Thanks to a suggestion from a well wisher I've now created a Kindle version of BFN. 

Click here to buy

I'm replying to a comment I received on FB since such debates are best done in full public awareness, and may clarify things for others, as well. 

I read your book "Breaking Free of Nehru". As your explained you wanted an aggresive title, you got it. However, I do thank you for writing and putting forth such a debate – great. Actually, some of the points that you made are good and right, and one point I think should not be mentioned about avg IQ of indians in UK, and for other points in particular on economy, more like the US – your PhD from the USC, I think needs more self education on actually how it is turning out to and what is at miss.

 

I see you just as me when I came in 74 and studied in Georgia Tech. But having lived here for 36 years I begin to see issues that are not just visible at first.

 

I find it a vaneer society where as India is good in core. While Adam Smith is right but its implemantation in the US has come to rip it at seams. So, I think while you got a good size economy injection of the US capitalist indoctirnation, which is good, and it is dominant now or at least it was at that time of your PhD, a closer look now will be helpful for debate for us.

 

Today, though the US covers itself in capitilist doctorin, is protagonist of it yet it is functioing with all capitalist priciples compromised – not because of economic compulsions but becasue of political, economic, and hegamony.

 

We can debate on it – but, I am interested in pointing out to you should be copy this economic system as we did British Parliament system, it will be a grand system to put indian society in hugh pain. Given India's current economic model is not going to be much good for India as was the yesteryear economic model did not work, we ought to debate not on capitalist priciples but on implementing those priciples. We can discuss it more and later.

 

Now, I want to shock you and compell to think, and pl do reply me. Breaking away from Nehru will not be a bad idea as it will fetch some short term good results. However, frankly I think we need and ought to break away from McCaully – that will bring us enduring results in all spheres.

 

Why I wrote this? While I agree with you that Nehru and for that matter the assemblies of that time did some absurd idea things as you pointed out, social justice, but no matter how good the constitution is, it is the SOCIETY SELF ESTEEM that will do socity good. The Self Esteem DNA will help us as we are unique civilisation on planet.

 

One more point, it is not attack on you. It is a mere personal disagreement with you on one of your choice on a fundamental level and priciple. In my view and firm conviction, I am to not only like myself but I am to love myself – it is in humility manner and not in egotistical manner. In this way, I can change myself yet still be what I am. Because, the change we make are only to a certain attributes but we cannot ever undo where we started from. For example converting to Budhasim did not change Mr Ambadekar and it only became a qualifier. All those hindus who converted to Islam or Christinity still are dalit and trying to seek benefits of OBC. What good was their rejection? Pl think and comment. Why I wrote this much? i would like you to take that line out from the book. However, i respect and admire you in and for your personal choices and dicisions.

 

I wish you well and look forward to a dialog with you.

 

Thankd and regds

V

Dear V

 

Thanks for reading BFN. Much appreciated. Glad you found some agreement with the message in the book. I'd like, however, to focus here on the few issues you raised which seem to me to require a brief discussion and clarification.

 

Let me assure you, first of all, that there was NO indoctrination about capitalism during my studies in the USA! It would do my studies in philosophy and economics in India and Australia, well before going to USA, great injustice, to suggest that my US studies were somehow pivotal to my philosophy of life. If anything, the university I went to had a preponderance of Fabian socialists and Keynesians. Marx was taught, as well, with considerable sympathy. And Rawls. My worldview has been informed by a vast amount of reading and thinking about philosophy since the age of 12. My US studies did help provide rigour to some of my views, by providing me the capacity and time to study issues in detail. These studies did not, however, make my views.

 

I agree that the US system is not a functional capitalist system. But I don't recall suggesting (even remotely) in BFN that India should "adopt" the American way. 

 

Re: breaking away from Macaulay, I'm afraid I don't know what you mean. Are you suggesting that a young man who came to India for about five years 180 years ago influenced India so much that we are now his slaves? I'm afraid you must spend some time to read history, and indeed, about Macaulay. If you search this blog, you'll find considerable discussion about Macaulay. Much of it will surprise you, since there is SO MUCH disinformation on Macaulay in India today – which merely shows that Macaulay failed to educate Indians. Indians today not only COOK up imaginary things about what Macaulay presumably said, but without reading or understanding him ONE BIT, make wild generalisations. One sentence or two of his alleged writings is all it takes for them to form a view. Such "highly educated" Indians! I hope you are not one of them. I prefer scholarly discourse, not shallow perceptions.

 

Self- esteem in India? What self-esteem can a POOR, CORRUPT nation possibly have? India can't acquire any self-esteem with SUCH A MISERABLE QUALITY education system, such poor quality public life, such pathetic "leaders", such hopelessly corrupt business leaders, and such deep poverty. 

 

And no, India is by no means a "unique" civilisation. It is merely one of many typical human civilisations. It is currently struggling to come out of its feudal era, but finds it can't. That is why I write my books – to take India to its next journey.

 

Your last point – I object vehemently to your suggestion that people are somehow stuck to "where they start from".

