Why India Must Adopt The Next Big Reform: Performance Management

As India marks its global presence in the form of a large, growing and stable economy, governance reforms are a necessity to encash and sustain this momentum. Along with Goods and Services Tax (GST), signs of one more such reform are emerging, namely, performance management in governance.

Performance management’s basic principle is that performance data of an organisation, department or individual should be collected and used for decision making. For example, if student attendance in a particular school is lower than other similar schools in that area, the data alerts the appropriate agencies to intervene and improve the attendance. This concept originated in western democracies (including Australia and New Zealand) in 1990s.

In India, it was formally introduced in 2009 with the creation of Performance Management Division by the Union Government. The division published Results Framework Documents (RFDs) to measure achievements against targets until 2013-14, after which the National Democratic Alliance government migrated to other forms of performance management.

Transparency, accountability and outcome-based approach are key principles in a performance-oriented model of governance. Minor developments in the way government publishes its work indicate the growing importance of performance management. The Petroleum and Natural Gas Ministry recently released a production scorecard to compare its year-on-year production every quarter. It also highlights the production levels achieved against the target for that period.
Ujala portal by the Power Ministry gives a national and a state-wise estimate of costs, energy, and carbon emissions saved every day as a result of LED distribution. The GARV dashboard by the same ministry is an attempt to monitor the village electrification process. In all these examples, it is noticeable that the government is deliberately publishing data, the reasons for which could be multifold including an aware and demanding citizenry.

Project monitoring for performance is another concept getting institutionalised in the government. The Prime Minister chairs a monthly meeting of PRAGATI, a mechanism to review the performance of key projects and initiatives directly by the Prime Minister’s Office. Fourteen such meetings have taken place till now. In addition to taking updates, it resolves inter-agency conflicts and grievances to fast-track the project. With similar intentions, Maharashtra Chief Minister Devendra Fadnavis has created a ‘War Room’ in his office to review progress and expedite decision-making.

Internationally, performance-based systems have generated a number of success stories to learn from along with scepticism of their utility. Atlanta city government launched a ‘Focus on Results’ programme and was able to identify housing code violations better. Similar programmes run across the cities in the US to use data for decision-making for existing and future plans, some relying on sophisticated statistical and computational tools. Governments in UK, US and Philippines have implemented performance-based budgeting to allocate public money efficiently.

Several commissions in India like Administrative Reforms Commissions and Finance Commissions have recommended similar practices to increase accountability and efficiency. In the Union Budget 2016-17, the government upheld Fourteenth Finance Commission’s recommendation that 10 percent of central grants to local governments should be based on performance.
A performance-based culture should also percolate down the governance hierarchy. The NITI Aayog has asked all the states to align their plans with a national 15-year vision document. Interestingly, the Aayog has developed an outcome-based monitoring system for the states. The outcome data relates to infrastructural projects as well as initiatives in the social sector, including education and health.

The culture is also moving down to the local level of governance. Smart city initiative has a clause that the selected cities will regularly submit a ‘City Scorecard’ to receive the central grants timely. Even the proposal for Smart City Competition required the cities to mention their past performance (such as tax collection, expenditure etc). At the rural level, the Saansad Adarsh Gram Yojana mentions ‘mid-term performance evaluation’ and the need to identify ‘best-performing’ panchayats. To do this, the local governments will have to develop a habit of collecting, disseminating and analysing performance data.

Not just ministries and departments but public employees also should focus on their performance. With the Seventh Pay Commission applicable, the central government employees will get annual increments and promotions if they get a ‘very good’ in their report cards. Even the ministers are not spared. The Prime Minister’s Office has called a meeting of all the ministers to review budget proposals. Ministers would present the progress achieved on different budget promises made so far by the Narendra Modi government.

The merit of a government is in creating institutional mechanisms for good governance. Steps like increased monitoring are generally taken with resistance by those who become accountable. However, an outcome-oriented system is the only way India can objectively give a direction to its actions. Just like GST, can the leadership build a national consensus to focus on results and performance? Performance management should become a culture in the government, and that is the legacy that leaders at the centre and state can leave behind. For how long can India grow at night? It should grow in day, when the world watches and our performance is measured.