The bureaucracy needs deep surgery to enhance its effectiveness. This is a fiscal imperative for improving the quality of public services.
Mahatma Gandhi was more successful in changing the face of colonial India than he was in influencing his own household. Prime Minister Narendra Modi faces the same dilemma: how to get his household—the public services—to perform better. Enhancing performance is essential to leverage the impact of the economy-wide reform effort initiated in 1991, the broad direction of which continues to be robust and consensual across party lines.
Outcomes have followed. A total of 154 million citizens escaped poverty between 1994 and 2012; enough to create a middle class comprising 33 percent of India’s 1.2 billion population. Per capita consumption has increased consistently, though the bottom 40 percent of the population has lagged versus average consumption. The good news is that the lag reduced from a high of 38 percent in 1994-2005 to a low of seven percent in 2010-12.
Infant and child mortality rates have halved, though the nominal level is still high. Illiteracy fell by 15 per cent but remains high at 32 per cent of the population. Women are more empowered via legislation which protects their rights at home, in the workplace and enhances their participation in the political process. Social and spatial mobility has increased. One-fourth of India’s population does not live where they were born.
Despite this successes, citizen dissatisfaction with the State abounds. The governance reforms undertaken thus far to solve problems faced by citizens addressed narrow, vertical areas where quick, visible results were possible. Digitisation has improved land record management, and e-governance has made doing a lot of things easier, from getting passports and identity cards to filing tax returns and depositing tax.
But deeper governance reforms, which adapt institutions and processes to modern needs, are needed. Improving the ease of doing business has received much attention and it shows in improved rankings. Continuing to improve requires the government to review the quality of its regulations affecting commerce and industry and assess if the desired outcomes—enhanced competitiveness, good jobs, investment and economic growth—are being facilitated.
If light-handed regulation serves the purpose (as it has in telecom because there is sufficient competition), resorting to intrusive, heavy-handed regulation is a wasted effort. Over-regulation imposes unnecessary compliance costs on regulated businesses, reducing their bottom line, their investible surplus, the dividend payout and the share value appreciation for equity holders. And often, the brunt of heavy-handed regulation is felt most in the small and medium scale sector, which generates the bulk of employment and where India is globally competitive.
The “license Raj” has gone, but the “inspector Raj” remains. But even here, reform is in the air—Rajasthan and Telengana are pace etters in growth and employment-enhancing reform.
Good governance is about building citizen-centric institutions—the new architecture for access to public information is an exemplar. It is also about getting value for the public money spent, for example, by finishing projects on time or aligning budget allocations and expenditure to address the needs of citizens (poverty reduction, better public services, infrastructure and targeted social protection). It is also about right-sizing government and vacating space for private and non-State actors, particularly in public service delivery and infrastructure development.
The “swarnmala” of good governance
Good governance also means “joined up” action within the government. This means linking the entire delivery chain, across departments and state actors, to achieve a common target. Assume a targeted outcome that old age pension should reach on time. The eight upstream links in the swarnmala of the delivery chain are:
• The beneficiaries need to be correctly identified (responsibility of the welfare department);
• Complaints that bribes were demanded for registering pensioners have to be investigated and delinquents punished (the vigilance department)
• The particulars of the pensioners have to be correctly fed into the database (the data entry contractor)
• The stay taken by the previous contractor, who was terminated, has to be vacated before the new contract can kick in (the law department and the judiciary)
• The money has to be available in the account of the welfare department (the expenditure department)
• Sufficient budget should have been allocated (the budget department and Parliament);
• Banks must agree to small transactions at reasonable cost (Reserve Bank of India); and
• The pensioner should not be robbed while returning after withdrawing the money from the bank (the police).
Unless all State actors align their actions to the single goal of delivering pensions on time, it is unlikely to happen. Determining the weakest links in this chain and improving them, one at a time, is how governance improves. It is always a long haul, especially when reforming constitutional entities.
A Representative Parliament
Since 1996, India has consistently ranked in the 61 percentile in the Voice and Accountability metric of the World Wide Governance Indicators. But Parliament and state assemblies are far from being representative of diversity. The Delhi-based Association for Democratic Reforms (ADR) reports that 87 per cent of MPs elected to the 2014 Lok Sabha got less than 40 per cent of the votes present on the electoral roll. A majority of voters either did not vote for the elected candidate or did not vote at all. More worryingly, 61 per cent of the MPs got less than 50 per cent of the votes cast in their constituencies. Our system of electing those who get the most votes does not gel with the objective of representativeness. This needs to change.
A Constitutional amendment mandating a simple majority of the votes on the electoral roll and 66 per cent of the votes cast in order to get elected seems sensible. It provides the right incentives for parties to build support beyond narrow pocket boroughs. Similarly, the introduction of stringent residency preconditions for nomination to the Rajya Sabha can ensure that only those with deep interests in a state get nominated from it.