 

Ambedkar was a great thinker, and while Hindus may still consider him to be a "scheduled caste" and look down upon him, he spat on the caste system, and did the only honorable thing he could do: He left Hinduism.

 

He was NEVER, therefore, a Hindu again.

 

The fact that his "followers" in India are so poorly educated (they don't even know what he wrote) and desperate for benefits from the reservation system is a sad story that can't be attributed to the genius that Ambedkar was. These people are mere beggars. Ambedkar was a king. And so my recommendations for social reform, found in BFN, will stay. 

 

S

I haven't had time to continue the active debate going on here about a play being staged in Sydney, but while revising DOF a short while ago, I came across a small section that I thought would be useful for people to consider:

Tolerance as the kingpin of liberty

Let me make an observation about one of the underlying difficulties of advocating liberty. The idea of liberty doesn’t always lead us to things we are conditioned to support. Its implications often challenge our long-held beliefs. I believe, for instance, that marriage should only refer to a relationship between a man and woman. I do not support public nudity, tasteless ‘fashion’, or the increasing trend towards the use of foul language in daily discourse. Yet, I am prepared, now, to look at these issues through the lens of liberty, no matter where that might take me (that I’m raising these issues does not mean I have changed my opinion on these matters).

Such an open approach is ethical, apart from being scientific. More generally, if someone isn’t directly harming us then we must learn to tolerate such a person, even if we do not support his actions or opinions. Tolerance is the kingpin of freedom. As John Stuart Mill (1806-1873) (an East India Company bureaucrat who later became a British parliamentarian) noted, ‘If [someone] displeases us, we may express our distaste, and we may stand aloof from a person as well as from a thing that displeases us; but we shall not therefore feel called on to make his life uncomfortable.[1] This includes things that we may personally detest on so-called ‘moral’ grounds. But should anyone harm us directly we shall invoke the social contract and demand accountability.

---

[1] Mill, John Stuart, On Liberty, 1859, Chapter 4.

Final Comments

• Some readers pointed out that many good things are already happening in India. In accepting that, I would like to remind them that such good things have been motivated entirely by the initial burst of capitalism forced onto India by the IMF. We have still no internalized full-fledged capitalism, which is primarily about justice and good governance. We should not be content with morsels of capitalism when we can but should have it fully. There are still millions of poor and illiterate people in India. The task has barely begun, and good governance is not even on the horizon.
• Some readers said they agreed with parts of this book but not with other parts. I suggest that such an approach is not logically consistent. I see this entire book as one piece. People have only one real choice: to either agree entirely with this book, or to disagree with it completely.While this may sound like the height of arrogance, the problem is that my recommendations have been derived exclusively from the principles of freedom and the value of life. The recommendations of this book flow as a mathematical proof would, being either completely right or completely wrong. There are no grey areas in this book; people can’t pick and choose. If you do, you will end up with a logically inconsistent model.
• The claim of impracticability doesn’t hold water at all, either. For example, it could be claimed that we simply won’t find enough high quality economists today to recruit into each State Government in India. But such an objection is a matter of detail. It may mean that we need to get there slowly, or it may mean that we need to bring back our economists who are forced to teach in Western countries today (or like me, help Western governments to even further improve their countries) instead of teaching (or working) in India. But it doesn’t change our destination. Matters of practicality can always be worked out if there is a will.

• Let any two believers in freedom come together with the aim of building a Freedom Team of India to an initial size of 1500 persons. I am happy to coordinate an electronic platform for this if it will help anyone.[v] Using this platform is purely optional – any platform will do.
• The Freedom Team of India (or whatever else it is called) will then need to agree on what the new India will look like and how its members will deliver the reforms if they were to ever come to power. I’ll be pleased if Chapters 2 and 6 inform the answers to some of these questions. But of course, the blueprint would entirely be the work of the Freedom Team.
• After that will come the question of who. Once ready, this group of 1500 should select outstanding leaders from among itself and form a new, ethics- and freedom-based political platform.
• Its leaders and supporters should then go from village to village, explaining the proposed policies to people.
• Finally, about 550 outstanding leaders should contest elections. With the right effort and good luck, a majority of them will hopefully get elected.
• After that it would be a matter of disciplined implementation of the planned reforms.
• It going to be that simple to change India!

Till now I have largely continued with the expositional tone of an Indian citizen because this book was started to support my political efforts of 2004–5 while I was still a citizen. After three failed attempts to establish a platform to reform India’s governance, I forfeited my Indian citizenship on 17 November 2005 upon acquiring Australian citizenship. I am now an overseas Indian citizen. I can therefore play only a limited role in India’s future unless India agrees to full dual citizenship in the future. However, the task I had started upon is still incomplete. Indeed, it has not even been started.

The final end of the State consists not in dominating over men, restraining them by fear, subjecting them to the will of others. Rather, it has for its end so to act that its citizens shall in security develop soul and body and make free use of their reason. For the true end of the State is Liberty. Baruch Spinoza (1632–77)

Health care

Some Important Non-Core Functions

Environmental Sustainability

But while population size does not cause wealth or poverty, it impacts the environment significantly.India’s large population has without doubt had an adverse impact on the environment, such as on our wildlife. In addition to creating a large population, Nehruvian socialism has also added to the depredations on India’s environment. Our socialist pirates – Ministers and officers charged with the responsibility of protecting forests and the environment – have personally looted our forests and connived with polluting industries to damage our environment.

