EXITS are ubiquitous to the human condition. The writer and readers of this essay know that we will all exit this life. But even though exit is inevitable, how and when it occurs has profound consequences.¹ After all, we react very differently when a child dies due to violence than when an aged grandparent dies in his sleep. When states exit from production via mass privatization, the consequences are very different than when the state gradually exits by reducing its role and allowing an expansion of the private sector.

The transitions and adjustments that can follow exits – be it from relationships, occupations, countries, positions of power – can be liberating or disempowering. For those who exit, the change can precipitate reactions ranging from loss and angst to relief and hope. But the reverse could be true for the many others indirectly affected by these exits.

Like individuals, programmes and organizations too have a life cycle of birth, maturity, and decay. But not in India, where an apparent elixir of eternity afflicts people in public life, public programmes, and public enterprises. This essay focuses on four aspects of exit that have shaped modern India: in public life; in occupations, often due to technological change; of programmes and firms, both private and public; and among citizens, from their place of birth or from public services.

India is a young country run by old men. The average age of cabinet members in the outgoing UPA ministry was 68 years – an astounding 43 years older than the age of the average citizen, by far the highest among major democracies, leading the Economist to comment that ‘India is run by gerontocrats and epigones: grey hairs and groomed heirs.’² While the average age of the cabinet members of the present NDA government dropped to 60 years, octogenarians like Lal Krishna Advani and Murli Manohar Joshi have continued to hanker for a role in the BJP, just as the former octogenarian prime minister seeks continued relevance in the Congress party.

 

Politics is a difficult vocation in India and requires a degree of energy that is hard to rustle up at old age. An 80-year old foreign minister, even one who possesses all the qualities needed for the job, will find it hard to be mentally agile given the hundreds of meetings required of the job and the relentless travel it entails. The sheer physical energy required to do a job with so much globetrotting is not trivial – and one where being younger has the advantage of just having more stamina to do the job.

If politicians don’t retire, neither do the honourable judges or the mandarins of the civil service, having creatively imbibed the magical potion of near eternal bureaucratic life. Gubernatorial appointments are illustrative. As reported in the Hindu in 2013, among the governors appointed at the time were four former IAS officers and eight former IPS officers, while three had served in the army.

But gubernatorial appointments are just the tip of the iceberg. As new regulatory bodies were formed after the mid-1990s, the IAS saw a golden opportunity to replicate amakudari (descent from heaven) – the institutionalized practice where retiring senior Japanese bureaucrats get cushy jobs in the private and public sectors – at least for some of its members. The judiciary used its authority to veto this capture – until the bureaucrats relented and mandated that each regulatory body should have a retired judge, preferably heading the body in question! The honourable judges even insisted that new appellate bodies be created to appeal against the regulators’ decisions (and even that would not be the final word) – which, of course, created even more openings for retiring judges.³ The hankering for post-retirement jobs, to try and retain the status and trappings of office, results not only in blocked opportunities for those out-side this charmed circle, but inevitably also to greater ‘malleability’ to the demands of political masters in order to get these postings in the first place. In the end, it is the public who has to pay a heavy price.

 

The phenomenon is equally common in the Indian scientific and educational establishments. While the age of peak productivity of scientists has shifted upwards over the 20th century, it is still less than fifty. Great achievements in the sciences decline after middle age, and youth, conceptual achievement, and scientific revolutions are linked.⁴ But in India, nonagenarians continue to call the shots in shaping various aspects of science, agriculture and higher education policy while exhibiting an astonishing degree of vanity.⁵

The results are painfully apparent. While the political class is usually seen as the prime villain, Indian science and higher education is as much a victim of those who, while they undoubtedly made valuable contributions in their younger years, have clung limpet-like to power far past their prime. They serve on countless committees – especially selection committees – viewing their actions as selfless service to the nation, even as they have spawned a sycophantic and nepotistic culture ensuring that young talent seeks greener pastures.

