RTI act, 2005

“Information” (§ 2(f)) – Any material in any form, including electronic form,accessible by a public authority under any law in force.

Easy procedure for filing of RTI application to Public Information Officer (PIO)of the concerned public authority (§§ 6, 7). Duty of public authority to comply with specified time period for disclosure of

information (§ 7(6)). Penalty for non-disclosure of information - ₹ 250 per day till application is

received or information is furnished, maximum penalty being ₹ 25000 (§ 20(1)). Duties of public authorities:

To maintain duly catalogued and indexed records relating to the requisite orconcerned information, in computerised form within reasonable time (§ 4(1)(a)).

Proactive disclosure of particular information of public authorities encouraged (§4(1)(b)).

Certain types of information exempted from disclosure by publicauthorities, including information relating to trade secrets, commercialconfidence, national integrity and sovereignty, and third party incidents (§8(1)). Can be declared open for disclosure if the public interest outweighs the

harm to the protected interests (§ 8(2)). Opportunity to be given to third party about request for information

related to it, as well as any objection raised in this regard (§ 11(1)). Appeals to be made first to First Appellate Authority (FAA), and

subsequently, to the Central Information Commission (CIC) for centralauthorities, or State Information Commission (SIC) for State ones (§ 19).

Alternative remedy – Direct complaint to CIC/SIC if decision passed by thePIO relating to concerned information not satisfactorily.

http://rti.gov.in/ From 2005-2015- 1.74 cr applications were filed. Commonwealth Human Rights Initiative (CHRI, reported in Economic

Times), reveals that 27.2% (47.66 lakh) of the total RTIs filed between 2005and 2015 were to the different ministries and departments under the Centre

Maharashtra State: 26.40%(46.26lakh) , Karnataka State: 11.83 (20.73 lakhs)

Quality of Public Services: 2005 - Quality Management System (QMS) in India integrates - UK + USA model = Sevottam

• ‘Sevottam’ ( Uttam-Excellent, Seva- Service) It is a generic framework - for improving public service delivery on a continual basis, till excellence is achieved

- Excellence here means improving processes to achieveoptimal point of timeliness and quality. It includes reducinguncertainty from the viewpoint of Citizens

• Government organizations that adopt QMS Sevottam iscertified under Indian Standard 15700:2005, by Bureau ofIndian Standards, New Delhi. 41 Central organizationscertified from 2010 to 2013

• Many Departments and Governments adopted Sevottam but problems in service delivery persisted

Madhya Pradesh enacted the Madhya PradeshLok Sewaon Ke Pradan Ki Guarantee Adhiniyam in 2010 followed by Bihar and other states.21 states/UTs have now enacted the RTS Act

Right to Services Acts: Legislative Approach

Karnataka: Service Guarantee Act, SAKALA, 2011

• The Act empowered citizens to avail 678 services from across 52 departments in a time-bound manner and claim compensation for any delays/ defaults

• In 3+ years more than 8.5 crore services were availed by citizens in a time bound manner in Karnataka

• Accountability: In case of a delay/ default of a service request, the appellate authority/ competent officer/ designated officer/ subordinate public servant is liable to pay compensatory cost at the rate of Rs. 20 per day for delay subject to a maximum of Rs. 500 per application

SAKALA SERVICE DELIVERY PROCESS

Citizens need for a service

Sakala Counter

Places demand for the service

Gets 15 digit Acknowledgement Number

Process of closing the service request

Data updated

SMS to citizen

Service delivered

Service processed SMS to citizen

151

265

375

419447

478

668 678 688706 721 725 726

0

100

200

300

400

500

600

700

800

Apr-12 Dec-12 Aug-13 Sep-13 Nov-13 Feb-14 Jun-14 Jul-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16

I phase II phase III phase IV phase V phase VI phase VII phase VIII phase IX phase X phase XI phase XII phase XIII phase

Number of Services delivered under Sakala

3+ years -Stats

3+ years -Stats

10 croreApplications

received

10 croreApplications

received

9.90 croreApplications

Disposed

9.90 croreApplications

Disposed

98% - in time disposal

98% - in time disposal

2% - Delayed disposal

2% - Delayed disposal

4% - Average Rejection

Rate

4% - Average Rejection

Rate

659 cases –Compensation

(Rs.79,700/-) given to Citizens

659 cases –Compensation

(Rs.79,700/-) given to Citizens

Data as on Jan 2016

January 2016

• 726 services from 61 departments• 136 online Services• 100% tracking of service delivery process• 98% in-time delivery• 20,000 Plus Service centres in 31 districts of Karnataka• ISO 9001 certified process• More than 13 lakh calls answered by call centre since