• One of my earliest battles against corruption, in 1985–6, was an attempt to stop illegal felling in beautiful dense forests found in the Hojai subdivision of Assam. Trees were being cut illegally with the connivance of forest department officers, and possibly (almost certainly) of the Minster.
• One of my friend’s wealthy acquaintances in Delhi confided to me in the early 1990s how he made his wealth by illegal harvesting of native timber from Nagaland. The method he used was that of paying off Nagaland Ministers.

• Cost recovery: To the extent that polluters can be individually identified, external costs will be recovered from them directlyand polluters will be forced to repay the affected community. This can include mandatory requirements for polluters to clean up toxic spills, failure to do which would lead to imprisonment for extended periods.
• Pigovian taxes: To the extent that polluters cannot be individually identified, Pigovian taxes will be imposed on the activity that approximates most closely the activity undertaken by the polluters. A range of incentives-based solutions, such as trading of permits within limits to pollute, will also be used. In particular, carbon taxes will be imposed in a phased manner on electricity produced from coal. The revenue so collected will be used as follows:
  • to provide (compensatory) subsidies to companies to increase plantations and forests. These subsidies will be paid based on the actual growth of these forests confirmed through satellite imagery;
  • to fund Indian investors to build nuclear power stations while meeting the world’s highest standards of safety and security under international supervision; and
  • if funds remain, to fund industry and universities, based on demonstrable results, to increase research in non-polluting technology.

(Note dated 4 June 2011: I'm reviewing my earlier position on the concept of Pigovian taxes. It is possible, according to my current position, that these taxes are not an appropriate way to reduce negative externalities. See this.). 

School Education

• Schooling will cost child ‘A’ nothing if parents choose a school which charges their ‘A’ a fee equal to or less than what the government is prepared to fund that particular child.
• Schooling will be partially subsidized where parents choose a school which charges a fee for ‘A’ over and above what the government is prepared to fund that particular child.

• As a first step, my government will get completely out of school ownership and management. Over the course of the first 30 months, all government schools will be privatized. Their land,[ii] buildings and equipment will be sold at market rates through an open tender in which educationists working in these schools will be encouraged, through a (small) preference in the conditions of the sale, to form consortiums which can be registered as companies or societies, and make a bid. It is expected that such consortiums can create a persuasive business case to raise bank loans and buy the schools with repayments to be made from earnings made over the years.[iii]
• Funds raised from the sale of schools will form part of a one-off increase in government revenues to be used to offset the initial increase in core function expenditures.
• The following conditions would apply to the sale:
• • The school’s land cannot be sold for 50 years. The government would retain the right to acquire land from school owners for other public purposes where it becomes necessary to do so, upon payment of slightly greater than market value, after making suitable arrangements for the children affected.
  • The school’s land or buildings cannot be used for any primary purpose other than school education. School owners will be allowed to operate business activities approved by the (local government) council from the school campus after school hours. There is no incompatibility between having temporary shops or a small gym as a side-business operating in the school building after school hours so long as the funds raised from these activities by the school help to keep it solvent and keep its fees low, while also meeting the quality standards prescribed by the education regulator.
  • The consortium which buys the school will not disadvantage existing staff for up to five years from the time of purchase of the school on a similar sliding scale referred to earlier.
• Schools will not be protected from competition in any way. Practically anyone could set up a school anywhere, charge any fee and try to attract students. There will be no quotas or limits on the number of schools in an area, even if this may make it harder to raise loans. This openness is necessary to prevent monopolies of any sort arising in what should be a completely free market. So long as a school complies with quality requirements, through ‘deemed licensing’, it could be launched. Schools would self-assess against standards established by an independent association of educators nominated by the education industry, and notify the education regulator of their existence – that would amount to becoming a licensee. Stiff penalties would apply if a school was later found to have violated the standards. Schools would be permitted to enrol children only at the beginning of a school year and parents will not be able to change their children’s schools during the year unless there are exceptional circumstances.
• To prevent the financial collapse of schools through mismanagement, each school will be compulsorily required to purchase bankruptcy, fire, workers’ compensation and public liability insurance from the market, to be reinsured initially by the education regulator until the rates of school collapse are better assessed and private market premiums fine-tuned. If the buyers of a school turn out to be bad managers, or worse, this insurance will prevent the school from going belly-up and children from suffering.
• This model will create a competitive market for high quality schooling. Only the most efficient schools, fully accountable to the parents for the quality of education they provide, will survive. Poorly managed schools will be bought out by more efficient schools. There will be no barrier to the potential size of a consortium. An efficient consortium could potentially buy out all schools in the country. So long as even one other efficient competitor could set up a school in any place in the country, the size of the consortium would not matter.

