Problems and the Death of APVAN

As the title of this section suggests, I will be discussing the problems that Naidu has faced in implementing his programs and especially the state of APVAN. As I have mentioned earlier, Naidu has faced a number of problems and most of them have expectedly come from his own government employees (the bureaucrats). APVAN too has now been tabled for similar reasons and I will present something in the form of a post-mortem report. Yet another reason for such major opposition has been the size of expenditure the state government would have to incur as a result of all these projects. Also, another peculiarity of Indian politics is for opposition parties to oppose the government on issues which it could gain popularity and to bring up popular opposition.

Most of Naidu’s programs have asked for the government’s operations in becoming more transparent and to make the bureaucrats more accountable. Even his social programs like Janamabhoomi required the citizens holding the government accountable for policy and to audit its accounts. With the statewide network, everyone would have access to government information and be able to see how the bureaucrats were performing. With such a network, every minister’s files would become trackable by the public. Furthermore, APVAN would have made the filling out of forms and accomplishments of simple tasks such as obtaining a permit or paying utility bills extremely easy and hassle free. However, by having this online, the government employees (like the clerks and lower-grade bureaucrats) would lose out on the power that they had from having people to pay them and go through them. This is another fear that these employees have had. The employees on the lower scale have felt that they would be made redundant by the computers and have so mounted the political pressure to stop the project.

Today APVAN has been laid to rest and along with it has rested Naidu’s most ambitious project in terms of size and money. Naidu finally succumbed to the political pressure that was mounted by labor unions in the government. The first opposition for APVAN came from opposition parties when they asked the government to justify the government spending an equivalent of $35 million over a period of seven years. Other opposition parties were not only opposed to such a sum but to the fact that it would give monopoly control to the Singapore consortium. However, the main opposition came from the labor union because of fears of unemployment. They set up an association called the AP Non-Gazetted Officers Association (APNGO) and held consultations with Naidu and even threatened agitation. They claimed that 50,000 government employees jobless and claimed to be fighting for the common man since the common citizen would have to pay a service fee for using the computer network (although I cant imagine the fee being more than what they pay currently for the form and bribe). Naidu was quick to sense the damage that a union of one million state employees could have on elections and so listened to them and scrapped the project. APNGO’s president even went as far as saying that, "APVAN was on the lines of the East India Company. Employees are extremely happy…that the project has been dropped."

Conclusions

A number of conclusions can be drawn from Naidu’s example in Andhra Pradesh that can be applied to not only other states in India but perhaps as a general example in the study of the Politics of Economic Reform. We can learn a lesson from the case of APVAN and its eventual shelving. Naidu’s example also strengthens the theory and logic behind the J-Curve. Finally, Naidu presents a case for other heads of governments in what their actions should be. To this effect, I will also attempt to recommend policy that Naidu should implement before the elections.

Naidu’s examples in AP tell us something about the history of India’s economic reforms and the actions that other Indian states might take. Until recently, the central government easily sanctioned loans to state governments for so called development projects. This was initially meant to be an aid to states who could not generate enough revenue on their own to fully develop their state. Individual state governments however saw it as an excellent political opportunity. Here was a system that would pay for their loss-making populist policies and not cost them a dime. State governments would borrow heavily from the central government and spend them on financially unsound projects and policies such as ones to provide cheap rice. Soon enough, the central government ran out of money to lend out and grew smart of what was going on and decided to stop all such loans to states requiring them to thus generate their own revenue. This forced state governments to boost the economy in the state so that the government could fund its populist policies and remain in power. This spurted in states trying to outdo their neighbors in attracting potential industries and investment. We saw state chief ministers leading business and political missions abroad to other countries and talking to businessmen there. Naidu himself made a trip to Seattle recently where he met up with Bill Gates and gave a presentation on the benefits of investing in Andhra Pradesh. So this policy reversal by the central government and this added competition by other states in India has forced the other states to implement policies which would boost the state’s economy.

APVAN was a unique project for India in more ways than one. The most obvious of that being the fact that it would have wired up the entire state and made government forms and procedures more accessible to the common person. Then, it would have also streamlined the government and made it more efficient. Finally, APVAN was to be designed and constructed by private firms, and those too non-Indian firms. This was an excellent innovation seeing that previously the government attempted to set up such projects themselves which led to delays and over-expenditure. APVAN would have been a great boon to the citizens of AP as their lives would have been made much easier and routine things would become just that, routine. They would also gain from a more efficient government and if that called for ridding of unnecessary employees, then that too was in the best benefit of the citizens. However, while the government labor union was very well organized and powerful, there was no common voice of the citizens. This meant that Naidu was forced to listen to the unions since there was no clear way to measure the collective opinion of the rest of the citizens. The unions had an organized special interest that Naidu could quantify in terms of the election and so had to ensure their support during elections. So while the citizens that could have benefited from this project could greatly outnumber the union members, they were not aware of their benefits and were not able to voice their opinion. Hence, the conclusion can be drawn that to predict a policy maker’s actions, we cannot simply take sheer numbers into account but must also factor in things like the collective strength of the group and their accessibility to the policy maker.

The case of APVAN has also shown the J-Curve working in that it promised a better standard of living in the long-run but caused difficulties in the short term. It also validates the logic in that a government is unlikely to implement economic reforms (and in some case even rolling back on reforms) just before elections and instead choosing to take populist measures. While there are not many policy decisions taken by Naidu which can be singled out and termed populist, we can see that recently he has kept more quiet about his ambitious computerization plans and in fact promoted his social programs such as Janamabhoomi. He even recently had a World Bank loan sanctioned for almost a billion dollars to use in building primary education and health. However, Naidu had other options that he could have implemented. It is rather obvious that projects such as APVAN would have been greatly beneficial to the state and as such should have been allowed to be completed. However Naidu felt that they might cost him the elections and so scrapped them because of the opposition from certain unions. He instead could have done something similar along the lines of Margaret Thatcher’s policies. Her party gained most of its support from the middle class families and so to build her base, she had to get more people into the middle class. She did so by making people more interested in capitalism by giving them stock in companies and houses to own. Naidu could have done something similar by educating the masses about the benefit of a network such as APVAN. Since most of the rural farmers probably don’t realize the benefits of computers and their widespread use, Naidu could have stood to gain from having them understand the gains. This way, he probably could have still gone ahead with the reforms and win the elections since the voters would understand the debate when the opposition approached them. Although it could be easily said that Naidu could chose to ignore the government employees that might be displaced as a result of such projects, he would stand to gain in the long run by winning their confidence. If there is any truth in the idea that they might lose their jobs (which seems highly likely) then Naidu should ensure them of other jobs. And if the rumors are false, then Naidu should ensure them of such.

In conclusion, I started off by describing and explaining what people term populist measures and how the J-Curve relates to it. In the same section I also described the state of Indian politics and how Naidu must play along with them. In the next section on Accomplishments, I outlined the programs and actions that Naidu has undertaken, dividing them into social and computerization. Finally, I went into the problems faced by these projects and how it relates to the study of economic reform as a whole.