2011, No-080 44554455• 659 cases – Compensation (Rs.79,700/-) given to Citizens

(17-2- 2016)• 10 crore Applications received (17-2-2016)• 9.90 crore Applications Disposed

Top Services and Departments

Corporate Social Responsibility

UNIDO

• The United Nations Industrial Development Organisation (UNIDO)

CSR is a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders. CSR is a way in which companies achieve a balance of economic, environmental and social imperatives.

First Phase

(1850-1914)

Driven by noble deeds

of philanthropists and charity

Second Phase(1914-1960)

Largely influenced by Mahatma Gandhi’s theory of trusteeship. Industrialists

pressurized to show their dedication towards the benefit of the society

Third Phase(1960 – 1980)

CSR influenced by the emergence of Public sector undertakings to ensure

proper distribution of wealth

Fourth Phase(1980 until the present)

Indian companies integrated CSR into a sustainable business strategy. What

started as charity is now understood and accepted as responsibility.

Four Phases of

CSR Development in India

Companies Mandated to constitute a CSR CommitteeNetworth of Rs 500 Crore (76800000 USD )or moreTurnover of Rs 1000 Crore (153600000 USD) or more Net profit of Rs 5 Crore (768000 USD) or more

CSR Committee to haveThree or more directorsAt least one is to be an independent director

Board’s Report shall disclose the constitution of CSR Committee

CSR Committee will Formulate CSR policy and recommend to board indicating

the activities to be undertaken as specified in schedule vii Recommend the amount of expenditure to be incurredMonitor CSR Policy from time to time

CSR: Companies Act 2013-Section 135

Board of Directors will Approve CSR Policy Ensure implementation of CSR policy Disclose the contents of CSR policy in the Board report Place the same on company’s website, if any Ensure CSR spending amounting to at least 2% of the

average net profit of the preceding three financial years Board’s Report shall specify the reasons for not spending

the specified amount There is no penalty for failure to spend 2% of net profit on

CSR

CSR: Companies Act,2013

• Eradicating extreme hunger & poverty• Promotion of education• Promoting gender equality and empowering women• Reducing child mortality and improving maternal health• Combating human immunodeficiency virus, acquired immune

deficiency syndrome, malaria and other diseases• Ensuring environment sustainability• Employment enhancing vocational skills• Social business projects• Contributions to Prime Minister Fund or any other fund set up

by the Central Government or the State Governments for socio-economic development and relief and funds for the welfare of the Scheduled Caste and Schedule Tribe

• such other matters as may be prescribed

Schedule VII Activities

18 June 2014

Number of Companies and Actual Corporate Social Responsibility (CSR) Expenditure

in India(2014-2015 and 2015-2016)

Company Type

2014-2015 2015-2016No. of

Companiesfor whichData has

beenCompiled

Actual CSRExpenditure

(Rs. in Crore)

No. ofCompanies

for whichData has

beenCompiled

Actual CSRExpenditure

(Rs. in Crore)

PSUs 226 2497 172 3360.2Private Sector

Companies7108 6306 4925 6462.1

Total 7334 8803 5097 9822.3

Abbr. : PSUs : Public Sector Undertakings.Source : Lok Sabha Unstarred Question No. 374, dated on 03.02.2017.

1 crore= 10 million

Sector-wise Corporate Social Responsibility(CSR) Expenditure in India

(2014-2015)

Subjects in Schedule VII* CSR Expenditure(Rs. in Crore)

Eradicating Hunger, Poverty & 1421.66Health CareEducation/ Vocational skills / 1462.60Livelihood EnhancementWomen / Old Age / Children 219.27Environment Sustainability 1188.69Art & Culture 539.83Sports Promotion 454.91PMNRF etc. 125.32Rural Development 724.32Slum Development 114.14Swatch Bharat Kosh 42.64Clean Ganga Fund 15.49Others 28.50Total 6337.36

Note : * : Scheduled VII of Companies Act, 2013.Source : Lok Sabha Unstarred Question No. 656, dated on 26.02.2016.