Child-based funding:

• School will bill the government each month (or quarter), seeking reimbursement against eligible vouchers (eligibility below) for each child, by name.
• By the thirtieth month, my government would have allotted a unique identification number to each child in India between the ages of four and eighteen, in preparation for this program. This number would be linked to a database which records key biological features[iv] of the child and photographs of his/her parents, to prevent potential falsification of records commonly done by illegal immigrants to India.[v] A new identification number would thereafter be allotted to each child who subsequently reaches the age of four. This database will be linked to the previous year’s income tax return of the child’s parents,and would generate a voucher of a specific value, linked to that income and to the expected educational costs for a child of that age. Vouchers will therefore differ in value. Children of poor parents will get vouchers of a much higher value than children of wealthy parents.
• Children would go to a school selected by their parents. Parents would pay an amount over and above what the government voucher reimburses the school for each of their children separately. Poor parents would of course not pay anything since they would have high-value vouchers. Richer parents will pay a top-up amount.
• This higher allocation for poorer parents is a crucial part of the model. The system today does not provide genuine equal opportunity even though it is based on the socialist ideology of equality. The quality difference between government and private schools is therefore quite vast, and does not allow children from rural areas or slums to prosper. My government’s policy would make schools in rural areas or slums extremely attractiveto potential school owners, since children with predominantly high-value vouchers will attend such schools. Therefore schools in economically backward areas will be able to afford much higher salaries for teachers, and potentially attract even better teachers than schools in urban areas. In this manner, all schools will be able to provide a robust quality education at the minimum.
• An annual adjustment would be applied to the value of a child’s voucher after the income of the child’s parents is declared to the tax office. Excess payments made for the child to the school would be recouped through the parent’s future taxes.
• The voucher system will be managed by a range of private service providers under strict conditions of accountability. The independent education regulator will monitor the quality of these providers and ensure the overall integrity of the voucher system. Stiff penalties will apply if preventable fraud is detected at any level.
• Schools would be required to report a child’s death or transfer from the school within one month to the voucher service provider. Should it be found that a school has charged the government for a child who was no longer studying there, the school will face financial penalties including potential withdrawal of the school’s license and criminal prosecution of the school owners.
• Education departments and directorates, as well as inspectorates of schools, would be mostly disbanded by the end of the thirtieth month; many of their teaching and non-teaching staff would have been, by then, employed by the larger consortiums. The social infrastructure department, which will manage the overall budget for school education, will work with the independent education regulator to ensure that minimum outcome standards of educational attainment are met by each school, and that vouchers are administered properly.

Higher Education

• Tertiary institutions will charge full fee virtually from everyone barring the few to whom they give scholarships. By the government not funding tertiary institutions, significant tax revenues currently allocated to higher education will be released for more essential purposes, even as the quality of university education and infrastructure is significantly boosted by the open market fee charged by universities.
• Those admitted to a course by any recognized tertiary education provider will be loaned money for 15 years at a low rate of interest by the government to attend that course:
• • An Indian citizen (not overseas citizen of India or permanent resident), who gains admission into an approved tertiary institution in India will be eligible to borrow from the government all fees charged by that institution, as well as the cost of necessary books and equipment and modest living costs.
  • These loans will bear a low interest – around 1 per cent more than the (variable) Reserve Bank rate. The repayment would be through the income tax system after the student gets a job and starts earning above three times the level of the poverty line. This loan will enable all meritorious persons in India to pursue higher education.
  • Even after India becomes completely free there will remain some tendency on the part of some students to leave the country after being educated at the taxpayers’ expense. Such students may not return the loan and also pay taxes to other countries which did not invest a rupee in their education, but potentially not repay their loans to India. Where similar schemes operate elsewhere, as in Australia, an international agreement will be sought by those countries to ensure these loans are refunded to India. Either way, a system to monitor departing students will be established. Passports and immigration officials will be given access to the database of student loans. Students who leave India – even on a temporary visit – will need to furnish a bank guarantee equivalent to the amount of their currently outstanding loan plus the present value of all costs incurred by taxpayers on their school education. This guarantee would be forfeited should they fail to return within the stipulated time. Those without proof of this guarantee will be turned back at the immigration check and not permitted to leave India.
  • How will these student loans be funded? The basis of this loan model is that income streams from university students are far more secure than houses or land. Almost all university graduates will earn well, making it a trivial task to recover their loans through the tax system. Therefore, a rolling debt model will be used. From the thirty-first month, ten-year bonds will be issued equal in today’s real value to the student loans expected to be issued (not repaid) that year. Prudent investors in India, including banks, will buy these bonds.
  • The bonds will be retired after ten years using multiple-year recoveries from students who would by then be in the workforce, noting that not all bond repayments will be met from student loan recoveries in a particular given year. Apart from mismatches of timing between student earnings and the face value of the bonds, the residual costs of administering this programme will have to be paid by the taxpayer as well, plus the difference in interest costs between the effective rate of the bonds and the Bank rate and a write-off for defaults. This amount will form a subsidy for higher education. The justification for this small subsidy is that it provides an equal opportunity – to those selected for higher education – to complete their courses. With efficient management, the subsidy will be reduced considerably.

