07-07-2025
For India's complex, growing economy, a lesson from China's Qing dynasty
For a large, fast-growing and complex economy like India, there is a necessity for a certain minimum size of the government. While this is true for every aspect of the government, it is particularly crucial for public services that touch ordinary citizens on a day-to-day basis such as law and order, healthcare and education. Together these determine the quality of life of an average citizen within the country. Technological advancements and innovations in governance models have led to unprecedented improvements in the efficiency of welfare programmes in India. This is a lived reality for 300 million Indians who have come out of poverty in the last 10 years. There are some sectors of the economy, however, that will require greater government investments in human resources.
By most staffing norms, we have an acute shortage of nurses, policemen, teachers and public development officers. The ideological belief that smaller governments are better for the growth and development of a nation stands in sharp contrast to the economic reality of market breakdowns, particularly in areas of health, education and safety. Human resource investments in areas of public health, public education and law and order are critical for long-term economic growth and improvement in basic quality of life for an average Indian.
Given the size and complexity of India, among the lessons from history, on the perils of evangelical allegiance to the ideology of a smaller government, the example of the pitiful demise of the Qing dynasty is worth recalling. In The Ideological Foundations of Qing Taxation, Taisu Zhang presents a compelling argument that the Qing dynasty's government size was notably small, primarily due to ideological constraints rather than structural limitations. Zhang posits that the Qing state's fiscal conservatism was deeply influenced by Confucian political ethics and the traumatic memory of the Ming dynasty's collapse, which was attributed to excessive taxation. This historical lesson led Qing rulers to adopt a cautious approach. Consequently, the government maintained a minimal presence in economic affairs, resulting in a grossly limited capacity to mobilise resources and people for state functions. The Qing state was small in actual personnel and ideologically committed to maintaining a light footprint. According to one estimate, the Qing state never employed more than 30,000 officials across the empire. In most counties, a magistrate and a few hundred local staff would administer populations of over 2 lakh.
When compared to other contemporary states, the Qing government was exceptionally small. Zhang highlights that while European and Japanese states had tax-to-GDP ratios ranging from 10 per cent to 20 per cent, the Qing's formal tax revenue constituted only about 1 per cent of GDP by the mid-19th century. This stark contrast underscores the Qing dynasty's limited fiscal capacity and its implications for governance and state development. The ideological commitment to small government led to institutional practices that further constrained the government's size. Zhang's analysis reveals that the Qing dynasty's small government size was not merely a result of economic or administrative limitations but was fundamentally shaped by ideological beliefs that prioritised small government and feared the social and economic consequences of fiscal expansion. This ideological framework not only defined the Qing state's fiscal policies but also had lasting effects on China's economic development trajectory for two centuries.
Within the context of India's current status, improving 'state capacity' for good governance is at the heart of most reforms — at the central as well as the state levels. The real economy of India is moving much faster than our traditional data are able to capture, hence our administrative capacity is constantly doing a catch-up. Technology is a great enabler and critical to modernisation, but not a complete substitute for human resources. There are limits, therefore, to development when merely based on technological and financial advancements. Shortage of human resources becomes a binding constraint to overall improvements in outcome. This is obvious in public health, public education and maintenance of law and order in particular – where no matter how much improvement occurs in infrastructure, budgets and technology – the feet on the ground remain a critical bottleneck. We need to recruit more people for public service in India, across different sectors and we need to do this urgently.
India is a talent-rich nation. We have to ensure that the most capable and hardworking people are brought into public service. This requires innovations in recruitment and parity with the rest of the fast-growing economy to avoid long-term distortions. Parity in terms of pay as well as performance. Most public debates are limited to the differences in the pay structure (hence, regular Pay Commission revisions, etc). The time-use survey data reveals that an average government employee works fewer hours daily and has more leisure hours than private sector employees. Keeping the government sector small and privileged has long-term economic and social costs for the nation. While we modernise the economy, we must also modernise the state – by strengthening quality as well as its numbers. This is a critical need to sustain India's growth and development today as well as to meet our aspirations for the next hundred years — as the fundamental ideological flaw of the Qing dynasty shows.
The writer is Member, EAC-PM