Participatory Planning: Definition

• A type of planning where local organisations and institutions formulate, adopt, execute actions and supervise the plan without interference by the central body

Three Tiers of local Self Government-Panchayati Raj

• The village, block and district levels• At the village and block levels they are elected

democratic bodies• At the district level there is an advisory body

under the Chairmanship of the District Collector MPs, MLAs and other important persons are its members

• The elected bodies are entrusted with planning and development activities

• Panchayati Raj institutions were set up in many states (22 states & 5 UTs)

Constitution Amendments

• PR institutions became constitutional units of self-government through the 73rd Amendment to the Constitution in 1993

73rd & 74th Amendments

Local bodies – Panchayats and Municipalities came under Part IX of the Constitution after 43 years of India becoming a republicParliament passed the 73rd and 74th

Amendments to the Constitution in December 1992 and they became part IX of the Constitution on 24 April and 1 June 1993 respectively

Salient Features of the 73rd and 74th Constitution Amendment Acts (1992)

1. Panchayats and Municipalities will be “institutions ofself-government”.

2. Basic Units of Democratic System - Gram Sabhas(villages) and Ward Committees (Municipalities)comprising all the adult members registered asvoters.

3. Three-tier system of panchayats at village,intermediate block/taluk/mandal and district levels.Smaller states with population below 2 million onlytwo tiers

4. Seats at all levels filled by direct election

Salient Features … Contd.

5. Seats reserved for Scheduled Castes (SCs) and chairpersons of thePanchayats at all levels also shall be reserved for SCs and STs inproportion to their population.

6. One-third of the total number of seats reserved for women. One-third of the seats reserved for SCs and STs also reserved forwomen. One-third offices of chairpersons at all levels reserved forwomen.

7. Uniform five year term and elections to constitute new bodies tobe completed before the expiry of the term. In the event ofdissolution, elections compulsorily within six months.

Salient Features… Contd.

8. Independent Election Commission in each state forsuperintendence, direction and control of theelectoral rolls.

9. Panchayats to prepare plans for economicdevelopment and social justice in respect of 29subjects listed in 11th Schedule. 74th Amendmentprovides for a District Planning Committee toconsolidate the plans prepared by panchayats andMunicipalities.

Salient Features…Contd.

10. Funds: Budgetary allocation from state governments, revenueof certain taxes, collect and retain the revenue it raises, CentralGovernment programmes and Grants.

11. In each State a Finance Commission to determine theprinciples on the basis of which adequate financial resourceswould be ensured for panchayats and municipalities.

29 subjects are under Panchayat

http://www.panchayat.gov.in/home

Multi-Level Federalism and Widening Democratic Base after the 73rd and 74th Constitution Amendments

First Stratum

UNION Two Houses of Parliament have 793 Members

(Lok Sabha: 543; Rajya Sabha: 250)

Second Stratum

STATES & UNION TERRITORIES 28 State Assemblies and Two* Union

Territories have 4508 Members

Total Elected Members at the Union and State Level

5301

Third Stratum DISTRICT & BELOW

Rural: 700 Million plus There are 607 Districts in India 535 District Panchayats elect 15,815 5912 Block/Tehsil/Mandal Panchayats elect

145,412 231,630 Village Panchayats elect 2,971,446 Total Elected Members : 3,132,673

Urban: 300 Million plus

107 City Corporations** 1443 Town Municipalities 2091 Nagar Panchayats*** Total Elected Members : 68,554

The Third Stratum Elects 3,200,000 Members (Approx)

Of this

more than 1,000,000 are women 800,000 are SCs/STS

* Only two Union Territories (Delhi and Pondicherry) out of seven have elected Assemblies. ** Population above 300,000 *** Areas in transition. One-third of all the Panchayats and City Corporations/Municipalities/Nagar Panchayats are headed by women as Presidents, Mayors. About one-fourth are headed by hitherto untouchables (Scheduled Castes) and Scheduled Tribes. Source: Institute of Social Sciences, Panchayati Raj Research.

Dimensions of Decentralization

(i) Functional(ii) Financial(iii) Administrativeand (iv) Political

References

• Twenty five years of Indian Economic Reform, Policy analysis, Aiyar, 2016 https://www.cato.org/publications/policy-analysis/twenty-five-years-indian-economic-reform

• http://www.ey.com/Publication/vwLUAssets/ey-india-transforming-through-radical-reforms/$FILE/ey-india-transforming-through-radical-reforms.pdf

• Statistics from Various Government sources• Personal experience in Government assignments• Images from Google Images