Tertiary Sector Privatization:

•  As with schools, there is no reason for the government to manage the delivery of tertiary education. Indeed, there is even less reason, since no bureaucrat can teach an Einstein or tell him how to manage his discipline. Let experts manage their own institutions. All government universities, technical colleges and the like will be sold off by the thirtieth month on the same pattern as schools, and accredited by imposing on them a few conditions necessary to demarcate them as institutions of tertiary education. These institutions will become for-profit corporations with shares traded on the stock market. Their sole business objective would be to provide tertiary education and they would use their lands for the primary purpose of higher education for 999 years.
• They will have operational independence. They would set their own salary structures to attract distinguished academic professionals and, consequently, bright students. They would determine the type and quality of tertiary education services they wish to deliver, the mix of courses to offer and other things that universities do. The competitive market will then deliver the best mix of options for students. Not one rupee will be spent on any ‘educational planner’ to predict the demand for graduates in specific areas. Only that much higher education will be provided as the market needs and will bear.
• The reason why universities won’t jack up their fees to astronomical levels upon privatization is because of their critical need to attract customers – in this case, high quality students. High quality students, like any other self-interested person, will look for good quality but low cost education and force the fees down to competitive levels.
• Will some academic disciplines be ousted from the teaching agenda by this model? Doubting Thomases will argue that privatization will affect the supply of courses in arts and philosophy. But this argument is without basis. Modern private sector corporations recognize the great value of liberal education in broadening the perspectives of managers. Indeed, arts graduates do better in modern businesses than technical graduates because innovation, entrepreneurship, leadership, people management and strategic thinking have little to do with technical skills.
• In this manner, the freely operating tertiary education market will decide what courses are needed for India. I imagine we would get a hundred Indian Harvard Universities in a few decades through this model.

Some First-Order Core Functions

A good government needs to deliver high quality outputs in at least three ‘first-order’ core areas, of defence, police and justice. These functions must be carried out outstandingly well and, if necessary, to the detriment of all other functions. If funds run short, a government can always provide incentives to citizens to take up relatively secondary things like infrastructure through a range of innovative ways by transferring property rights over roads, airports, or railways. I have outlined key elements of reform in these first-order core functions in the Online Notes.[i]

Second-Order Core Functions: Infrastructure and Equality of Opportunity

Poverty Elimination

Phase 2 – Breakthrough (Second Two and a Half Years)

Local Government Reform

Phase 1

Now to the bureaucracy. The first two and a half years of my government are being characterized here as Phase 1 – Build up, following Jim Collins. The second half of this five-year term is being characterized as Phase 2 – Breakthrough. Since much of the improvement in India’s governance will depend on the active participation of states, they will be provided incentives to initiate similar reforms. I will immediately write to public service heads, asking that the bureaucracy start examining all its work in the light of freedom of the people, and explore constructive ways to systematically step aside from needlessly interventionist activities.