The role of money power in elections and the link to black money and corruption are other worrying issues. But these require wider governance reform which can follow.
An Efficient judiciary
India has improved its rank since 1996 to the 64 percentile in the Rule of Law metric of the World Wide Governance Indicators. Our higher judiciary has the unique distinction of being proactive in protecting citizen rights. Despite exemplary levels of professionalism, effectiveness in dispensing quick and reasonably priced justice is low. Unless cases are decided quickly, the judicial process becomes a perverse instrument to circumvent the law.
A recent survey of litigants in 300 district courts by Daksh, a Bengaluru-based NGO, found that 87 per cent of the respondents felt that delays happen because the other party does not show up or because the judge is slow in deciding the case. The situation would be no different in the higher judiciary. Delay is an outcome of inefficient application of judicial procedure, inept management of courts and case overload.
The level of litigation is set to increase as resort to courts becomes more affordable relative to rising incomes.
Budgeting for an increase in judges and filling vacancies is a no-brainer. An efficient option is to optimise the time of judges by hiving off the management functions of delivering justice. Judges need to be concerned only with the legal aspects of a case without having to waste their time on case registration and management, personnel management and general administration.
Inducting judicial administrators from the Indian Administrative Service (IAS) and the Provincial Civil Service (PCS) would be ideal. These cadres have the requisite skills—judicial experience and general administration. Making administrators work under the oversight of judges may also help bridge the unfortunate antagonism between these two arms of the State.
Despite its inefficiency, the judiciary retains credibility amongst litigants. Daksh found that 75 per cent of litigants who had previous experience in fighting cases were still willing to go to court rather than opt for an alternative dispute redress mechanism.
More importantly, only 9 per cent believed that they lost their case because the other party had influenced the court. This finding contradicts a 2002 Transparency International survey which ranked the judiciary as being the most corrupt after the police. The more systematic Daksh survey of litigants seems the more credible. But administrative reform in the judiciary is long overdue.
A Competitive Bureaucracy
India ranked second in 1996 among a set of six comparable countries—Brazil, China, Kenya, Russia and South Africa—in the Government Effectiveness metric. By 2014 India had slid to fourth rank. Meanwhile, China improved from rank 4 to 1; Russia from 6 to 3, while South Africa slid from 1 to 2.
Where have we gone wrong?
Pay commissions have revised salaries and benefits on a decadal basis and kept them competitive for the elite Grade A cadres. The emoluments of Grade B—the intermediate cadres—suffer in comparison, because they have fewer promotion prospects. Grade C—the lowest level—has traditionally been over-compensated versus market comparators. Low compensation is not a barrier for either attracting or retaining talent.
Functional flexibility has grown on paper with enhanced delegation of powers. But the willingness of bureaucrats to use the powers available has shrunk. Short tenures, particularly in operational positions, and changing political masters create an environment of administrative ambiguity. Unless the administrative and financial regulations are changed to expressly put effectiveness (getting the job done) over compliance (going strictly by the regulations), bureaucrats are right to be risk-averse.
Making administrative and financial regulations performance-oriented is a neglected reform area. Regulations continue to be based on best practices. They should instead be “best fit” for the context in which they are applied. Managerial discretion is a key ingredient of effectiveness. But it needs to be regulated using tools to test whether discretion was used in public or private interest.
Accountability to citizens remains indirect via the legislature. This is especially true for de-concentrated offices of the Union government which provide services like the railways, telecom or electric power, all of which answer only to Delhi. But even state government officers in field positions—land revenue administration, teachers, doctors, engineers, or the police—are not directly accountable to local bodies. Instead, they answer to their heads of department, who are accountable to their minister, who in turn is accountable to the legislature.
This long chain of accountability dulls the imperative to associate citizens with decisions, be proactive to their needs or be collaborative in approach. Accountability could increase if decentralisation was fast forwarded; decisions taken nearest to the citizens empower them the most. But the 1992 Constitutional provisions for empowering local governments have not been implemented by state governments.
Digitisation and social media have enabled the voices of citizens to be heard even in state capitals and Delhi. This is useful for alerting government to emergencies. But a systematic integration of citizens and non-State actors into the process of governance needs to be evolved. Enlarging the space for direct accountability to citizens has positive outcomes.
Bureaucrats enjoy Constitutional protection against legal action for decisions taken in public interest during the discharge of their duties. Calls for diluting these provisions are ill-advised, not least because it is difficult to pin the responsibility for poor decisions on a single individual. But the government could be more proactive in disciplining erring bureaucrats. There is evidence that it is walking the tough talk.
