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Governments must do a few things only, and do them well

This despatch is being written from Bombay (foolishly renamed Mumbai by the Shiv Sena-Bharatiya Janata Party government which rules in the state) in the midst of murder, mayhem and civil commotion. For several days spread over the weekend of July 11 to 14, the city experienced riots characterised by stone-throwing, the burning of buses and disruption of public transport.

One of the lessons I have learned from this experience is that in the social tinderbox that is contemporary India, it doesn't take much to instigate a riot. Symbolic insult to one of the many millions of statues in the country can ignite a fire which can bring any city, including the nation's commercial capital, to a halt. For mischief-mongers and anarchists, contemporary India -- whom some absurd optimists project as an economic superpower of the 21st century -- is fertile territory.

Moreover, there is an eerie sense of unreality about the newspaper headlines which proclaim 10 shot dead in police firing, the destruction of public property and the sheer frustration of millions of citizens trying to get to work. Because in south Bombay from where I write, citizens are going about their business as usual. Central Bombay and the suburbs where riots have broken out seems a long way away from south Bombay's high-rise buildings and garishly furbished five-star hotels where members of the establishment stage ritualistic seminars to deliberate on ways and means to stimulate the economy and industrial growth in particular.

But the escalating reality is that India's cities are being crowded by a large and growing underclass which has no interest in preserving the social and economic order as it exists. Only 10 minutes away as the proverbial crow flies (and these days crows fly fast) from the ritzy glamour of south Bombay a visitor is likely to have to bear witness to scenes of human deprivation and degradation which would shock the most hard-boiled capitalist with a minimalist conscience.

Against this backdrop, the nation's establishment and intelligentsia would do well to heed the advice contained in the World Bank's World Development Report 1997 which discusses the role of the state (i e, governments) in a changing world.

The carefully phrased report is an implicit recantation of the traditional World Bank prescription of market-led growth as the universal panacea for socio-economic development. The World Development Report 1997 admits that the State has a large and important role to play is stimulating economic growth and social development. Especially within the slow-developing nations of the Third World.

But the role of the State must match its capability. Governments which attempt to deliver beyond their capabilities metamorphose into Midases in reverse, everything they touch turns to dross.

The report illustrates with numerous examples from around the world that economic and social development is more likely to be attained if government is effective rather than ubiquitous. Governments which focus upon 'securing the economic and social fundamentals' (rule of law, a benign policy environment including macro-economic stability, investment in people and infrastructure, protection of the vulnerable, and protection of the natural environment), are more likely to prevent the marginalisation of large percentages of people without a stake in the system and who are therefore more susceptible to the anarchic impulse, argues the report.

To their credit, the authors of the report stress that matching the role of the State to its capability involves rethinking not only about what the state should do, but also how it does it. Effective governments are those which don't take on too much so they have the time to pay attention to the details of policy and administration.

Moreover, argues the report, it is important to reinvigorate the capability of governments -- the second equally vital part of the reform strategy. The effectiveness of governments can be enhanced only if the incentives under which states and State institutions operate are changed. This involves developing mechanisms (such as an independent judiciary) for enforcing the rule of law; creating competitive pressures within the bureaucracy by emphasising recruitment and promotion on merit, and listening to and cooperating with community groups which would give citizens a greater say in the formulation of government policies.

One doesn't need a doctorate in political science to discern that in contemporary India there is a gross mismatch between the ubiquitous role the state has assumed and its capability. The consequence is widespread maladministration and corruption which has demoralised the citizenry. Little wonder that the nation is too dispirited to celebrate the golden jubilee of the nation's Independence from foreign rule.

Though our comrades of the Left and their fellow travellers are likely to dismiss the World Development Report 1997 as the prescription of a capitalisation devil, it's a befitting gift to this nation on the eve of its 50th Independence anniversary. The report cogently argues the need for redefining the role of the state in underdeveloped nations of the world and has been written, I suspect, with India particularly in mind. At a time in the nation's history when riot follows riot, it would be foolish to ignore its conclusions.