Why reform the government?

By Dr Ishrat Husain


THE recent decision taken by the government to establish a National Commission for Government Reform (NCGR) has evoked a varied set of reactions and also heightened expectations about the outcome of these reforms in some quarters.

The purpose of this article is to explain the rationale, to lay down the scope of work and to apprise the general public as to ways in which they can contribute to the task of the commission.

Pakistan has pursued a strategy of economic revival that consisted of four elements: macro-economic stability; structural policy reforms such as privatisation, deregulation and liberalization; targeted poverty interventions and improved governance. Despite many reservations expressed so frequently and with such ferocity by the pundits in our media, the economy is showing signs of vitality and rejuvenation and the factors that kept the economy under stress in the 1990s have begun to dissipate.

Of course, in a dynamic and ever changing world, the economy faces new challenges arising both from economic policies pursued and from external circumstances. The most oft criticism of the economic strategy is that the benefits of growth have not been broadly shared and the disparities between the top income and low income groups are widening. Both these points are valid and need to be understood and addressed in a dispassionate and cool manner.

First, the revival of rapid growth rates in Pakistan after a hiatus of almost 15 years is a recent phenomenon. It is only in the last three years that we have moved up to six per cent annual average and this trajectory has to persist for some time before the benefits begin to accrue more widely. Why is this so? In the early recovery phase those who already possess assets — cash, land and houses, education and skills, machinery and equipment, distribution outlets, transportation, access to financial institutions, etc. — will be the main beneficiaries.

Those without any of these assets do not gain much in this early recovery phase. As growth continues the manufacturers and land owners consider this increased demand for goods and services as non-transitory. They begin to invest and that creates greater opportunities for employment of labour, even for those who are not skilled or are semi-skilled.

It may be seen that it is not the policies pursued that ought to be blamed for the current situation but the unequal distribution of endowments and assets built up during the last 50 years that have given rise to this highly unsatisfactory outcome. Had we invested more in education, training and skills required by the economy or carried out land reforms, the results of the same policies would have been quite different and highly beneficial. This critical point is hardly mentioned in any of the weeping criticisms that adorn the pages of our dailies and fill in the time slots in our TV channels.

Second, the policies pursued for kick-starting a dormant and slumbering economy may no longer be relevant for the next phase of the strategy. In 2001-02 Pakistan recorded negative per capita income growth, unemployment was rising, and living standards were declining. In such a low level equilibrium, inflation was naturally quite low, prices were stable but the level of economic activity and aggregate demand were also low. In a capital deficient country a lot of expensive industrial capacity was lying unused while un-employment rates were the highest and poverty was rising.

Fiscal policy lever could not be used as Pakistan’s debt burden was already quite high. Monetary stimulus was used to kick-start the economy, which led the country to resume its path on the high growth track but in the process the aggregate supply shortages pushed up the prices and inflationary pressures raised their ugly heads. Oil price escalation from $25 to $70 per barrel further worsened the price situation. As the poor and fixed income groups are hit the most by inflation, the outcry is both justified and understandable. The monetary policy had therefore to be reversed in April 2005 in view of the new realities.

As nobody possesses the crystal ball or perfect foresight, the fine-tuning of the policy from acceleration to neutral to reverse gears takes time and hits against friction. Rational human beings may differ on the tactics used and timing chosen. We however, all become wise through hindsight to point out the precise timing at which the gears should have been changed.

Third, the other two channels — poverty targeted interventions and improved governance — got stuck in the sand and could not make the desired contribution because the institutions of governance — mainly the governmental machinery at the federal, provincial and local level — were largely dysfunctional. No particular government is blame as this was the cumulative result of a long period of neglect of our institutions. Patronage and loyalty to the ruling classes had replaced merit, competence and selfless service to the public.

The government, therefore, decided to undertake major administrative reforms in the context of the devolution.

