Atanu Dey On India's Development

Governance Cafe Baghdadi Style

Cafe Baghdadi is a little hole in the wall restaurant in Colaba, Mumbai, just around the corner from Regal Theatre and next to the famous street restaurant Bade Miya. Baghdadi’s fried chicken would beat KFC’s chicken any day of the week, by the way. That chicken is good. What tickles me at Baghdadi is a sign which lists a set of rules for its patrons. The list is long and fairly detailed. It says, for instance, that “Customers are not allowed to argue with the waiters,” and that “Alcohol is forbidden.” The list tells you in no uncertain terms what you, the customer, are allowed to do, how you are to behave, and so on. Basically it puts you in your place and tells you who is the boss.

While a set of such rules is cute in a two-bit restaurant (however delectable the chicken fry), it is certainly not cute when you have an analogous set of rules that the government of a supposedly free people forces on you. In the case of the restaurant, you can take your business elsewhere, maybe to Bade Miya next door, where you are presumably allowed to argue with the waiters. It is much harder to move to a different governance regime. When the government paternalistically imposes rules which interferes with your basic freedoms, it is unacceptable. I believe very strenuously that government interference in the economy is at the root of India’s sad economic performance.

Why the government interferes in every aspect of the economy is an interesting study in itself and I will not go into it right now. Also, I will not rigorously argue my case that it is government involvement in actitivities that it should not be involved in is enormously harmful. Anecdotal evidence, though not conclusive, is suggestive of the general soundness of an argument. For instance, take the case of the telecommunications revolution in India. As long as the government was the sole provider of this service, the telecom system was one of the world’s worst. When the sector was unshackled from the clutches of the government, it boomed with an echo that is being heard round the world.

Talking of which, Shashi Tharoor wrote a very articulate piece on the matter in the Hindu called Mobile Miracle. (Hat tip: Vivek Sellappan.)

Bureaucratic statism committed a long list of sins against the Indian people, but communications was high up on the list; the woeful state of India’s telephones right up to the 1990s, with only eight million connections and a further 20 million on waiting lists, would have been a joke if it wasn’t also a tragedy — and a man-made one at that. We had possibly the worst telephone penetration rates in the world. The government’s indifferent attitude to the need to improve India’s communications infrastructure was epitomised by Prime Minister Indira Gandhi’s Communications Minister, C.M. Stephen, who declared in Parliament, in response to questions decrying the rampant telephone breakdowns in the country, that telephones were a luxury, not a right, and that any Indian who was not satisfied with his telephone service could return his phone — since there was an eight-year waiting list of people seeking this supposedly inadequate product.

Mr. Stephen’s statement captured perfectly everything that was wrong about the government’s attitude. It was ignorant (he clearly had no idea of the colossal socio-economic losses caused by poor communications), wrong-headed (he saw a practical problem only as an opportunity to score a political point), unconstructive (responding to complaints by seeking a solution apparently did not occur to him), self-righteous (the socialist cant about telephones being a luxury, not a right), complacent (taking pride in a waiting-list the existence of which should have been a source of shame, since it pointed to the poor performance of his own Ministry in putting up telephone lines and manufacturing equipment), unresponsive (feeling no obligation to provide a service in return for the patience, and the fees, of the country’s telephone subscribers) and insulting (asking long-suffering telephone subscribers to return their instruments instead of doing anything about their complaints). It was altogether typical of an approach to governance in the economic arena which assumed that the government knew what was good for the country, felt no obligation to prove it by actual performance and didn’t, in any case, care what anyone else thought.

Telecommunications is a critical infrastructure, of course. But it is not half as critical as education. It is absolutely imperative that the government get out of education. If the government does not, the education sector will continue to be as dysfunctional as the telecommunications infrastructure was during the days of government monopoly. That is something we cannot afford. India needs to have a vibrant educational system and the only way we will have it is if the government were to let go of the stranglehold that it has on education.

The more general point that I want to argue is that the government should get out of the business of dictating to people how they should behave, what they will read, what they will eat, who they will employ, who they will give charity to, etc. One of my greatest complaint against the government of India is that it should get out of the business of taking my money and funding charities. Charity is when I freely give of my resources to causes that I believe in. When the government does it, it is robbery, not charity.

That is why I believe that if your government is run along the lines of Cafe Baghdadi, you might be living in a Third World country.

Public service announcement: The government of Maharashtra has decreed that you will not consume alcohol on five specific dates between Jan 25th and Feb 3rd. For your own good of course. Because you cannot be trusted to behave yourself. So there.