The growing complexity of India’s economy requires people with deep domain knowledge on specific issues, making it critical to recruit talent from outside that brings with it new ways of thinking. However, culling the senior bureaucracy and recruiting new talent at senior levels of government is perhaps at its lowest levels in decades. By all accounts, the learning trajectory, energy and idealism of the average civil servant peaks at the Joint Secretary level. But the iron law of seniority prevailing in these core institutions of the Indian state trumps the iron law of ageing. An identical retirement age for the bureaucracy, judiciary and regulators would ensure that the former would have to make choices earlier in their careers, rather than having their cake and eating it too. A target of external recruitment of say a fifth of the senior positions in the bureaucracy and judiciary too would at least ensure some fresh ideas and talent, but that is extremely unlikely to happen.

 

A core challenge facing India is the health of its public institutions. The rejuvenation of these institutions depends fundamentally on their ability to recruit, motivate and retain talent. The public sector’s approach to its human capital has been akin to driving down a road with one entry and one exit, giving it little flexibility in both jettisoning deadwood and recruiting new talent. The latter is much more difficult without the former, which requires building roads with multiple entry and exit rampways.

One of the singular features of public policies in India is that while innumerable rationales for interventions are made, those for exiting are few and far between. Consider the Indian state’s role in industrialization. There has been much criticism of the Nehruvian state’s industrialization strategy, with the government setting up everything from steel plants to heavy engineering to chemicals and fertilizers. However, in many cases, notwithstanding the criticisms that have the benefit of hindsight, the Indian state’s involvement in industrialization had a reasonably judicious sense of timing with respect to entry, but when it came to exit, the saga has been a sorrowful one. In rare cases (such as petrochemicals), the state however had a road map for exiting. It first reduced its financial role (thereby increasing enterprise autonomy), and then successively allowed domestic capital to enter, opened the sector to foreign capital and finally exited by privatizing the state-owned enterprise (SOE).

 

Indeed among the most negative state policies that have resulted in a massive drain on the public exchequer without any long-term gains in industrialization has been a refusal to allow exit of public or private sector firms even when they have become clearly unviable and instead using a form of drip-feed to keep these comatose firms alive. In 2000, when the Atal Bihari Vajpayee-led government moved to offload shares in Air India, then handling mainly foreign travel, the CPM issued a statement urging ‘the working class and the people of India to resist this dangerous and anti-national move...Otherwise, the economic and political sovereignty of the country itself will be in danger, aggravating the sufferings of the Indian people.’ Since then budgetary support to Air India to cover its losses has been around Rs 60,000 crores.Presumably the sovereignty of the country and the sufferings of the Indian people have been safeguarded as a result.

The pernicious economic consequences of the lack of exit in multiple areas of the Indian economy have recently been highlighted by the Chief Economic Advisor to the government, Arvind Subramanian. As he put it India ‘went from socialism with restricted entry to capitalism without exit. This is now a real problem in India. You take power, fertilizer, banks, PPP projects, civil aviation, or even agriculture like rice and sugar – the problem is you can’t get out. Inefficient firms or inefficient production can’t be easily reduced and that poses a really big problem for all the things that you think are desirable. It is a fiscal burden; it affects the economy in so many ways.’

 

The net effect has been to protect the most poorly performing capitalists and the most obdurate unions who have operated with the knowledge that the government will not allow them to go under. The negative externalities have been massive for the huge pools of labour in India’s vast unorganized sector, who have had to pay the price of the consequences of these policies, namely an industrialization that has not only proceeded at a much slower rate but is also more capital intensive, negating India’s comparative advantage in low skilled labour.

A similar story could be told of the chequered history of India’s poverty programmes, whose anaemic outcomes have been less the result of intentions than of perennially weak implementation. One reason is that all poverty programmes must necessarily pass through the eye of the needle – local public administration – whose capacity has been chronically weak. India’s successful poverty programmes have been either spatially or especially temporally concentrated, i.e., very few programmes deemed successful at any specific period have been sustainable either when they have been expanded spatially or extended over time. The reason for initial success has been a concentration of resources, not just financial but more importantly administrative. As successive governments pile on yet new poverty programmes without eliminating old ones, the ‘combination of lack of exit and rapid entry of new poverty programmes on the one hand and the weak implementation capacity at the only level where it really matters – the local level – inevitably results in a slow asphyxiation of even the best designed programmes.’⁶

The success of public programmes is predicated not only on appropriate timing on when to enter but also when to exit. The greater the ex ante intention of the state to intervene in a sector, the more carefully it must devise criteria that enforce exit – a rarity in the Indian context.

