By design or by instinct, Narendra Modi appears to have applied the Pareto principle while expanding his cabinet. The Pareto principle, also known as the 80:20 rule, suggests that 80 percent of the outcomes are the result of 20 percent of the factors that influence them. Thus, 20 percent of a company's products may account for 80 percent of the profits. Or vice-versa, where 20 percent of the products may account for 80 percent of the losses.
The biggest criticism of Modi's cabinet expansion has been that his slogan of 'Minimum government, maximum governance' has proved to be empty, with the ministry’s numbers shooting up to 66 from 44. If his initial cabinet was extolled for its compact size and efforts to synergise some ministries (coal and power, for example), now the ministry is fast approaching the size of previous governments which had 70-80 ministers. In the third iteration, Modi’s cabinet will no longer look like the exception.
Prime Minister Narendra Modi. Reuters
However, if we apply the 80:20 rule to analyse his cabinet, we will find that Modi expects big results from 12-18 key ministers – about 20-25 percent of his 66-member cabinet. The Pareto principle is not an exact theorem. It merely means a small bunch of factors will decide the largest part of the outcome. Thus, if 20-25 percent of his ministry performs, it will deliver 75-80 percent of the desired results.
The desired political and economic outcomes are what he would need to claim success in five years, when he goes back to the electorate in 2019. He would have to be able to say, among other things, that he has restored governance, improved the lives of citizens and, most importantly, created growth and jobs.
Now let us see if the fourth of his ministry that Modi will depend on is focused on his priorities.
In my analysis, there are around 18 ministers crucial for outcomes – of which seven have to deliver independently, and the remaining 11 in partnership with Modi’s PMO. Or at least half-deliver.
The seven ministers and heavyweights who matter most are: Arun Jaitley (finance and I&B), Manohar Parrikar (defence), Suresh Prabhu (railways), Nitin Gadkari (roads, highway and ports), Venkaiah Naidu (urban development, among others), Ravi Shankar Prasad (telecom), and Piyush Goyal (coal and power).
The 11 other ministers who have to deliver either under the PMO’s tutelage or by themselves with strong bureaucratic inputs are: Rajnath Singh (home, but with behind-the-scenes push from NSA Ajit Doval), Sushma Swaraj (external affairs, but with PM doing most of the diplomacy), Smriti Irani (HRD, with direct PMO inputs), Rajiv Pratap Rudy (handling PM’s key area of skill development), Prakash Javdekar (environment), Chaudhary Birendra Singh (rural development), Radha Mohan Singh (agriculture), Dharmendra Pradhan (petroleum, with Jaitley’s finance inputs), Jitendra Singh (PMO’s handyman, and pointman for north-east), Nirmala Sitharaman (commerce and industry, with PM’s inputs), and Mahesh Sharma (tourism).
Together, these 18 ministers will have to achieve all of Modi’s politico-economic goals. A year down the line, if they are not seen to deliver, some of them will be sidelined.
Modi’s Pareto work is thus comprised of seven super ministers who are very critical to his core agenda of jobs and growth, and 11 ministers who have to play support roles in the softer areas that deliver governance and/or remove the obstacles to growth and political dominance.
The Super Seven’s roles are clear: Jaitley has to deliver the reforms and growth even while communicating with the Delhi media – hence the addition of the I&B portfolio despite his health issues.
Parrikar is key to both defence preparedness and ‘Make in India’. It is highly unlikely that the world will beat a path to India to set up manufacturing industry when China and Vietnam and cheaper (witness now Nokia left us recently to go to Vietnam), but defence manufacturing does not need the high level of competitiveness that other industries do. Defence is always protected in any country, and this is where the manufacturing boom will begin to happen. Once this takes off, other manufacturing clusters will happen.
Nitin Gadkari and Suresh Prabhu will have to deliver the jobs multiplier in road and railway infrastructure. Even though bullet trains have hogged the limelight, Prabhu’s core job is to get investments (including FDI) into railways and make the organisation the engine of economic and jobs growth, just as the Golden Quadrilateral road project was Vajpayee’s inspired vision in NDA-1.
Venkaiah Naidu (among others things, he has to deliver parliamentary backing for some laws that may be changed while also shepherding Modi’s urban agenda of creating jobs and infrastructure in urban areas, including at least a couple of smart city projects. Piyush Goyal has to meet Modi’s goal of viable 24x7 power in all states, a la Modi’s achievement in Gujarat. And Ravi Shankar Prasad’s telecom, of course, is the golden goose that is needed to generate revenues (from spectrum, etc) and provide the backbone for e-governance and the information highway.
In fact, we should add party president Amit Shah also to Modi’s Big Seven team, for we live in a political economy. If Amit Shah cannot deliver the political outcomes that Modi desires most of the time, his boss and his Pareto group of 18 cannot deliver the rest of the promises made to the electorate.
If 20 percent of Modi's key ministerial colleagues are able to succeed, the results achieved by the remaining 80 percent of his ministers may not matter. Delivery of ‘maximum governance’ will be achieved.
That leaves us with the issue of ‘minimum government’. Here I believe the media has misinterpreted the meaning of minimum government. It is not about having a small ministry, but something else. Minimum government means the government will deliver key services to the citizen without having to negotiate a shoal of corrupt bureaucrats. It means the businessman will not have to trip over miles of red tape to get his business up and going. It means deregulation, reducing the ambit of the permit raj, and e-governance. It means getting the government, whatever its size, off the backs of the people.
This is exactly what Modi has begun delivering. Environmental clearances are easing, and e-governance initiatives have been taken up in all ministries, making the citizen interface with the government smoother. More than legislating more laws, Modi is planning to get rid of many of them and clearing the cobwebs from outdated rules and regulation. (Some 987 laws have been marked for extinction; most will not be regretted, but for some he will need multi-partisan support which Naidu and Jaitley will have to work on).
The size of Modi’s ministry is thus irrelevant to his goal of freeing the citizen from the clutches of excess government, and the dead hand of officialdom.
So what happens to the 40-and-odd ministers in his cabinet, the 80 percent from whom not much is expected?
They serve two purposes. One is to send a political message in the states that will head to the polls in 2015, 2016 and 2017, but the other is to keep them tied up in ministries so that they don’t cause the party embarrassment. MPs on the loose tend to make stupid statements and get restless doing nothing. As ministers, they will at least be kept out of trouble. If none of them deliver anything worthwhile, it is no skin off Modi’s nose. If some of them actually turn out to be unknown gems, it will be a bonus.
The problem with glib media attempts to divine political intentions from cabinet appointments is that we tend to give the noise more importance than the signal. It is time to pay attention to the signal – and the signal is that a handful of key performers are being put in positions of power to deliver the results. They may or may not deliver, but that we have to wait and see. But it is unlikely that all of them will fail.
Modi has improved his odds of success with his Pareto Principle-driven approach to ministry making.
