India, one of the world’s largest countries, has made tremendous strides in its economic and social development in the past two decades and is poised to realize even faster growth in the years to come. India currently stands at the threshold of a unique opportunity regarding governance and public management reform. However, with 17 percent of the world’s people, India accounts for less than 2 percent of global GDP and 1 percent of world trade.
The 73rd and 74th Constitutional amendments gave considerably increased powers to local governments including increased financial and administrative autonomy. Where administration is weak, the burden falls heavily on the poor, who suffer from skewed government spending, limited access to services, and employee indifference. Although India’s civil service is not unduly large by global standards, there is a pronounced imbalance in the skills mix. Around 93% of the civil service comprises Class III and IV employees for both the Government of India and various state governments. Effective civil service reform will have to include measures that improve access to information, strengthen accountability, and reduce political interference.
India’s priority reforms includes improving the composition of public expenditures by reducing the share spent on wages, pensions, interest payments, and agricultural subsidies, and increasing investment and operations and maintenance for priority social, infrastructure, and agricultural programs. An expenditure restructuring plan has been prepared to ensure that ministries adhere to a spending timetable to avoid an expenditure glut in the last quarter of the fiscal year. This plan will include guidelines for ministries regarding utilization of their annual budgets. Last year, the finance ministry instructed all ministries to refrain from spending more than 33 percent of their budget in the last quarter of the financial year.
The Tenth Plan targets an increase in tax revenues from 8.1% of GDP in 2001-02 to 10.3% of GDP by 2006-07. Achieving this goal depends on strong recovery in manufacturing growth and extending the tax base to the booming services sector.
The Indian press and public opinion have been concerned about problems of corruption in public affairs. The Right to Information Bill was passed in 2005 in an effort to improve governance and public administration and eliminate corruption. This bill accords all citizens greater access to public documents than was earlier possible. Corruption investigations have increased significantly in many states; and several states working to provide a baseline against which future progress can be measured.
A long-established legal system has given India the underpinnings necessary for free enterprise to flourish. Although India’s courts are notoriously inefficient, they at least comprise a functioning independent judiciary. Property rights are not fully secure, but the rule of law, a legacy of British rule, generally prevails.