These reforms were initiated at the same time as structural economic reforms. Structural economic reforms require stable, functioning, competent and responsive institutions for implementation and desired results. But unfortunately we were caught in a difficult logjam. While the economic reforms themselves create dislocation and displacement in the transition period, strong working institutions provide the wherewithal and armoury to withstand these shocks thus minimizing the costs of adjustment.

In Pakistan we embarked simultaneously on the most ambitious reform of our district government by uprooting the existing administrative set-up and replacing it by a new system. In principle, nobody in his right mind can disagree that devolution of powers to the local governments at grassroots level makes a lot of sense. The dismantling of the old established administrative system was easy but its replacement with a brand new untested system, however well intentioned and well meaning it may be, takes quite some time to take roof and produce results.

The teething problems in settling of the new system are by themselves quite tough and time-consuming but new relationships between the elected nazim and the civil servants, between the nazim and the police, between the district coordination officer and the line departments, between the tehsil and district set-ups have to be redefined, reconfigured and re-established. The unintended consequences of these radical changes should also not be underestimated. As human beings we deeply resent the loss of power, prestige and privileges and resist changes in status quo fiercely.

Those who perceived themselves to be the losers in this new set-up were naturally demotivated and demoralised. Instead of building the new superstructure brick by brick with enthusiasm, the key civil servants became indifferent and adversarial. This attitude was not limited only to those serving in the districts or provinces but also had strong spillover effects across all strata of the civil servants. This apathy and indifference led to centralisation of decisionmaking at the highest echelons of government further stretching the capacity of decisionmakers.

We are thus confronted with a highly paradoxical situation. Our policies are in a state of flux and transition and the anchor which provides the support to these policies — that is, the administrative machinery is also in a state of flux and transition. Institutions are the conduit, the pipeline, through which the policies are transmitted and implemented for the larger benefit of the citizens. If the pipeline is clogged or leaking, the policies do not get translated into the intended benefits. The result is that the ordinary citizen who has to rely on the government for meeting most of his basic needs — security, justice, education, healthcare, drinking water, etc. — is caught in this vortex.

Those who are influential, well connected and enjoy some status have no problems in getting access to these services for themselves, their friends and families while others who are not so fortunate get the short shrift. Insufficiency of access to these basic services, in my view, is what is affecting the lives of ordinary citizens adversely and widening the gap between the elite and the common man.

What then is the way out of this situation? We can neither afford to abandon the economic policy reforms in the midstream as they are essential for long-term economic growth and poverty reduction, nor can we bid goodbye to the devolution reforms under implementation as they will eventually empower the local communities.

I am quite sure that except for some anarchists, most Pakistanis will not wish that we should implement any radical reforms that lead to chaos and instability in the country. Such an action will once again put us back on the path of retrogression and regress. A more sensible option is to review and fix the administrative structure at the federal, provincial and local levels, revise and update the processes, rules and delegation of powers and responsibilities to the different tiers of government, automate and make transparent the way in which a common citizen can obtain the various services from the government departments, reorganise the civil services so that we have motivated, competent and responsive public servants and fill in the gaps and remove the weaknesses identified during the last five years. This approach ensures continuity of direction with course correction.

The National Commission for Government Reform (NCGR) has been established in pursuance of these particular objectives. Cynics will dismiss this effort as another attempt at hoodwinking the public and distract them from the real political problems facing the country. Others may find any approach short of restoration of the status quo ante as unacceptable. But to my mind the governmental structures of the 20th century which may have functioned quite well for their times would no longer be able to meet the global realities of the 21st century.

Those who are still caught in the time warp may have to accept this bitter fact and let go of their romantic idealism about the past structures. For the success of government reform it is imperative that all stakeholders, including political parties, should put their weight behind this initiative as they will be the beneficiaries of a better system of governance in the country — not immediately but in the next five to 10 years. Any semblance of partisanship in the design and formulation of reforms will be simply counter-productive. I am the first one to admit that these tasks are by no means easy or straightforward but they are essential for improving the lives of Pakistanis.

