The contractor state by Pratap Bhanu Mehta

It is no accident that the auditor has become the new subaltern figure of resistance

The government of India is a government of contractors, by contractors, for contractors. There may be a touch of exaggeration in this claim. But this simplified description of India’s political economy explains the main contours of current economic and political woes. At the most general level, our challenge is that the government contract process is misaligned with the larger social contract in more ways than one can list. It has a relentless power of its own, defying all logic of social utility, cost or even efficiency. We often complain that outlays are not translated into outcomes. There is a big assumption that the purpose of outlays is to produce outcomes. But there is little evidence that this is the logic underlying state action. The purpose of the outlay is to create a broad justification for expanding the reach of the contracting state. The end is the awarding of the contract. But the nature of contracting is now producing systematic misalignments.
Take example after example. Why is our infrastructure so badly under-designed? The obvious answer is that the main interest in infrastructure is not in its social utility: whether it gets to move goods or people faster, whether it is safe, whether it is economically viable. The main interest in infrastructure is the awarding of contracts. Why is there a fascination with unsustainable mega projects but no funding available for sensible low-cost alternatives? Why would we rather transport water for hundreds of miles than fix leaking pipes? Was JNNURM an urban regeneration scheme or driven by the logic of projects? Is the shape of our cities governed by any logic of social design or does it simply adapt to the political economy of contracting? 
Contemporary Gurgaon is the most astonishing example of, literally speaking, a contracting-driven city. The point of an irrigation scheme is not water, it is contracts. Take a more recent example: the aborted Aakash project. The idea of using cheap tablets may or may not have pedagogic utility. But the execution of the project was governed by the rush to give out a contract. Instead of making the design and intellectual property freely available and spurring innovation, the scheme was turned into a giant procurement exercise. The misalignment of social purpose and the political economy of contracting is generating more negative externalities than we can handle.
The logic of contracting is not aligned to social purpose. But does it have a consistent inner logic of its own? The real breakdown in the state in the last few years has been that even its inner logic is now broken. Most of our contracts seem to be horrendously designed: an odd combination of a narrow accounting mentality on one hand, and clever ways of systematically introducing ambiguities on the other. No wonder they are being contested across the board, bringing the economy to a grinding halt.
It would be naïve to pretend that contracts have very little to do with rent-seeking and corruption. But the political economy of rent-seeking, through contracts with the state, has its own norms. Previously, the norm was to stick to how much you charged the state, but make money by compromising on quality. Then we invented clever devices like build-and-maintain contracts, and public-private partnerships, ostensibly to align the incentives of government and contracting parties. For a while, it looked like these new arrangements would work. But now they are generating their own pathologies. It turns out that much of the private sector that was interested in these contracts believed some of the following. These contracts could in time be renegotiated, and the procedural façade would allow great room for political discretion. They also figured out that their investments could be recouped very fast, and after they had recouped their initial investment, they could lose interest in the project or simply bolt, notwithstanding any long-term commitment. So you now have the mess of projects like the Gurgaon expressway. Or they and their political masters believed in the possibility of abnormally high returns to the point that almost all the cost efficiency arguments seem to be nullified. The minute some questions were asked about costs they began to bolt, using the lack of government decision-making as an excuse. This was combined with another fact. The government also had touching faith in the power of contracts. It invited bids without necessary homework or clearance, as if a contract would miraculously generate the forest, environmental and other clearances required for its operation. And now it is finding that matters are not so simple.
You now have a private sector in the infrastructure sector that is finding the framework of contracting too restrictive because it was used to a regime where a contract was a contract for renegotiation. Hence the near-paralysis in awarding and executing contracts. The economy has come to a grinding halt because the cumulative pressure of badly designed, hubris-driven contracting has now caught up with us. It is a rather curious fact that all talk of reform now centres on reform of the contracting process. Perhaps we are beginning to realise that the state is only as strong as its weakest contract.
The logic of contracting then also began to distort the logic of politics in untold proportions. It is no secret that the sinews of power in Indian politics run through contractors. Forget the thin veneer at the top: at mid to lower levels of politics, the line between being a contractor and being a politician is almost non-existent. Politicians now create legitimacy, not by being socially embedded, but by managing networks of contractors: Subrata Roy, Ponty Chadha and Deepak Bhardwaj, to take some random examples, were collectively more powerful than half the cabinet put together. The political contract also began to follow the logic of contracting; the two became identical. But in the process both lost wider legitimacy.
The response was predictable. A government of, for and by contractors will generate its counter in a government of, for and by auditors. It is one thing to complain of auditors being penny wise pound foolish, of confusing accountability with a pinched up accounting imagination. But if the process of contracting now has its own sui generis logic, so will the auditing processes. The state has neither the capacity nor the willingness to re-embed its drive to contracts in larger social utility, political participation, or even a grand aesthetic imagination. It is not an accident that the new subaltern figure of resistance to the Contractor State has become the auditor and a renegade taxman.

The writer is president, Centre for Policy Research, Delhi and contributing editor, ‘The Indian Express’
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One Comment on “The contractor state by Pratap Bhanu Mehta”

  1. अंग्रेजी बहुत समझ नहीं आती। लेकिन अगर प्रताप भानु मेहता यह कहना चाहते हैं कि भारत सरकार ठेकेदारों की, ठेकेदारों द्वारा और ठेकेदारों के लिए है, तो इसमें उन्हें तकलीफ क्या है? अगर ये वही ज्ञान आयोग वाले प्रताप भानु मेहता हैं जिन्होंने आरक्षण के विरोध में आयोग से इस्तीफा दिया था और प्रधानमंत्री को पत्र लिखा था (, तो यह उनके लिए उत्सव मनाने का मसला होना चाहिए! तब शिक्षा और योग्यता और गुणवत्ता को लेकर वे जितने चिंतित थे, अब वे देख सकते हैं कि अब उन्हें उसकी चिंता करने की जरूरत ही नहीं है, क्योंकि "गुणवत्ता" वाली समूची शिक्षा-व्यवस्था ही अब ठेकेदारों के जबड़े में जाने को है। यानी न सरकारी नौकरियां, शिक्षा या दूसरी सांस्थानिक सुविधाएं रहेंगी, न आरक्षण का लफड़ा रहेगा।

    आरक्षण को बेमानी बनाने के लिए नरसिम्हा राव और मनमोहन सिंह की जोड़ी ने निजीकरण और उदारीकरण का फार्मूला आजमाया और वह संघी रथयात्रा और राम मंदिर अभियान के हिंदूवाद से भी ज्यादा कारगर रहा। अब ठेकेदारी तो उससे भी आगे "समाज" का रचेगा…! इससे वहीं का सफर शुरू हुआ है, जो आरक्षण विरोधियों की दिल्ली इच्छा रही है। इसलिए प्रताप भानु मेहता को अफसोस जताने के बजाय खुश होना चाहिए।

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