Prime Minister Narendra Modi’s exhortation to young civil servants to break the silos in their operation is a stark reminder that Indian bureaucracy has stymied reforms in their functioning, quite successfully. Few change of any substantial import has really happened in the way Indian civil servants operate. Exercises like the 360-degree evaluation of their performance that began in 2015 have been neatly packaged into a useless form filling process by officers keen to ensure they survive rather than the economy. The only area where the political executive has been able to secure yards is in retrenchment of some deadwood. More officers have been sent home than at any time in the past.
This stonewalling otherwise is significant as most other parts of the economy have either willingly or otherwise been dragged to make changes, which have opened them to more competition and consequently made them more efficient. Despite those reforms, the lack of changes within officialdom has meanwhile been a clear drag on the Indian economy. A key reform the public will cheer is to tear down the rigid structure of Indian officialdom. Bring in officers in droves whose performance will be evaluated on how they deliver on specific programmes than on filling up details of how they spent their day. There are enough blueprints available to do it, the only obstruction will come from those who will demand setting up of another committee to stonewall the needed changes.
This year, the Indian political system has unleashed two explosive changes to the economy – demonetisation and the goods and services tax (GST). Demonetisation has had more critics, GST less so. For both however, most commentators agree that while there is a lot to commend, the hiccups they face are those of implementation.
The demonetisation exercise was particularly significant for the galactic mass of rule changes. GST has in turn faced problems for the equally massive number of rules it has imposed on business instead of simplicity as its raison d'être. At some stage, the Indian economy and its constituent sectors will have adjusted to them and resumed its growth. But one can be fairly sure, there will not even be one significant exercise carried out within the Indian bureaucracy to examine their own shortcomings in the delivery of such gigantic economic exercise. Apportion of blame will be a chimera. And one of the key reasons officers will be able to carry on nonchalantly will be the silos they operate within. It will give them the cover necessary to claim immunity from any challenge to their performance. A 360-degree appraisal can’t break this since the standards for evaluating their own performance will be set by them.
While a lot has been written about the need for reforming bureaucracy, the failures at the implementation of both provide good enough justification to make some basic changes among those who were responsible.
Modi’s recognition of the basic problem after his three years of exposure to them, through his monthly Pragati meetings with the secretaries, shows he is thinking in this direction. The ongoing work on ‘Ease of Doing Business’ among the states has created specific opportunities to weed out departments and officers en masse with specific reasons instead of the exercise looking arbitrary.
There is also a groundswell of support. At the state levels, like in Delhi or in West Bengal, chief ministers Arvind Kejriwal and Mamata Banerjee have made this an issue. At the Centre, Minister for Road Transport and Shipping, Nitin Gadkari, has also made the same public complaint about stodginess of officers.
Returning to the case of GST, there are two types of problems. Some were created by businesses in their greed to hold on to dubious sales and inventory data to launder black money. The transparency GST forced upon them is a deadly cocktail to destroy that cover. But for plenty others, the irritants, as it has become clear, are created by shortsighted rules. Many of these rules have been inflicted by the tax officials without making the political executives aware of the costs they will extract.
For instance, for decades the customs and central excise officers were aware of how to construct the classification of goods. The international system known as the Harmonised List of Goods and Services is a standard that all of them know how to operate. Why then, when the rates were drawn up, was the confusion unleashed that is still being sorted out? The general rules were clear – that luxury goods will be taxed at a higher rate of 28 per cent and the others at either 18 or 12, depending on where they stood before GST came in.
The mess that the GST Council is untangling is because many of the officers involved in the exercise did not apply their mind. Again, it was silo mentality. Since the Indian Administrative Services (IAS) officers at the Centre and at the states had used GST to expand their turf into that of central excise and customs, the latter simply let their expertise drop. One knows about this public spat between the two services on this.
There is another area, where the same empire-building has had its impact. It is the railways. The division of spoils within the competing services within the railways is so intense that even the members of the Railway Board, the highest decision-making authority in India’s largest infrastructure services, evaluate any proposal in terms of what will happen to the interests of the constituency it represents than that of the travellers or business using the services. The reason why diesel and electric locomotives both operated within the railways for decades and made it impossible to harness economies of scale between different zones is due to one of these huge rivalries.
At this point, one should make it clear that the expansion of turf by the IAS into that of other central services that looks like an attempt to break the silos is hardly the same stuff. As an example, one should examine the short shrift that IAS has given to the idea that experts should be roped in to man key function areas. Again, for instance, the Department of Personnel and Training had last year made it public that it wanted a longer tenure of at least two years for a secretary in any department to ensure he delivered rather than planned for his retirement. Under this objective, the department has pushed for and secured a faster promotion route for IAS officers so that they have more years at the helm. But having got it, in the recent promotion exercise, the two-year rule has been conveniently forgotten for quite a few.
There are myriad examples to go on. Few states have taken up the offer from the department of land resources under the National Land Records Modernisation Programme to fully digitise their land records. The public needs it like yesterday, it has political support but the gravy trains in many state bureaucracies oppose it furiously. The short point is that there is an intense need to reform Indian bureaucracy before reforms in land and labour laws are made.
To drive some of those changes, there is no reason why an Arundhati Bhattacharya, former chairperson of State Bank of India, should not run the Department of Financial Services instead of an officer, who comes in just because he has the advantage of belonging to a particular service – or the chairman of NTPC Limited, as secretary, power; an educationist as one of the secretaries in the Ministry of Human Resource and Development. These will create competition among the other state-run companies or even among those beyond. But so be it. Prakash Tandon, the doyen of Indian management gurus, wrote that to ensure that he could perform effectively, he brought in his team of staff when he joined STC as chairman to replace the gargantuan team that he was offered. It should operate in the same way now.
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