 

The deep social hierarchies of caste have been one of India’s most pernicious historical legacies which continue to hobble the country. Two social processes have been at the core of the inter-generational replication of caste: endogamy (or within group marriage) and occupation. While the first continues, the second has been weakening under the onslaught of economic and technological change.

In most parts of rural North India, the decline of bullocks and the advent of tractors for ploughing has led to the near extinction of the halwaha relationship in which a Dalit household would provide for (among other services), full-time care of bullocks owned by an upper caste landlord. Jagjivan Ram, arguably the most powerful Dalit Congress leader in the 1960s and 1970s, had this to say about the practice, ‘Ninety per cent of our people are agricultural labourers – rather agricultural serfs. If you have to see remnants of slavery you go to a village and see a halwaha. For a few rupees he is forced to mortgage himself to a kisan and serve him on mere subsistence allowance... These halwahas are not free to go over to other villages on higher wages.’⁷ Although the practice had already begun to wane in the 1970s and 1980s, the pace accelerated subsequently and by the end of the first decade of the 2000s the practice had essentially disappeared.

 

New technologies and mechanization have been pushing exits from a host of traditional occupations as the demand for their services is being rendered redundant. Just as tractors undercut the demand for bullocks and the halwaha system, the rapid diffusion of washing machines over the past few decades (about one in eight households in India has a washing machine today) has reduced demands for the services of dhobis – a caste based occupation. While there is little doubt that this occupational exit has adverse effects on those individuals whose livelihoods depend on that occupation, its aggregate effects have further weakened the relationship between caste and occupation. At the same time the dhobis’ loss might be a gain for women; their access to washing machines (and of course electricity and running water) ‘will prove a key leap forward for gender equality in the world.’⁸

Indeed an important rationale advanced by Dalit intellectuals like Chandra Bhan Prasad for the community to embrace new technologies draws on precisely the possibilities they offer from escaping caste based occupations to (relatively) caste neutral occupations. Conversely, opposition to exiting occupational practices by adopting new technologies – such as the fierce resistance to bank computerization in public sector bank unions in the 1980s in West Bengal – contributed to capital flight from that state and an anaemic IT industry in Kolkata, compared to the other metros.

 

Albert Hirschman brilliantly captured the responses to organizational decline: exit or voice and how notions of loyalty shape choices between the two.⁹ When a government’s ability to provide goods and services decline, citizens might exit by moving from a publicly provided service to a private provider, or physically relocate to a different government’s jurisdiction, either within the country (through internal migration) or outside (emigration).

In recent years there has been much commentary on ‘elite exit’ or ‘middle class’ exit from public to private providers. In fact, Indian elites began ‘exiting’ a half century ago, leveraging their endowments of mobile human capital to emigrate. Elite exit has usually been taken to occur only in the face of successful, violent revolution, and even then not as a long-term strategy but as an inevitable short-term response to military defeat. The bottom line seems to be that elites exercise ‘voice’ but do not ‘exit’, unless by force. In the India case, however, the ‘option value’ of exit (i.e. the fact that elites could exit spatially and relocate the locus of their privilege from the political to the economic realm) facilitated democratization by allowing for a relatively smooth integration of new actors into the polity. The possibility of (relatively) peaceful relocation allowed Indian elites to reconstitute their power away from traditional sectors.¹⁰

Palatable exit options made it easier for erstwhile Indian elites to yield some of their centuries-old privileges. In 1990, India was reeling in the aftermath of a policy decision by a minority government to sharply increase affirmative action in government jobs and education, as recommended by the Mandal Commission. A decade later the issue had faded away due to exit possibilities inherent in international migration or to the thousands of new private colleges which mitigated the economic insecurities of India’s elites, thereby making them less implacably opposed to the political ascendancy of hitherto marginalized social groups. In turn, this arguably made Indian politics less contentious than it might otherwise have been in the absence of possibilities of exit for elites (and their progeny).

