A Bihar in your backyard

Nor is Delhi much better when it comes to fiscal rectitude. Sure, as the NCAER-CII report shows, it’s much better than Bihar, but that’s only in absolute terms. At a little over 4 percent of its GDP, Delhi’s fiscal deficit is low compared to Bihar’s 8 percent or so. But given that Bihar’s fiscal deficit was around 4 percent in the early ’90s, while Delhi’s was a mere 0.5 percent, Delhi’s deterioration has been far faster than Bihar’s.

Given that the fiscal deficit ultimately measures the ability of the government to spend on developing critical infrastructure, it’s hardly surprising that according to NCAER’s forecast, Delhi’s relative growth in terms of per capita income of its citizens will be a fraction that of some of the better-run states of western and southern India in the next 5 years.

Sure, Bihar will be much worse than Delhi, but this is no consolation. More so, when you see that other prosperous states like Punjab are expected to do only marginally better than Bihar. Haryana, thanks to the series of Chautala-type rulers it’s had, will have a lower per capita growth than even that of Bihar Haryana, incidentally, has larger power thefts than Bihar, and loses around 32 percent of its power in this manner.

In terms of crime, it’s possible to argue that Delhi’s nowhere near as bad as Bihar, since there’s no certainty that all murders and dacoities in Bihar get recorded anyway. But, with one car in Delhi being robbed every 52 seconds, surely it can’t get much worse?

Clearly, with such a sad state of governance in even the country’s capital, there’s an overall cap to the kind of growth India can expect it’s quite obvious, for instance, that if things are as bad as this in the capital, they’re a lot worse in much of heartland India. How serious the issue of governance and fiscal credibility are, can be judged from the fact that, as another NCAER report points out, after an exhaustive study of various states, that infrastructure-related factors are the ones which influence exactly where investors will finally set up shop. In the case of Ford, for instance, after examining several states, they finally settled on Chennai, primarily for its excellent infrastructure, and proximity to a port.

Clearly, states like Delhi, or other northern ones, with precarious fiscal positions, will never be able to build or service the kind of infrastructure that modern industry wants.

Interestingly, these very states are now touting the infotech revolution, as the ultimate panacea. Almost sounding like a clone of Andhra’s Chandrababu Naidu, for instance, Chief Minister Sheila Dikshit is planning to set up cyber-cafes, where the citizenry can access government websites to keep tabs on wat’s happening to their ration card, passports, and so on.

The problem is that, while this sounds very nice, only the naive can believe that the infotech revolution will thrive in the present system of governance. What’s the point of finding out, through cyber kiosks which are linked to government office networks, to cite just one example, why your ration card hasn’t got made for a full week, when no one has the power to fire the babu who’s sitting on it?

Similarly, what’s the point of tracking the funds allotted for an irrigation project, when you can’t do anything about the corrupt officials and/or politicians who eat up the funds? Nor is it that the government doesn’t know where funds are going, or why just 40 percent of the grain allotted to Uttar Pradesh for the targeted public distribution system, actually reaches the intended beneficiaries.

The government knows all this, it’s just that it doesn’t feel motivated enough to do anything about it. In which case, it’s unlikely that infotech in itself will help improve things dramatically. Essentially, the `new’ economy isn’t going to prosper much, if you don’t fix the `old’ one.