The NCGR would adopt a different mode and follow a more collaborative, cooperative, inclusive approach in which all stakeholders — political leaders from all parties, bureaucrats, academics, NGOs, media and citizens groups — participate in the process and articulate their voice and opinions.

The Commission drawn from the various walks of life consists of 11 members — five of them are serving or retired civil servants, three former ministers having supervised federal and provincial ministries, two are from the corporate sector and one is the member/ secretary. The Commission is a welcome mix of insiders and outsiders. These members are not beholden to any particular interest groups but have accepted this difficult challenge with completely open minds and ears to bring about changes that will make our administrative system responsive to the day-to-day needs of the ordinary citizen.

There are no magic solutions or readymade recipes to the enormous problems faced by a Pakistani vis-a-vis the federal, provincial or local governments, but the Commission will work sincerely and do its utmost to make a difference, however modest it may be. There is therefore a need to tamper expectations with a sense of realism.

The Commission has inherited a number of highly relevant and useful diagnostic studies, reports, recommendations produced by political leaders, civil servants and academics. It therefore does not intend to produce another voluminous report. What it proposes to do is to sift out practicable and actionable solutions for specific issues, place them before the stakeholders for their views and then submit the consensus achieved to the highest decisionmakers for approval so that they can be implemented.

The Commission will report every three months to a six-member steering committee co-chaired by the president and prime minister and consisting of all the four chief ministers. The proposals submitted by the Commission will undergo extensive prior consultations with the federal and provincial cabinets, Political Leaders, secretaries’ committees, district nazims and coordination officers’ committee, but once they are approved by the steering committee, they will carry the legal authority of the approvals of the federal, provincial and district governments. We are very good at identifying and diagnosing our problems but very poor in implementing the actions required. The commission will put all energies and efforts in ensuring that the decisions taken on reforms are in fact implemented in practice.

The Commission or its sub-committees would hold public hearings at all the major centres of the country and would welcome oral or written suggestions and comments from any citizen. Advance announcements for the venue and timings of the hearings will be made through the media. We would very much encourage the people who encounter difficulties and problems vis-a-vis the government departments in their day to day transactions to present their ideas before the Commission. A website (www.ncgr.gov.pk) has been set up to receive the ideas and comments from as many Pakistanis as possible.

Let me conclude by quoting the noted Indian journalist Kuldip Nayyar (Dawn, June 17,2006) about the civil servants in India. He says, “Public servants have invariably become an instrument in the hands of ministers in the centre and in the states. Ethical considerations inherent in public behaviour have become generally dim and in many cases beyond the mental grasp of many public functionaries. The desire for self-preservation guides their actions and behaviour. Manmohan Singh, who was a top civil servant, should have devised some steps to retrieve the situation. Anxiety to survive at any cost is the crux of the approach to the problems before public servants. The Mussorie Academy where they are trained is an ivory tower. It is too elitist and too distant for the common man. It should be obligatory for the trainees to work with NGOs at the grassroots level. They may learn, if not imbibe, the qualities of humility which officials lack”.

The writer is an ex-governor of the State Bank and now the chairman of National Commission on Government Reforms.

More reforms! These reforms will only bring chaos in the country just like devolution plan. Folks! Wait for a new version of devolution(devil’s) plan.

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still searching for my soul..............

In Pakistan,Political, structural & economical scenario is much different from western countries so one can’t get lucrative results by introducing west oriented corporate reforms.

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still searching for my soul..............

Shahid Javed Burki,the Economist,has narrarted an analytical article in reponse to Mr Hussain,s article:'WHY REFORM THE GOVT'.Inthis article,he further introduced some detail abt the mandate of NCGR.NCGR is meant to bring reforms in the administrative sector just to make the bereaucracy more efficient and less corrupt.Mr Burki rightly pointed out the administrative reforms can,t be brought into force unless the first step is taken towards reforming our political system because both political and administrative spheres of govt are co related.
Mr Burki's column is worth reading in order to unearth the objectives,viability and dependability of reforms the government intend to introduce.