The sad truth is that competitive merit is assessed only once—at the time of selection to a cadre. Thereafter, for the next 30 to 35 years, bureaucrats get pushed up the escalator through time-bound promotions. The seniority list determined at the start of one’s career retains value till the very end. There is little to distinguish between the brilliant and the average officer.
The IAS is a generalist service sans specific expertise. A 2010 report on the civil services reveals that even though the IAS constitutes just 25 per cent of the Grade A civil service cadres, 78 per cent of the positions of secretaries to the Government of India, 65 per cent of secretary-equivalent positions, 95 per cent of the additional secretary positions and 75 per cent of the joint secretary positions were staffed by IAS officers for whom these positions were reserved.
Within the IAS, eligible officers are placed in a particular position through a closed-door review of performance reports by the Department of Personnel and specified high-level committees. Officers cannot formally exercise choice and apply for a particular position. This lack of choice and non-transparent selection encourages the use of informal influencing networks and discourages specialisation.
The peculiar privileges given to the All India Services, comprising the IAS, the Indian Police Service (IPS) and the Indian Forest Service (IFoS) are linked to their unique role. These cadres serve both in the state governments as well as the Union government and were expected to be the glue between the two levels of government.
It is questionable whether, nearly seven decades on, the “glue factor” remains relevant. The private sector, migration for work, the railways, telecom, national highways, civil aviation and Bollywood have done more to bind India than the involuntary placement of 50 per cent of the All India Services, who number less than 10,000, to states other than their home states.
The IPS and the IFoS are specialised cadres. But policing and forest management—both state subjects—could as well be done by state-level cadres, which mirror the All India Services, but currently work perpetually under them and suffer from the glass ceiling syndrome.
The IAS is structured to provide wide experience across government functions with an in-built advantage of the best career progression as a result of senior positions being reserved for them. The justification for this privilege is that sound policymaking needs an elite with a helicopter perspective.
This might have been true once; today it is a bogus argument.
Efficient policymaking is possible even via collaboration across specialist silos. Even today, policymaking is done within the committee of secretaries, and each member has a separate departmental mandate even though most belong to the IAS. Being birds of passage in the department they head, they are probably more amenable to “groupthink” than being vocal advocates of their departmental mandate. A specialist, with the requisite professional expertise, could possibly contribute more substantively to policy formulation.
The Union government already has specialised cadres in a range of areas from tax to information services. Grade A positions in these departments should not be reserved for the IAS. The relevant specialist cadre must be trained to take full responsibility for the efficient functioning of their departments.
Public sector strategy formulation, general administration, personnel management, employment and labour regulation, land management, urban, rural, industrial development and the regulation of markets and commerce are broad spectrum disciplines, where the expertise of the IAS may be more salient. A broad framework for promoting specialisation was recommended by the First and Second Administrative Reforms Commissions (1996 and 2007 respectively). It has the support of all cadres, except the IAS.
It is not enough to have domain expertise without specific functional expertise. Government performs three broad functions within each domain—policy formulation and the legislative drafting; programme formulation and monitoring; and programme implementation. After serving for five to 10 years, officers in all cadres should be segregated into these three specific functional areas, each of which has different attributes, which must fit an officer’s profile and choice.
To make each function equally attractive, they must not be arrayed hierarchically. Today, policymaking is at the top of the hierarchy and the other two at the bottom. Hierarchy distorts the true value of the three functions, all of which enhance value as a network. The distribution of positions by grade must be done in a manner that ensures collaboration between equals, across the three functions.
To avoid the insularity which is endemic in closed access orders, government should hire at least 30 per cent of the professionals in the senior grades from the market on five-year contracts. The judiciary encourages lateral entry and benefits from it.
Also, cadre officers should have the option of switching permanently to the contract system.
Compensation for contracted professionals should reflect the absence of the safety net provided by cadre-based employment. Progression within the cadres, from the level of joint secretary or equivalent, should not be time-bound. Instead, a system of inviting applications from eligible officers for competitive selection should be introduced.
Appointments to these senior positions could be done through the Union Public Service Commission, which also conducts the initial recruitment of the cadres. These changes could incentivise transformation of the prevalent lethargic work ethic.
The government has already adopted performance-based assessment. The usefulness of this tool is limited, since seniority-based promotion is still the norm. But performance metrics linked to selection for a contract position or for promotion, as is being proposed, can incentivise better performance.
Between the three pillars of the State, it is the bureaucracy which needs the deepest surgery to enhance its effectiveness. Doing more with less is not just about productivity gain. It is also a fiscal imperative for enlarging the scope and improving the quality of public services. We can ill afford to ignore this challenge.
Sanjeev Ahluwalia is Advisor, Observer Research Foundation. He specialises in economic governance and institutional development.