 

However, contrary to Hirschman’s formulation, actual exit (and not simply the threat of exit) has simply relocated the locus of privilege. At the same time the elite basis of Indian emigration has also had implications for the quality of Indian democracy. Exit has reduced incentives to exercise voice, particularly for public goods such as health and education that have been the very basis for mobility of Indian elites (i.e. human capital). In most countries, privileged groups have much better access to the best public higher education institutions, which usually amounts to a subsidy to the rich. However, once elites move their children out (for instance, to study abroad), they also have a lesser stake in maintaining high quality public institutions. Consequently, elite exit may actually result in better targeting of subsidies and less regressive transfers, but those who now avail of services are likely to be accessing a lower quality product.

Within India it is not just the middle class that has been exiting public services. In rural India, even as the government has put in record amounts of resources in primary education, parents are moving their children to private schools, despite government schools providing (to varying degrees) mid-day meals, school uniforms and books. Normally citizen exit should have acted as a disciplinary device forcing state institutions to respond with better quality. But since governments across India make it so hard to close down non-performing public schools, there is no incentive for highly paid public school teachers to improve their effort and performance. A de facto exit of citizens coupled with a de jure non-exit of even the worst performing public schools has ruptured the transmission mechanism between citizens’ preferences and government response.

Ingress is not possible ad infinitum without egress but this truism is routinely violated in all facets of public life in India as people, programmes and projects all attempt to cling on. This appears somewhat paradoxical in a country whose dominant religious ethos has strong beliefs about a planned exit through the various stages of life. Perhaps the reason was a half-century of Indian planning where the dominant thinking was all about entry of new programmes and projects while exit was simply not a part of the thinking. It is not that exit has not occurred. It has, but usually through the law of unintended consequences. Whether it will also occur by design remains to be seen.

 

Footnotes:

1. Sara Lawrence-Lightfoot, Exit: The Endings That Set Us Free. Farrar, Straus and Giroux, NY, 2012.

2. The Economist, 11 May 2013.

3. Devesh Kapur, ‘Golden Parachutes, Leaden Results’, Business Standard, 17 March 2013.

4. Benjamin F. Jones and Bruce A. Weinberg, ‘Age Dynamics in Scientific Creativity’, Proceedings of the National Academy of Sciences 108(47), pp. 18910-18914, 2011. Benjamin Jones, E.J. Reedy, Bruce A. Weinberg, ‘Age and Scientific Genius’, NBER Working Paper No. 19866, 2014.

5. Ramachandra Guha, ‘Cut According to His Cloth: The Self-love of the Great Indian Male’, The Telegraph, 7 February 2015.

6. Devesh Kapur and Partha Mukhopadhyay, ‘Sisyphean State? Why Poverty Programmes in India Fail and Yet Persist’, Prepared for Annual Meeting of the American Political Science Association, 2007.

7. Cited in Devesh Kapur, Chandra Bhan Prasad, Lant Pritchett, D. Shyam Babu, ‘Rethinking Inequality: Dalits in Uttar Pradesh in the Market Reform Era’, Economic and Political Weekly XLV(35), 2010, pp. 39-49.

8. Inés Sánchez de Madariaga, ‘Access to Washing Machines: An Indicator for Measuring Advances in the Global Agendas on Gender, Sustainability and Urban Quality’, http://unhabitat.org/washing-machines-indicator-for-measuring-advances/

9. Albert O. Hirschman, Exit, Voice, and Loyalty: Responses to Decline in Firms, Organizations, and States. Harvard University Press, Cambridge, MA, 1970.

10. Devesh Kapur, Diaspora, Democracy and Development: The Impact of International Migration from India on India. Princeton University Press, Princeton, 2010.