Minimum cabinet maximum governance

The case for a downsized administration

Narendra Modi’s promise of ‘minimum government, maximum governance’ will be tested just moments after he takes his oath of office. How? By the number of ministers who follow him to take their oath of office. The UPA had a bloated ministerial team of 71, with 28 in the Cabinet, 11 Ministers of State with independent charge, and 32 other Ministers of State. The size of Manmohan Singh’s Council of Ministers was close to the upper bound of 79 (one-tenth of the combined strength of the Lok Sabha and Rajya Sabha, which is 793). The UPA’s many cooks spoilt the broth of governance. Modi needs to start on a leaner, meaner note.

It isn’t only about downsizing the numbers. It is equally about imparting ‘maximum’ coherence to governance. Consider the impact of combining the Ministries of Power, Petroleum and Natural Gas, Coal and Renewable Energy (and throwing in control of India’s Nuclear Power Corporation) to create a unified Ministry of Energy. It would, of course, reduce the number of ministers needed from four to one, and contain the associated bureaucracy to a manageable size. But it would also enable a coordinated policy framework to tackle India’s greatest crisis: the country’s lack of energy (chiefly electricity).

Under the current set up, separate ministries often work at cross purposes. It is the Power Ministry’s responsibility to enhance the country’s power generation capacity. But putting up additional capacity means little unless there is sufficient fuel to keep power plants running. Under UPA II, existing power plants lay idle because of an acute shortage of coal and natural gas, the two main fuels. And the Power Ministry was powerless to do anything about it. The Coal Ministry was too busy protecting the turf of Coal India Ltd (CIL), the country’s monopoly producer and supplier of coal. While CIL makes handsome profits for its Ministry to show off, it does so because it faces no competition. It has no incentive to dig out more coal to make up the almost 100 million tonnes of annual shortage, leaving bulk consumers either deprived or dependent on imports. Ensuring sufficient power supply is not CIL’s or the Coal Ministry’s problem.

During the UPA II’s tenure, the Ministry of Petroleum and Natural Gas tied itself in knots over determining the right price for natural gas. In the process, it ensured that natural gas producers, whether in the private or public sector, had no incentive to enhance production of this vital energy resource, starving power generation plants. Since it is not the responsibility of the Petroleum and Natural Gas Ministry to ensure adequate power generation, it can afford to dither endlessly over the pricing of gas.

Now, if the responsibility of framing policies for coal, natural gas and power were held by the same ministry, it would mean a goal-oriented approach that ensures that power plants are not starved of input fuels like coal and natural gas. The Centre’s entire energy policy would be framed in a way to smoothen out problems and prevent turf wars that inhibit solutions. Adding the Renewable Energy Ministry—which has no role and rather limited funds as a standalone department— and Nuclear Power Corporation would mean that the challenge of Climate Change can also be addressed by a comprehensive energy plan. A set proportion of India’s total power requirement could be drawn from clean, non- fossil-fuel sources. Thus, setting up a Ministry of Energy would be a perfect example of ‘minimum government, maximum governance’, and it would certainly help the next Government deliver 24×7 power to the entire country.

There is another domain where there is potential for a consolidation of ministries. Modi could consider following the global best practice by merging the ministries of Railways, Roads and Highways, Shipping and Civil Aviation into a unified Ministry of Transport. This would minimise government and maximise governance in a manner slightly different from the energy example. There are, after all, no obvious turf issues between the different transport ministries.

That said, it would be useful for a single Ministry of Transport to formulate an integrated transport policy, which can in particular properly weigh the importance that must be given to aviation, roads and rail as means of transport. But the real advantage of rolling four ministries into one is to reduce the counter- productive role that individual ministries play in micro-managing the sectors they oversee. For better outcomes, a ministry should only formulate policy, and not fix tariffs and run companies like in the present structure. The Railways should be corporatised and run by professional managers. Tariffs and issues of competition must be handed over to an independent regulator. Similarly, in the aviation sector, there is no need for the Ministry to run Air-India or regulate competition among airlines. The construction of roads has suffered because the concerned ministry has got too involved in laying down procedures and micro-managing bidding processes. Again, that should be left to an independent regulator that can function without political pressure. The Ministry of Shipping should not be running inefficient public sector ports. Instead, a unified ministry ought to lay down a roadmap for the privatisation of ports so that India’s trade gets a big boost.

A unified Transport Ministry can also safeguard crucial infrastructure sectors from meddlesome political influence. There will be plenty of scope for policymaking but considerably reduced scope for patronage, rent-seeking and mismanagement. Overall, it would help achieve Modi’s aim of maximum governance with minimum government.

There are other ministries at the Centre that can be consolidated too. There is no reason to have separate departments for Industrial Policy, Heavy Industry, Public Enterprises and Micro-Small and Medium Enterprises. They should all be merged, along with the Ministry of Mines, into the Ministry of Commerce and Industry. There is a strong case to combine the ministries of Agriculture and Rural Development, given that rural development is so closely linked with the modernisation of agriculture and agro-processing industries. At the moment, the Ministry of Rural Development simply presides over various dole programmes which should in any case be replaced with productive government investment, primarily in agriculture, which is a sector that employs India’s poorest citizens.

It would also be prudent to consider a merger of the Ministry of Communications (which looks after telecom and posts), the Ministry of Information Technology and the Ministry of Information and Broadcasting. The latter has a questionable role in a liberalised media environment. It spends most of its time controlling the State broadcaster, Doordarshan.

Of course, consolidation of ministries isn’t the only way to downsize government. There are some ministries that have clearly outlived their utility, like the Ministries of Steel and Textiles—relics of the Licence Raj when the Government would fix quotas for production—which should simply be abolished. This act would send a powerful message of lean governance.

There is no reason for the next Government to retain any more than 15 portfolios, each handled by a Cabinet minister: Home, Defence, Finance, External Affairs, Energy, Transport, Environment and Climate Change, Commerce and Industry, Communications and Infotech, Agriculture and Rural Development, Human Resource Development, Health, Law, Tourism, Culture and Sports and Urban Development.

The Council of Ministers could accommodate another 15 members as Ministers of State or Deputy Ministers. In some of the newly consolidated ministries, Ministers of State would have serious work to do for a change.

The challenge is political. Can Narendra Modi resist the pressure that may be exerted by party MPs and allies to hand them ministries? It is this system of patronage—with its scant regard for merit and emphasis on region, caste and other parochial considerations—that has led to a proliferation of ministries and departments and the unwieldy system of government the country currently suffers.

If Mr Modi is a truly transformational leader, he will begin his first day at the country’s helm with a lean and efficient Council of Ministers.

About The Author

Dhiraj Nayyar

Dhiraj Nayyar is chief economist, Vedanta Ltd, and the author of Modi and Markets: Arguments for Transformation

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