Nani Palkhivala once said, "We have too much government, but too little governance". Good governance means achieving goals and delivering results while working with checks and balances.

Sometimes, we tend to blame the Constitution of India for our inability to move forward on the path of reforms. The Constitution of India is no different from the constitution of other liberal democracies. It allows citizens to form associations, to move freely throughout India, to reside and settle in any part of India and to practice any profession or carry on any occupation, trade or business. It declares that trade, commerce and intercourse throughout the territory of India shall be free. The right to acquire and hold property was recognised as a fundamental right, but since 1978 it is a legal right. While distributing legislative powers, the Constitution simply identifies heads of legislation, but does not require either Parliament or the state legislatures to follow a particular economic philosophy. For example, the power to make a law on "banking" was given to Parliament. The Constitution did not say that banks should be nationalised. In my view, the Constitution allowed us to create a market economy and, indeed, there are many provisions that reinforce the basic principles of a market economy. If India took a different road, that was a matter of political choice, not because of any constitutional compulsion.

The failures have been at the sub-constitutional level. The three branches of the state share the blame for the deficiencies in governance. However, the overarching failure has been at the political level. The country started with enormous political capital accumulated during the freedom struggle. The leaders of that age were unselfish, austere and patriotic. In the past five decades, this political capital has been depleted. Political parties are unable to attract genuine talent.

There are grave deficiencies in the working of the three branches of the State. Firstly, take Parliament. The essential business of any parliament is legislative business. However, the Parliament of India devotes very little time to legislative business; and when it does it rushes through bills without debate and without mature consideration. Bills are pending in Parliament for more than two years. Some of these are imperative for good governance, yet Parliament seems to be in no hurry to pass them. Examples are the Fiscal Responsibility and Management Bill and the Competition Bill both of which have an immediate relevance to economic reforms. The debates in Parliament on economic issues tend to be divisive and send wrong signals. Ten years after reforms began, Parliament continues to debate their merits.

At the judicial level also there are deficiencies that contribute to deficiencies in governance. The biggest failure is the huge backlog of cases. There are long delays in disposing of even the most urgent cases. Public interest litigation has taken a toll on economic reforms. While it is a matter of satisfaction that the final result has usually tended to uphold deregulation and privatisation (most recently in the BALCO case), the time lost and the tortuous litigation have created a considerable degree of uncertainty about India's commitment to economic reforms.

The failing of the legislative and judicial branches pales in comparison with the failing of the executive branch. It is at this level that there is little intellectual or moral support for economic reforms. The cabinet system, because it draws almost exclusively from MPs and MLAs, does not allow for a cabinet of talent. Rare is the case when a person like Manmohan Singh is appointed as finance minister. Even in such cases, the political system requires that he undergo political baptism and, afterwards, he cannot remain apolitical. The cabinet system has also suffered as a result of coalition governments. Because many political parties join a coalition, they demand and get key ministries in proportion to their numbers in Parliament. As a result, there are many square pegs in round holes.

A rigid hierarchy aggravates the problems at the administrative level. If a minister is unfamiliar with the subject, the bureaucracy virtually takes over his functions and reduces him to a rubber stamp. No one in the civil service holds his tenure based on performance. It is possible for a sole joint secretary to keep at bay for months an investment proposal running into thousands of crores of rupees. In fact, that is precisely what happened to the first proposals that came to the Government from independent power producers. The administrative system does not allow for talent to rise to its natural level. Nor does it allow for outside talent to be inducted into the system.

Sound economic policies are necessary but not sufficient to ensure progress. They must be rooted in good governance. Governance cannot be ignored any longer.

(The author is a former Indian finance minister.)