  • http://apusworld.blogspot.com apu

    The underlying assumption is captured in your last paragraph – that people do not know how to behave, and babus know better than them on anything, including things that they know nothing about ! The latest is the blanket ban on AXN…why can the government not work with industry to set standards as to what sort of material can be shown when, and leave it at that !

  • jala

    Dear Atanu,
    I am not sure, what’ll happen if Govt gets out of Eductaion.

    True, Telecom is an example.
    I got Nokia Mobile Phone & Airtel connection faster than my Dad got the BPL Phone & Dept of Telecommunications (DoT, it seems so old now……) connection, because there was no Government.

    However, If I think of Private Schools, their War-mongering attitude on all kinds of fees (LKG Kid has to pay more no. of fees than the subjects she studies), I fear what’ll happen.

    I too studied in a private-school and my parents have paid hefty fees.
    Still, I recall my father paying lesser fees in I’st year Engineering than he did for my II’nd PUC.

  • http://www.unnati.wordpress.com Aashish

    i agree with you on the communications revelution, but i think u really are stretching things a lot when talking that the government get out of the educatiion sector. as a student of economics, i do know that the market system isthe best, but one thing i also know is that government can sometime improve market outcomes. Indeed, basic education, healthcare etc are necesdsary duties of any government, and i would actually argue that the government should spend more in education, rather than less. indeed there is a daunting task in educationg millions of indians, and the government simply cannot abdicate of its responsibility here. i also recommend to you that please for once try to read development as freedom by amrtya sen, particularly the section on education, hunger as well as health. awaiting ur response.

  • http://barbadkatte.blogspot.com RJ

    Aashish,
    I think Government has not got out of Telecom. BSNL is still the largest telecom provider in the country. All that has happend is the government monoploy in telecom is gone. I think the same would work for education. Government can still keep running its schools. It just needs to free scools from the current bureaucartic stranglehold.

  • http://valluvar.blogspot.com shiv

    The real demon here seems to be the grant of a monoploy by the brit trained oligarchs rather than any specific issues with PSU ownership. Since we consume a lot of telecom services in running our business, we have a pretty decent picture of both BSNL and Airtel. At this point we dont see much ‘technical’ difference except that BSNL can wire you up anywhere which none of the private telecom guys can or will (also fault repair and customer service is far superior at airtel). The essential dichotomy here is that BSNL is saddled with the USO (universal service obligation) as part of their business plan, whereas the private operators have been reneging on their commitments. While i am with the basic argument that a service cannot be provided unless affordability is in place, the whole argument of empowerment due to telecom is based on rural areas getting hooked up. The data i have indicates that, at least for airtel karnataka, bangalore contributes 90 % revenues and the rest of the state 10 %. Clearly ‘privatization’ is no silver bullet. For me as a bulk telecom (voice and data) user the indian telecom revolution has brought down my cost by an order of magnitude. But if i want my rural godown in dodballapur to get wired into our data network there is no solution other than BSNL….

  • Manu

    ah! Baghdadi afternoons, followed by bade miyan evenings and Gokul nights. With Mondegar mugs and regal movies in between.

    Oh and yes, I agree with the govt and bureaucracy bit.

  • Aashish

    Shiv,
    I think it might be interesting to find out if BSNL is currently profitable selling its services around your rural godown in dodballapur.
    -Aashish

  • http://indianslate.blogspot.com/ Manoj

    Atanu

    I dont know if you watched the PBS series of ” Free to choose” by Milton Friedman. I remember one episode on Public education and where Friedman strongly argues for slow elimination of Public schools and implementation of Vouchers for the poor to pay for education at private schools.

    I Definitely agree with him and you

  • shiva

    And OK Manu after you are done with Gokul, hop over to Cafe Leopold and make it a point to go upstairs to finish up. Next morning walk across to kamath’s for brekker, and after a liesurely stroll down the Causeway to Navy Nagar and back, polish off a nice lunch at Olympia (try the roti, dal, mutton fry with plain green chillies) and then on to Martin’s for dinner! And that’s just the weekend!

    Manoj,

    Milton Friedman is the Amartya Sen of his end of the spectrum. Two economists who ventured far beyond their areas of competence, and prescribing harebrained schemes that no one has thankfully implemented. Milton Friedman’s pet theories of monetarism have been quietly shelved. And Sen’s Maoist prescriptions were thankfully never implemented in India. But of the two Sen is more of a poseur. While Friedman never claimed to be an expert in any intellectual tradition before what is called the Scottish En;lightenment, Sen claims to be a “Sanskritist” and “philosopher”. That’s for another day.

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