We are like that only

I wrote this in response to an article by Mr Aakar Patel that was recently circulated in one of the mailing lists I belong to. You may find the article at:

http://www.livemint.com/2009/07/02203454/Why-Indians-don8217t-give-b.html?d=1

In the article, Mr Patel tries to analyse what drives Indian behaviour, seeking answers in religion, etc.

From my management consulting experience, I have come across a hypothesis that seems intuitively right, viz., ‘structures influence behavior’. Let me summarize the structures that, I believe, currently influence Indian behavior. 1. Scarcity of infrastructure and natural resources. 2. Underpaid government positions. 3. Lack of mechanisms to transparently fund political parties. 4. Excessive government presence in business.

These structures combine to make the average Indian desperate…the average government employee corrupt…the average politician corrupt…and the temptation to blame the government for all ills. Indians are not unique in this. Wherever these structures exist, be it Egypt or Philippines, the behavior of the average citizen is similar.

Can anything be done about these structures? Scarcity is a very tricky one, particularly of natural resources such as fuel, water and land. This cannot be changed overnight…so, I guess we will need to be patient. Let’s turn to the other structures. Paying government employees may seem a dumb thing to do, particularly in a situation of scarcity. However, from Chanakya to Lee Kwan Yew, smart administrators have consistently recommended doing this in order to reduce corruption. Formalizing mechanisms to fund political parties openly will help reduce “poll tax” a bit. Reducing government presence in businesses, such as electricity, railways, airlines, petroleum, roads, etc., will allow economic pricing, which over time, might reduce scarcity.

Is real change of this magnitude possible in India, by simply changing a few structures? I believe so, particularly from the experience of the last few years. The huge surge in economic growth, productivity and export of services that has happened in India during the past 10 years was triggered by changing of three structures – licenses, import duties and telecom infrastructure. Licenses were removed or reduced, import duties were drastically reduced and government withdrew from telecoms monopoly. Enough has been written about the cause-and-effect of these changes, so I won’t repeat them. But, what is our main takeaway? It is that, ‘Structures do influence behavior…and a few structures can be changed with momentous effect’.

All this has very little to do with Brahma or Hinduism. A lot more is due to foresight, vision and pragmatism. Let’s hope our Indian-ism, which has helped us survive so far and flourish periodically in history, takes us forward once again.