presentation rfi smith federalism and globalisation feb 2012
TRANSCRIPT
How does what happens internationally affect India’s
federal governance?
Bob Smith
Ackland Smith ConsultingVictoria
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Explore implications for governance in India of interaction between international and internal pressures on federal system
Aim
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Impact of global financial crisis (GFC) bigger than expected
Growth and social development programs extend beyond powers of centre
How to handle matters affecting more than one level of government a continuing puzzle
Reasons
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Amaresh Bagchi: can globalisation and federalism co-exist?◦ Will economic globalization and centralization override
accommodation of diversity?
Shalendra Sharma: ‘federal institutions lag behind the imperatives of globalisation.’
Jay Chaudhuri: do Centrally Sponsored Schemes) work?◦ ‘For all the money which [is] spent, little is known about
where the money has gone, how it has been spent, and what results it has produced .’
Differing views
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Globalisation and India ◦ Thin globalisation◦ Cautious liberalisation
Bagchi’s reflections◦ Accommodate diversity; enhance fiscal discretion of the states
Centre’s strategies for reform◦ policy and management challenges◦ Reform agendas
Intergovernmental relations Public management Budgeting and financial management Local government
Overview
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Economic globalisation and liberalisation
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Rodrik: ‘thin globalisation’◦ robust domestic growth strategies ◦ democratic policy making within nation states◦ global markets depend on governance
foundations of national governments◦ roles of markets, policies to promote competition,
and business regulation expanded
Braithwaite: ‘regulatory capitalism’
Varieties of globalisation
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As crisis continued government faced challenge of fiscal consolidation while maintaining high and inclusive growth
Even thin globalisation involved reciprocal interactions with costs as well as benefits
◦ uncomfortable choices about public sector directions and effectiveness
◦ mitigation of crisis demonstrated key role of centre
◦ crisis raised questions about institutional capabilities and future directions
GFC impacts—India
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Gradualism◦ ‘signaling the broad directions of reforms… but
leaving the detailed implementation to a more opportunistic process’ MS Ahluwalia
Diverging paths?◦ ‘India could be evolving both in a developmental and
predatory fashion at the same time…’ Rahul Mukherji
GFC◦ ‘India is more integrated into the global system than
we tend to acknowledge’ D Subbarao
Reform in India
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Federalism—managing in while also managing out
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Effective federations involve both cooperation and competition
Improvements in federal governance must include the states
Bagchi◦‘for good or ill liberalisation and reforms
driven by globalisation have not enhanced federalism but have rather curbed it’
Making federations work
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Economic reform and intergovernmental relations
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What’s in the mix?◦ Reform ideas and advocates◦ Constitutional, financial and bureaucratic powers
political interests◦ Inflection and blocking points
Change in how federation works◦ less change in structures than change through
processes
Volatile mix
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Plan objective◦ ‘a policy environment that is investor-friendly and is
supportive of inclusive growth’ MS Ahluwalia
Four challenges◦ energy supply, managing the water economy, likely
urban transformation, and protection of environment consistent with rapid growth
Challenges each involve ◦ structuring of markets; institutionalising effective
regulation; workable relations between levels of government
Intergovernmental relations and 12th plan
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‘Most of what needs to be done … rests with state governments but the central government must find ways of improving project design, prioritising resources to fund well designed interventions that work, devolving resources to lower levels and helping build capacity’. MS Ahluwalia
Take over? Impose? Monitor? Negotiate?
Extending institutional reach of central bodies far away from sites of implementation no guarantee of success◦ Incomplete contracts, asymmetric information, transaction costs
12th plan—Implementation
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Forums ◦ topic by topic meetings with chief ministers◦ meetings of central and state ministers,◦ ‘empowered’ committees of ministers ◦ task groups of officials
‘thickening of the Indian polity’s federal institutional structure’ Rob Jenkins
Example: GST
Improvements?
Negotiation?
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‘Evidence based evaluation’ to assist ‘redesign and reprioritisation’ MS Ahluwalia
Evaluation also canvassed in recent India Review symposium on accountability and outcomes
◦ But programs of review and evaluation might only deepen concern about problems already known
◦ CSS: ‘going to the operating room without a diagnostic’ Jay Chaudhuri
Review?
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Management of intergovernmental relations
Public management reform
Improvements in budgeting and financial management
Breathing more life into institutions of local government
Focus on outcomes for citizens expands reform agenda
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Conclusion
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Answer to Bagchi’s question about impact of globalisation on federalism ambiguous
But need for improvements in management of
intergovernmental relations and how public officials relate to citizens unambiguous
So far GFC shock not led to policy inflection point as in 1991
Towards a more adaptive federalism?
Handling globalisation by more reform at home?