• Month 1: The Planning Commission will be shut down from day one. Its policy analysis functions will be transferred either to existing departments or to the IPO. All commitments made under the Five-Year or other Plans will be scrapped. All previously committed funding will be up for review at the time of renewal or extension of funding on a case-by-case basis. Files of the Planning Commission will be sent to the National Archives for recording and open access to researchers.
• Month 2: My government will not undertake a useless reshuffle of IAS officers. Instead, as a first step, all deputations and postings to and from the IAS, IPS and IFS state cadres to the Central Government will be frozen from the sixtieth day, after which the system of transfers and deputations at the level of joint secretary and above would be scrapped. All new appointments except new recruits to the civil services (and the IPO) will be frozen until Phase 2, urgent requirements being met by ad hoc contracting. The annual intake of new civil service recruits by UPSC will continue till Phase 1 is completed to prevent shortages of trained personnel at the grassroots in the states. These recruits will be treated at par with other employees at the end of Phase 1, and will be able to apply for Phase 2 positions either in Central or State Governments, keeping in mind that traditional roles like sub-divisional magistrates and district magistrates would no longer exist in Phase 2 in states which participate in these reforms.
• Month 2: Secretaries of existing departments will be given two months to come up with a well-defined set of core competencies including knowledge and leadership standards, as reviewed by internationally reputed consultants, for each position in the rank of joint secretary (and above) to the Government of India.
• Month 3: Upon approval of these competencies by the relevant Ministers – and the Freedom Minister, to ensure consistency in the standards – all civilian positions at senior executive levels will, without exception, be advertised publicly on the first day of the third month of my government assuming office. There will be no reduction in the number of senior positions in Phase 1. However, all such positions will henceforth be recruited entirely through the open market.
  • As most departments do not handle security matters, there is no reason why non-citizen permanent residents can’t work in such Ministries. Therefore, except for civilian positions in the defence and external affairs ministries, and some positions in the Freedom Department, senior positions in all other departments will be open to anyone with appropriate merit from practically anywhere in the world.[i] All they would need to do before appointment is to apply for permanent residency in India.
  • Compensation payable for these newly advertised positions would be at par with that of senior managers in multinational corporations in India, in the range of Rs 40–100 lakhs annually, to be individually negotiated – noting that a few senior policy analysts hired by the IPO from abroad will earn similar amounts as well.
  • Current civil service incumbents could apply to these positions along with others.
  • A series of interviews and presentations from shortlisted candidates on a range of complex policy matters would be held by teams headed by the lead Cabinet Minister of the concerned department and another Cabinet Minister. Existing civil servants who are short-listed would be encouraged to bring along with them a summary of their perspectives on the strategic plans for their departments (as outlined later). Strategic and persuasive discussion of such plans could help civil servants demonstrate their capability. The selected secretaries will be appointed first – under my signature – and given the option of forming a part of the interview team for joint secretaries. Each secretary would then formally appoint the joint secretaries and retain complete oversight of them, including the rights to dismissal.
  • All these appointments will be on 24-month contracts, extendable by three years if the incumbent is successful in obtaining the fewer Phase 2 positions.
• Months 5 and 6: Appointments will be completed in five months and appointees will start work at the commencement of the seventh month. Unsuccessful incumbents will relinquish their roles simultaneously.
  • Civil services incumbents appointed to these positions will have to resign from their civil service before taking up these appointments. They would also get the benefits admissible to them on voluntary retirement from their service, over and above their new contractual benefits. If they are not yet eligible for voluntary retirement, they would be deemed to have completed 20 years of service.
  • Unsuccessful civil service incumbents could either revert to the rank of a Director in the Central Government on their existing salary or revert to their state cadre. They could also select an individually negotiated redundancy package plus pensionary benefits under the relevant rules. No other government employee will be offered a redundancy package until the beginning of Phase 2.
  • If some of these positions cannot be filled because suitable candidates cannot be found, or if there are unforeseen delays in recruitment, experts of international or national stature may be tapped on the shoulder and offered short-term appointments on mutually acceptable ad hoc terms at salaries potentially much higher than those indicated earlier.
• Month 8: Departmental strategic plans: The newly appointed Secretaries would be given 60 days to prepare a 21-month strategic plan for their department to be delivered by the end of the eighth month to the Cabinet. They would work closely with their relevant Ministers and the Freedom Department which would have already conducted background work through the IPO on each potential restructure. These plans will be published on the first working day of the ninth month, after Cabinet approval. These would specify the pathway to the restructure in sufficient detail to guide implementation. These plans will include, among other things, the deliverables and milestones listed below:
  • A high-level reviewof each major activity undertaken by each department to be completed by the end of the ninth month. A two to three page summary on each major activity would be presented to the Cabinet from the ninth to the twelfth months, and all reviews published on the internet after Cabinet endorsement. These reviews would provide the rationale for either continuing with an activity or reverting it to citizens (Box 13 in the Online Notes[ii] outlines the principles that will guide these reviews[iii]).
  • The strategic plans will specify the timelines for implementing organizational and structural change, even asthere is no let-up in the delivery ofcore functions.
  • Regulation should not be directly implemented by departments. Regulatory enforcement and implementation will be de-linked from policy making to minimize capture of policy by regulators. Where such regulatory bodies do not already exist, the strategic plans will specify when a relevant independent regulatory will be established. As part of this process, the Reserve Bank would be made completely independent, tasked with focusing solely on inflation; in the longer term, the concept of central bank will be reviewed and most functions decentralized to the private banking system. To ensure independence of regulatory bodies, appointments of their chief executives would need to be endorsed by relevant Parliamentary Committees from the beginning of Phase 2. This would eliminate perceptions of bias in the delivery of regulation. The delivery of laws will thus become independent of political considerations.
