Monday, May 23, 2016

Shaping expectations - taming inflation and corruption

Both inflation and corruption are a function of expectations. Further, both have high levels of hysteresis and the resultant tendency to get entrenched. Once internalized, dismantling requires vigorous efforts to reshape expectations. In the process, collateral damage is inevitable.

In an environment where inflation expectations were unhinged, India's central bank Governor Raghuram Rajan has sought to cement low inflation expectations through an extended period of monetary tightening, even at the cost of economic growth. It has been acclaimed by experts, who have hailed him as India's Paul Volcker. 

On a similar vein, in an environment where corruption in senior level postings had become pervasive, the Government of India's Department of Personnel and Training has sought to reshape expectations by adopting an extremely rigorous process of screening. Unsurprisingly, the multiple levels of due-diligence for integrity and efficiency have come at the cost of causing delays and leaving many posts vacant/unfilled for long periods. Senior level positions in banks and public sector units have remained unfilled for long periods. The same experts complain that the delays in filling up posts have caused administrative paralysis.    

While the jury is still out on whether inflation has been slain or not, it can be fairly confidently asserted that the expectations on personnel deployments have been favorably reshaped. But not if you have been following the mainstream media. Clearly what is sauce for the goose is not sauce for the gander!

2 comments:

Sai Prasad said...

It is difficult to say what expectations have been cemented as a result of the policies you mention. There seem to be different expectations floating in the system.

Posting of bureaucrats are carried out in a controlled environment and shaping expectations is a much quicker job. On the other hand, increasing public expectation for corruption free governance is more difficult and would take time. I believe the latter would be more lasting rather than the former.

Why dont you look at how to increase public expectation and demand for corruption free governance.

Gulzar Natarajan said...

Dear Sir, Thanks for the comments.

1. Yes. I completely agree that shaping expectations for a corruption free governance should be the priority. And postings are a far simpler area to shape expectations.

2. About the expectations cemented, I can only say that the role of political and other connections has come down sharply. As to whether the other desirable features - right person for the right job etc - have been formed or not, I am not sure.