Reform requires artfully using the benefits given to one constituency to neutralise vested interests that oppose reform elsewhere, leveraging largesse for broader structural change. For instance, the case for doing something for farmers is overwhelming. If credit relief is structured as a kind of cash transfer, it is entirely appropriate, and could even have been larger. But a unique fiscal opportunity designed to mobilise the goodwill of farmers could have been used to create space to restructure fertiliser subsidies. Not necessarily to slash them, but to ensure that a greater proportion goes directly to farmers than to supporting inefficient industry. A more politically imaginative party could have seized the initiative by increasing direct cash transfers to the poor and spending even more on health and education. But to finance this it could have brokered a deal on disinvestment or pension reforms and exposed the Left’s greater allegiance to small vested interests than the larger good. Reform is about taking a few risks and hard bargaining, particularly when you have a few resources to throw around.

In this sense, the Sixth Pay Commission is likely to remain another missed opportunity. It would be difficult to argue that government employees should not share the gains of growth and some hikes are necessary. Government often is astonishingly self-serving and inefficient, but a whole-scale delegitimisation of government service is neither here nor there. The question of the kinds of reform government needs is complex. But there is, arguably, no question more critical to India’s future growth prospects. But the conversation about this has to move beyond pedantic and minor changes in service rules; it has to embrace a conversation about the character of government and the kind of talent we want in it. And the context of a pay hike is the right time to do it.

... contd.