  • The strategic plans will also specify when a separate strategic plan for each departmental public sector body, regulatory body, or undertaking dealt with by the department will be delivered – latest by the eleventh month. Without exception, all business undertakings including defence manufacturers will either be auctioned off in the international market or their shares sold to the people of India by the end of Phase 1. The government will stop being a businessman. Period. Not one business will remain in the government’s hands. Buyers would need to protect the financial outcomes of staff of these undertakings for up to five years after Phase 1 on a sliding scale similar to that for public services. Defence undertakings will be sold only to companies fully owned by Indian citizens who live in India and employ Indian citizens; these companies will also provide periodic reports to the defence ministry and permit random inspections by authorized defence inspectors at any time of the day or night. Exports by such private defence companies would be vetted by the Defence Minister.
  • A key element of the strategic plans will be the comprehensive modernization of the trappings of government administration. During Phase 2 there will be no concepts of clerks, peons, or drivers. Offices would be completely modernized and made ‘open plan’ with senior managers seated in the same work environment as their support staff, excluding joint secretaries and secretaries who could have their own rooms. There would be a number of small and large meeting rooms. State-of-the-art technology and facilities would be made available, including modern workstations with access to global databases and international standards, electronic document and records management; and more importantly, high quality toilets and kitchens for staff.
  • The strategic plans will identify and deliver on thetrainingneeded to ensure that employees wanting to work in Phase 2 possess relevant technical skills. The stringent competency requirements of Phase 2 will mean that those who don’t shape up will have to be let go. In recruiting public service leaders for Phase 1, one of the important competencies will be their knowledge of the skill sets needed for modern governance. In particular, they must be capable of sourcing high quality trainers from across the world.
  • The Freedom Department will coordinate all departmental strategic plans and ensure that each major aspect is properly addressed. When these plans are added up it should become clear how the restructuring of the ten new departments will be completed.
• Month 9: A new Public Administration Act: The Freedom Minister would introduce a Public Administration Billin the Parliament in the ninth month. This will essentially implement many of the suggestions already made in Chapter 5. For those interested I have provided details in the Online Notes. The Act would come into effect at the commencement of the thirty-first month.
• Month 9: A new Superannuation Act: As indicated in Chapter 5, one of the key barriers to occupational flexibility in India is the absence of a uniform superannuation scheme that applies both to the public and private sectors. A Superannuation Bill, upon the commencement of which the Central Provident Fund legislation and General Provident Funds would be disbanded, would be introduced in Parliament in the ninth month. This would require each employer, including the government, to transfer 10 per cent of an employee’s gross salary, at a low rate of tax, into privately managed superannuation trusts that would invest these funds into risk categories selected by employees. This 10 per cent contribution would technically form part of the employee’s contribution, and will be included explicitly in all salary packages. I have discussed further details of this important piece of reform in the Online Notes.[iv]
• In this manner, by eliminating tenured appointments at senior levels, by introducing redundancy for all permanent positions and by enacting superannuation legislation, significant flexibility would be introduced into the Indian labour market. A number of other, more generic, labour market reforms will also be introduced which I do not touch upon here for want of space.
• Month 9: Constitutional amendment to abolish the all-India services: Also in the ninth month the Freedom Minister will introduce a Constitutional Amendment Bill to wind up existing civil services and repeal Articles 308 to 323. Approvals from states would be obtained and the Amendment enacted as soon as possible, to take effect from the thirty-first month at the latest. Through this process, there would no longer be any Constitutional barrier to the Phase 2 structures. Indeed, this amendment would be made effective as soon as the Public Administration Act is enacted.
• The amendment would automatically abolish the Union Public Service Commission (UPSC) in its current form. However, under the Public Administration Act, the UPSC will be reincarnated and headed by a Public Services Commissioner. It will shed its recruitment function except for the armed forces, for which a longer and different transition will be separately laid out. It will largely convert into a research organization on public administration and provide recommendations to government on world-best-practice for the bureaucracy. Its periodic recommendations could lead to further streamlining of the public services and help to further increase their agility, productivity and effectiveness. It would also establish newer, and usually better, working conditions every three years for the public services in consultation with employees and their representatives, subject to Cabinet approval. The practice of setting up ad hoc Pay Commissions would cease.
• Month 22: Advertisement for Phase 2 positions: Based on the details of the restructure, which should emerge clearly by the twentieth month, jobs for all individual Phase 2 positions will be advertised by the twenty-second month, eight months prior to the commencement of Phase 2. These will be open recruitments through the market using procedures prescribed in the Public Administration Act. Current employees of the government will be eligible (as will others) to apply for these, fewer, ‘final’ positions. All appointments made to these positions will be deemed appointments, effective only from the commencement of Phase 2.
• Advertisements for these positions will be staggered, the senior-most roles being recruited by the twenty-fifth month, well before the junior ones. Senior managers so appointed will chair the selection panels to recruit their future direct reports. All appointments will be completed by the twenty-ninth month.
• Phase 1 government employees not recruited to a Phase 2 position will be declared redundant with effect from the thirty-first month and suitably compensated. They would also be supported by the Freedom Department through training and guidance in setting up a business. It would be generally ensured that they do not become worse off for up to five years beyond the commencement of Phase 2 on the sliding scale mentioned earlier. It is expected that they will find something useful to do in the radically reformed economy of India. The Freedom Department will also monitor their health and well-being.
• The performance indicators for Phase 2 secretaries will be significantly tougher than Phase 1 indicators. These will be linked closely to citizen perceptions of departmental performance and corruption. If an organization is perceived to be corrupt by more than a certain proportion of the public, this ‘target’ proportion being drastically reduced each year, Phase 2 secretaries will be dismissed automatically without recourse, despite not having been personally implicated in their department’s corruption.

