Meaning of Minimum Government, Maximum Governance
Minimum Government, Maximum Governance means that the government with all its ministries and regulators should create an environment where the regulatory framework is minimum and relatively easy for the business organizations to comply. Government should create the space for the private sector and should not itself occupy that space. Government should work like an experienced referee of a football match but should not enter into the ground to play. Minimum Government, Maximum Governance does not mean that there would be no government i.e. regulatory mechanism but the size of government would be small, effective and business friendly which would support and promote the private sector thus channelizing more investment into the economy.
Modi & Minimum Government, Maximum Governance
If any single modern day politician who can be considered as the biggest advocate of the idea of Minimum Government, Maximum Governance in the country then he is definitely the current Prime Minister of India Shri Narendra Damodar Das Modi Ji. Mr. Modi regularly stressed on various forums on the need of a system where the role of the government is minimum but at the same time truly effective. According to him “I believe government has no business to do business. The focus should be on Minimum Government but Maximum Governance”. For decades, we have had extraordinarily large governments while ironically the quality of governance has been quite poor. There has been more attention paid to the size of the government and not so much to its quality. Thus, our model of a small yet efficient government stands out. We strongly believe that the role of a Government in businesses should be limited to that of a facilitator”.
So these are quite bold statements from an Indian politician. However the real economic change needs the concept of Minimum Government, Maximum Governance in any case. The vision of Mr. Modi is truly forward looking as according to him, government should preclude itself from competing with the private sectors and only act as a facilitator. Government should let the private sector to work.
Daal Ki Baat (Pulses from Africa)
So this seems a great forward looking step by the government to keep the prices of pulses in India under control. So where is the issue?
Again Government is involved in everything
According to Mr. Modi government has no business to do business. But it seems that the country is not fully prepared to go into the path suggested by the Prime Minister. Because sooner or later government comes into the business. The same happened in this situation also. Here government will make investment, raise pulses then import pulses into India either self or through PSUs or private players and then sell pluses in India. Understand this with the help of Scenario 1 diagram.
In this situation, there is everything under the control of the government. This situation is not very ideal from a longer term perspective.
So What Would Be The Ideal Situation?
As we already discussed that an ideal situation is that situation where government just act as a facilitator and let the private players work. Government should create space for the private sector but should not occupy that space. Scenario 2 diagram will help you understand the ideal situation.
Some International Scenario
There are countless international examples where the governments has kept themselves upto the role of facilitator only i.e. Scenario 2. We will discuss few examples here.
Starbucks is one of the largest food and beverages chain particularly coffee in the world that operates in more than 70 countries with over 24,000 stores employing around 1,90,000 employees and having a revenue of over $17 Billion annually. Starbucks is the largest consumer of raw (ground) coffee which it mainly purchases from Latin American Nations like Brazil and some African Nations. The largest consumer of Starbucks coffee is North Americans. Coffee is the integral part of the life of North Americans. So what we can learn from here is that it is Starbucks who grows coffee in Brazil, processes it, imports it and then sells it all over the world. American Government is not involved in this entire process. Yeah American Government works diplomatically to make ways for Starbucks which any government must do.
ExxonMobil is world’s largest Oil and Gas Company that explores, extracts, processes and sells oil, gas and other petroleum products. ExxonMobil holds the extraction rights in many countries and has assets worth Billions of dollars. ExxonMobil extracts oil from say Iraq processes it in Latin America and sells it in North America and other parts of the world. Again American Government is not involved in this entire process. However as any government is expected to do, American Government works diplomatically to make ways for ExxonMobil.
As we can see that the best practice all around the world is to let the private sector work and government should act as a promotor, facilitator as well as the protector of its private sector and not just as a regulator. Reasons are quite obvious. If government will keep everything in its hand, things will go worse definitely. Indian Government has also learned this lesson and is deregulating lot of things which it used to completely dominate at some time in recent past. Few examples could be deregulation of the prices of oil and gas products, working towards deregulating the prices of sugar, fertilizers etc. divesting its stakes from Public Sector Undertakings etc.
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