Donald Trump is even busier these days compared to his campaign days as he is mulling over the new administration that will start its work after January 20. The names for various positions have been announced but what caught everyone’s attention is the surprisingly new department with no surprising name—-The Department of Government Efficiency (DOGE). As said during the campaign, Elon Musk will head the department along with Vivek Ramaswamy. To be clear, DOGE is no statutory or constitutional department and is no part of the government, instead, it will be a sort of advisory team to the President that will focus on structural reforms to eliminate bureaucratic hurdles to make the country economically efficient.
The incoming Trump administration has announced a Department of Government Efficiency headed by @elonmusk. This is my talk at @republic conclave yesterday about how India has already been doing a similar effort in recent years (we call call them “process reforms”:…
— Sanjeev Sanyal (@sanjeevsanyal) November 13, 2024
Simply put, it will work on the resistances that increase the output by eliminating the no-use element of the system which India has been doing aggressively for the past 10 years. Before going through the steps taken by the Modi govt and its positive effects on the economy, it is necessary to understand what is structural reform.
What are Structural Reforms?
Being a developing country, India has taken several steps to make reforms that change the entire structure of the system, only to make things easy. To begin with, land acquisition was one such reform. To make the country economically grow, there is a need for land, transportation, power projects, economic zones, airports, railway stations, and so on so forth.
For development, the govt needs land so after independence India adopted the Land Acquisition Act and made changes to it in the later course of history as per the need. It was a structural reform because it essentially made structural changes in the country’s system. A similar big change was nationalization of banks in 1969 and liberalisation of the economy in 1991. Moreover, one of the biggest emphasis of structural reforms is to reduce bureaucracy to the extent possible.
So one thing is clear these structural reforms are never-ending requirements to meet modern-day needs. As India is a large country with a bulky bureaucracy that evolved from Inspector Raj, it needed structural and process reforms desperately.
How Central govt bring reforms and how does it impact the Indian economy?
DBT: With the advent of PM Modi, one of the initial decisions was Direct Benefit Transfer (DBT). With DBT government managed to provide the benefits of most schemes directly to citizens without any intermediary. This small process reform was not only monumental in providing benefits with 100 percent efficiency but also saved Rs 1 lakh crore as stated by Union Minister Dr Jitendra SIngh in February this year.
Ease of Doing Business: Similarly, ease of doing business is also a similar process reform. In India, there was a lot of paperwork needed to start a business which resulted in paralysed entrepreneurial ecosystem, setting up a company was big fish’s game, but under ‘Ease of Doing Business’, the Modi govt simplified the process and as a result, the startup is growing rampantly.
IBC 2016: Another case related to business entities is the Insolvency and Bankruptcy Code 2016. This brought a paradigm shift in dealing with corporate insolvencies. At a time when the country needs growth, prevention of liquidation and insolvency till the last is necessary while simultaneously addressing the losses to the debtors. Hence the govt introduced CIRP in IBC. These provisions for an entity to present a resolution plan to take over the company, if approved the company can be saved from liquidation. As per reports, by the end of December 1051 companies have been rescued under CIRP of IBC since 2016.
Just imagine how many jobs have been saved and how many new opportunities were created. Besides, the public money that was lent to these firms was also saved.
GST: GST implementation and online tax filing was also a structural reform undertaken by the Modi government which not only simplified taxation but also led to a spike in tax collection.
Many process reforms are still in the pipeline and are crucial for enhancing efficiency, this includes digitalisation of land records among others.
Legal reforms: By the way, the efforts are not limited to economic fronts, as during the first nine years, the government abolished over 2,000 laws that were obsolete and troubling citizens. One that people can easily relate to was getting certificates attested by gazetted officers. Surprisingly, many laws were from the British era and added miseries to the lives of citizens. Basically, if fewer people were in line and fewer laws would be there to intimidate them, the more efficient output they can provide to the country.
So what the government is doing, basically, is that it is reducing excess bureaucracy, and expenditures and making governance easy, and pro-people by increasing its outreach to citizens. And as the US DOGE is a newly formed department to do the same, it can be said that India has set a stellar precedent.
But why does the US need DOGE when it is developed?
The question here is why the US needs such a department when it is already developed and India is developing. This question has two aspects, first comparison between India and the US in terms of development, and second the undigestible fact for some as to why the US would incorporate something that can loosely be called an Indian model.
The practical reality is that becoming developed is just a bar that every country wants to cross, but in the ever-evolving times, there is an innate requirement for a country to keep a check on reforms needed with new challenges in front. Well, most of the developed countries lack this retrospection and get involved in utilising the heightened economic growth and eventually end up in crisis mode. This is evident by the fact that most developed countries are Western countries that have seen an economic meltdown in the past couple of years. Had they continued with reforms they would have also survived well like India in challenging economic times like the COVID-19 pandemic.
So, apart from the domestic political complexities highlighted by Trump during his presidential campaign, there is also a need for the US to make it efficient and thus, it has looked up to one of the most successful models of times.