Let’s do a perception check

During the January 2006 “India Everywhere” campaign in Davos, Larry Summers, then Harvard president, asked me whether some of the hype surrounding the campaign represented real change. He later answered the question himself, saying that perceptions invariably lag behind reality. In India, successive years of market deregulation and reforms had altered ground reality with which perceptions were beginning to approximate.

What was true of India is now true of the lagging states of India. Ground realities in Bihar and Rajasthan, for instance, may have changed more significantly than perceptions. So how does one bridge the perception gap? Development councils, creating interface between government and a panel of experts, may help.

This week, Bihar held the first meeting of the newly constituted Development and Investment Promotion Council. It did so in the backdrop of credible steps to improve governance, enact key legislations, administrative reforms and generally opening its windows to changes elsewhere. The council has a broad spectrum of membership drawn from the corporate sector, academia, media and domain specialties. The positive response judged from the participation of Anand Mahindra, K.V. Kamath, Analjit Singh, Hafiz Contractor, Priya Paul, Suresh Neotia, Habil Khorakiwala, Homi Khusokhan, Tarun Das, Amit Mitra, Shekhar Gupta, and Suhel Seth, among others, suggests a robust appreciation of Bihar’s new investment opportunities.

What can such state-level development councils achieve?

• First and foremost, they can bridge the gap between perception and reality. In the case of Bihar, almost everyone agreed that the significant improvement in security environment needed wider awareness and appreciation

• Second, they are an acknowledgement, so to say, that government policies are neither infallible nor immutable. Helping governments whose outlook had remained closed for years to rethink on policy paradigms and programmes is itself a big help

• Third, opening the doors to divergent views entails new obligations, responsibilities and accountability. State governments are only accountable to the people through periodic elections and in a more direct sense to their legislatures. Making themselves accountable even in an informal way to a wide body of different disciplines can be instructive

• Fourth, quite often, in a different context it is said that mindset changes among policy makers does not percolate to operational grass-root levels. An interface between the bureaucracy and the council members creates the dynamics of mind-set change

Public Private Partnership is the new buzz word. Many state governments have not fully understood what it entails in terms of regulatory, accounting and administrative policy changes. Bihar has acknowledged in its Approach Paper for the 11th Plan that achieving an 8.5 per cent GDP growth is critically predicated in securing private investment of over Rs 100,000 crore. This requires a new approach.

A freewheeling discussion in a muti-faceted development council is a good way of discovering the lacunae in design, conception and implementation of PPP models.

Investment, it is said, is an act of faith. Keeping together the flock of the early faithfuls needs quicker implementation of promises and pronouncements like rural roads, city development plans and new education initiatives.

Goodwill cannot substitute for tangible progress. However, positive encouragement always speeds up action. Seeking convergence between perception and reality and the other way round is always enigmatic.