Thoughts on economics and liberty

Why is our Bureaucracy so Inept? #1

We could, for convenience, visualize India as a large ship jointly owned by us, the citizens. Elected political representatives can then be likened to a captain hired to take this ship to a desired destination. Bureaucrats, the next layer of public managers, are its sailors. There is a wide range of Bureaucrats including public servants, defence forces, police and the judiciary. Our political representatives constitute our government and the Bureaucracy the machinery of the government. It is our political representatives’ task to design and use this machinery to deliver upon the agreed objectives for which we have hired them. Bureaucrats are directly accountable to our representatives and only indirectly to us.

This relationship between citizens, who are the sovereign principals in a free society, and their agents and sub-agents is depicted in the diagram below.
 
For a free society to have a good Bureaucracy is almost as important as having a good political leadership. But India’s bureaucracy falls well short of international best practice. Indeed, to say that our Bureaucracy is sloppy, sluggish, inefficient and therefore ineffective is perhaps an understatement. It won’t do us any good to get outstanding political leaders generated by the reforms outlined in the previous chapter and then force these leaders to use the shabby Indian bureaucracy to deliver results.
 
Having used the term Bureaucracy (do note the capital B, though) in an unusually broad sense so far, I’ll now revert the use of this word to its more common meaning, namely, as the public services. Within the Indian public services, I’ll focus almost entirely on public service leaders, primarily on the Indian Administrative Service (IAS). Pranab Bardhan, a well-known Indian economist, has rightly suggested that we should create a structural shift in the level of internal competition in the bureaucracy. ‘It is anomalous to expect [economic] reform to be carried out by an administrative setup that for many years has functioned as an inert, arbitrary, heavy-handed, often corrupt, uncoordinated, monolith. Economic reform is about competition and incentives, and a governmental machinery that does not itself allow them in its own internal organization is an unconvincing proponent or carrier of that message.’[i] To advance Bardhan’s perfect diagnosis, I will compare and contrast the Indian and Australian bureaucracies, having worked in them for a combined period of over 25 years.
 
The first thing to note is that the quality of personnel who hold leadership positions in Australia is significantly better than their Indian counterparts. This difference magnifies even further at the lower levels of the bureaucracy. Australian bureaucrats are significantly better in leadership skills and possess not only extensive specialist policy knowledge but also impeccable personal integrity. The Australian delivery of governance services is superior because its public service leaders are outstanding. By no means do I imply that public choice theory does not apply to Australia. Indeed, most civil servants here, as anywhere else, behave in a manner entirely consistent with such theory. But carefully designed incentives have ensured that their self-interest is aligned with the public interest. In particular, contractual appointments at the senior levels and absence of tenure ensures alignment with political representatives’ policy goals. Further, internal competition ensures that only the best public servants rise to the top.
 
In India, on the other hand, while we pay attention to the principles of competition and merit in assembling our cricket team, which is therefore internationally competitive and can even beat Australia on a good day, we do not apply such principles to our bureaucracy. This has led to the vast chasm that I have noted above in the performances of these two bureaucracies.

[Note:This is an extract from my book, Breaking Free of Nehru]


[i] In his 2003 oration – see Jha, Raghbendra, ed, The First Ten K R Narayanan Orations: Essays by Eminent Persons on the Rapidly Transforming Indian Economy, ANU E Press, The Australian National University, 2006. Available for downloading from [http://epress.anu.edu.au/narayanan_citation.htm].

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