To ensure a fail-safe transition to Phase 2, suitable transitional arrangements and redundancies will be built into all systems for the first three months of Phase 2 to ensure that no core function is compromised even marginally.

The Freedom Agenda for India

First of all, we should be very reluctant to dismantle anything related to governance without fully understanding its impacts. For example, we should be extremely loathe to jeopardize our already weak justice and police systems. Being therefore wary of reducing any of the strengths we have built so far, my objective in this blueprint is to develop a constructive story which incrementally, but systematically, rebuilds, and then strengthens, the pillars of liberty in India. It is like re-building a road in small sections without disturbing the flow of the usual traffic.

Raising Resources

Reforming Public Finance

Building Capability to Govern

Appointments of Cabinet Secretary and Ministerial Staff

The ball of bureaucratic accountability will be set rolling by reducing the current exclusive reliance on the bureaucracy for policy advice and implementation. To signal this change the Cabinet Secretary will no longer be a public service position. This will mark the divide between political representatives and the bureaucracy, between the agent and sub-agent. This position will henceforth be held by an MP in the rank of Minister of State without voting rights in the Cabinet. The incumbent public service Cabinet Secretary will be offered a redundancy package; or, alternatively, reverted to his or her state cadre. Ministers will also be empowered to appoint a small team of political ministerial advisers on short-term contracts which will run concurrently to the Ministers’ appointments.

Compensation for Peoples’ Representatives

Being committed to a squeaky clean government, I cannot afford the luxury of Cabinet colleagues being paid poorly. As an interim measure, my Cabinet will significantly increase the salary of members of Parliament. State Governments will also be funded for similar increases for their assemblies and councils. The monthly wage of MPs and MLAs would go up from the current Rs 33,000 to, say, Rs 3,50,000, with proportionate increases for Ministers. There will also be an annual adjustment based on the cost of living. Simultaneously, all perquisites and indirect benefits will be abolished.

• For every 1 per cent increase in per capita GDP growth beyond 5 per cent per annum, all our representatives will get a one-off 5 per cent bonus.
• For every 1 per cent permanent reduction – defined as a reduction sustained for two years – in the number of people below the poverty line, MPs and MLAs will get a permanent 1 per cent increase in their base salary. Once the negative income tax system is fully established, the entire reduction in poverty will be incorporated permanently into the base salary.
• For every ten ranks that India rises on a sustained basis of two years in Transparency International rankings, there will be a 5 per cent one-off bonus.
• There will be a permanent 20 per cent increase on base salary upon India’s becoming the world’s least corrupt country for two years in a row.
• The sum of these bonuses will be limited to a total of 50 per cent of the base salary in any given year.

• a compensation mechanism for peoples’ representatives that will eliminate all reasonably foreseeable incentives for corruption, or will otherwise promote the freedom of citizens; and
• any matter related to the mechanisms of political representation, such as electoral laws.

High Priority Electoral Reform

• repeal of the requirement in the Representation of the People Act for Indian political parties to swear allegiance to socialism;
• removal of limits on political fund raising and expenditures subject to stringent disclosure. These disclosure requirements will include third party audits and audit by the Election Commission. There would be penalties of up to Rs 10 crores and jail terms of up to three year for failures to accurately report on and declare all receipts and expenditures related to political purposes. Penalties for making unauthorized political expenditures on behalf of another person would be increased to Rs1 crore along with a jail term of up to one year;
• state funding of elections (being retrospectivefor the elections that would have led to the formation of my government) would be introduced. Candidates who secure more than one-twentieth of the valid votes polled will be reimbursed Rs 25 for each vote polled on a formula linked to the population and geographical extent of the constituency, normalized to an assumed 100 per cent voting rate. Surveillance will be strengthened through video cameras in polling booths and other security measures taken, as well as very significant penalties imposed, on people who engage in booth capturing; and
• the security deposit for elections would be increased to Rs 5 lakhs from the current Rs 10,000, and forfeited when less than one-twentieth of valid votes are polled by a candidate. This lower forfeiture limit will allow many more candidates to contest, while the much higher security deposit will deter non­-serious candidates.

Freedom Ministry and a New Constitution

• The Indian Policy Office (IPO) would form its core advisory area comprising policy professionals with demonstrated capability to analyse policy in relation to economic impacts and impacts on our freedom. The IPO will, by and large, hire new analysts through open competition, including Indians currently teaching economics and finance in the world’s top universities – these people will be hired on short or medium term contracts and paid salaries comparable to what they are currently drawing abroad. The idea is to suck back top class policy talent of Indian origin currently sitting abroad.This office will function as a division of the Department but will retain significant independence in its advice. The Minister for Freedom would provide the Cabinet with the IPO’s original advice, as well as his or her own comments and recommendations.
• A separate division of this department will review all existing laws to assess their compatibility with freedom.
• The department will coordinate all legislation required by this blueprint, particularly a new Public Administration Act and Superannuation Act by the ninth month.
• In Chapter 3, we saw how a new Indian Constitution can be fast-tracked. Processes to create a new Constitution will be put in place by the Department, such as convening a new Constituent Assembly with the approval of all the states within six months. The draft Constitution so prepared will be put to a referendum within six months of its completion. The task of translating the existing Constitution into relevant Acts would also be co-ordinated by the Freedom Department to ensure that, subject to the referendum being successful, the new Constitution would be able to take effect on or before the first day of the thirty-first month of my government.
• Surveys will be commissioned by the Freedom Minister through an independent organization to assess citizens’ views on the level of corruption and service delivery in various departments. Results would be published quarterly and inform the public self-reviews of Ministers as well as confidential performance reviews of secretaries.