Traffic Rules, Mindset and On-Time Payments

The article was published in the Business Standard on September 4, 2019 and carried in Organizing India Blogspot on September 5, 2019.

Payments have gained currency, pun unintended, with the sharp focus on consumer spending and the economy. The following anecdote from newspaper reports begins with a payment problem for a traffic infraction, which leads on to existential questions on behaviour and governance.

A motorcycle rider in Uttar Pradesh was booked for not wearing a helmet. Events spiralled quickly to arrive at the heart of the matter: The state of governance and our utter disregard for due process and the law. But let’s not get ahead of the story.

The rider was an electrician on contract with the UP State Electricity Board. He pleaded with the police to be let off on the Rs 500 fine, saying he earned only Rs 6,000 a month, and hadn’t been paid for four months. The police said it was the law, and issued a ticket. The electrician’s superior interceded at his request, but couldn’t convince the police to waive the fine. (It turned out that tickets had been issued to 70 policemen for traffic violations.)

The electrician checked on the electricity dues owed by the police station. Finding that they amounted to Rs 662,463 over several years, he disconnected their power supply. When questioned, he said that this was as required by the law.

The power supply to the police station was soon restored, with the customary, vague assurance that the bill “would be paid soon”. A positive outcome, however, was that the state electricity board then paid Rs 17 crore of arrears for the month of May to 9,627 contract workers, including the electrician. The remaining amount, they said, “would be paid soon”.

Why were wages delayed? Apparently because consumers delayed payments, and the electricity board didn’t have the money to pay. Employees were still owed back pay for three months. Meanwhile, a formal enquiry reportedly began on the episode.

Such incidents are not unusual. In August, there was an instance in Agra of unpaid sanitation workers responsible for the toilets at the Taj Mahal going on strike. In Noida near New Delhi, two major shopping malls, a hospital, and a school had their water and sewer lines shut off because of unpaid dues. There were apparently 107 defaulters who owed over Rs 10 lakh each, with the highest being Rs 46.35 crore.

It isn’t as though citizens and the private sector are the sole culprits, with only stray government entities defaulting. A former Confederation of Indian Industry chairperson said in an interview on television recently that while hard data on government dues to the private sector are unavailable, informal estimates of the dues from central and state governments, state-owned companies such as electricity boards, and arbitration awards, ranged from Rs 2 trillion to Rs 5 trillion. Her observation was that if these dues were paid, it would provide the biggest boost for the economy, because it would result in much-needed capital formation and economic rejuvenation. As to where the funding could be found, given the government’s finances, she replied that the same sources (for example, bonds) could be used that would fund whatever waivers or incentives the central and state governments were promising. Those funds could be channelled for productive use in capital formation by their rightful claimants.

Stepping back for perspective, the problems appear to stem from slack implementation of protocols (defined, sequential steps), whether it is the discipline of timely payments, or rules and regulations. The same malady afflicting payments shows in the disregard for traffic rules, and the confusion in disallowing tyre shredders to discourage driving the wrong way, which is even more dangerous to the public.

In some cases, the design itself is flawed. For instance, resources for infrastructure such as coal and spectrum need to be priced low to facilitate productivity. If auctioned at a premium, instead of abundant supply of good quality at reasonable prices, the supply is constrained in quantity or quality, or priced high. Other instances are of processes not thought through in terms of design (e.g, stranded power generation. A requirement of Letters of Credit (LC) for purchasing power has been around, but has not been enforced. Will a new directive enforce this, when banks acting prudently can issue LCs only to distribution companies with strong finances?) The design shortcomings could result from fragmented and episodic attention, disaggregated responsibilities, lack of professional capacity, or simply winging it.

These failings have existed over decades, regardless of the governments in office. Some initial successes, as in mobile telephony from 2003 to around 2011, or in road construction or electricity supply, have not been consistent, nor have they been convergent to yield all-round, sustainable growth of the sort that could result from well-organised orchestration across the board. They have not even been able to sustain their performance, and now comprise the troubled sectors for banking and non-performing assets.

The root causes may be in underlying contradictions in our attitudes. These include feudal and post-colonial (exploitative) notions, with the trappings of a Westminster system, without the requisite culture and preparation of policies, practices and training. The result is either government and citizens facing off in an “Us vs Them”, with citizens often being viewed in the way colonials regarded “the natives”, or episodic “schemes” that fizzle out. Our political leadership and we have to realise that we are in the same boat, and that there is no substitute for working together with discipline for our common interests.

There are no colonial masters here, only their mindsets that we adhere to, without refashioning them for our purposes. This is what we must change over time from a total-solutions perspective, from on-time payments, to law and order including traffic, to waste management,¹ all infrastructure, finance, industry, farming, the arts and daily living.