India's Reform Journey Revisited - Manish Sabharwal, Teamlease Services

What is one reform that was overlooked in 1991?

I think it was education reform. Finally, human capital is the most renewable or only renewable form of energy a country has. After 1947, while we got our elite education, IITs, IIMs, IISC, but it was like primary education was a blind spot, and so university excellence was a blind spot. I would say while the focus on 1991 was on the urgent, and we just lost picture on the important. We were so focused that the patient is in the ICU.

If the patient's in the ICU for 30 years, you've got to tell them to lose weight or quit smoking. In my mind, if we had thought about education reform in 1991, standing here in 2023, I think the compounding of human capital that could have happened if we had something like the National Education Policy, which blurred the boundaries between education and employability, which thought about degree apprenticeships, learning by doing, learning by learning, learning with modularity.

There's so many design principles which now we know. In retrospect, obviously, postmortems have a certainty that prescriptions don't. Your question did ask, what should we have done that we missed? I think that almost all economic development models would suggest that human capital should have been prioritized in ways that it wasn't in 1991.

What is one reform that India needs today?

I think it would be civil service reform. I think that education reform at least we have a 15-year glide path in the National Education Policy, so we're allowing foreign universities. There's a lot of action going on in education, but there has been no action on civil service reform. I don't talk about the 6,700 IAS officers. I talk about the 25 million civil servants in India who have this prohibited till permitted mentality, who have this writing the law for the thief.

I think that as an employer, there's 67,000 compliances, 6,700 filings. There are 26,410 ways for an employer to go to jail. Now, this regulatory cholesterol doesn't bother big companies. I have 140 guys in regulatory affairs whose only job is handling this regulatory cholesterol. I think the only explanation for 63 million enterprise in India, 12 million don't have an office, 12 million work from home, only 12 million are registered for GST, only 1 million pay Social Security.

There are only 23,500 companies in India with a paid-up capital of more than 10 crores. Why does 6.3 crore enterprises only translate to this small number of companies? It's really regulatory cholesterol. I have, over time, all our attempts of ease of doing business are almost the same thing as civil service reform, because civil servants, even if we were to make all these compliances vanish, they would reproduce them in one year because of the way they think.

I think that civil service reform, creating performance management for civil servants, lateral induction of civil servants, retiring people at 52 if they're not shortlisted for the next promotion, making the cylinder back into a pyramid, and then making it an Eiffel Tower. We're too top-heavy right now. They're 250 people with the rank of secretary to government of India. I think civil service reform is a meta-reform now which unifies and pulls together the various strains of reform and compounding that have been going on for the last 34 years.

If we truly want to make that leap in per capita income, we're going to be third in total GDP, but we're 138th in per capita GDP. If we want to raise that, then I think civil service reform is really an upstream meta-reform that has not received any attention since 1991. We have and obviously, civil servants will not do this. Nobody cuts the tree they're sitting on. This will have to be done by the political system. Civil servants have become very adept at presenting any proposals of civil reform as an assault on the steel frame that holds India together. That steel frame has become a steel cage now, so it's time for civil service reform.