Thoughts on economics and liberty

Building a New Bureaucracy for India

I must unfortunately conclude that our British India bureaucratic system is beyond resuscitation; it has terminal ailments and can’t be resuscitated. It needs a total rebuild, from ground up. It has to be dismantled and a new public service system erected to replace it. With political commitment, such a reconstruction should be possible within five years as detailed in Chapter 6. I highlight the key changes needed at this stage.

The key principles behind the new system will be deceptively simple:
  • Recruit the best people to leadership positions on salaries comparable with the private sector.
  • Let these leaders then similarly recruit the best people they can find; and so on, down the chain.
  • Spend all possible effort to develop these people into Level 5 leaders so they can become role models for others, and thus help to transform the competence and culture of the entire bureaucracy.

Recruit Senior Roles from the Open Market, and Abolish Tenure 

A first step would be to hire extremely competent people as public service leaders – people with multifaceted leadership ability including high quality people-management skills, significant policy knowledge and demonstrated strategic thinking skills. Obviously, such people have to be paid well. The open market intake should apply in the first instance only to senior executive positions but in a phased manner to allpositions. All senior appointments will have to be contractual, with the contracts permitting the government to let the executives seek better opportunities elsewhere (polite language for dismissal!) for underperformance without any rights created against such dismissals.
From what I know about the Indian system, it will be very hard, if not impossible, to find such people within the Indian civil services. Even IAS officers trained abroad are generally not in the league I am referring to. The hunt for talent would therefore have to focus on our private sector which has been developing an excellent reputation internationally. A few Indian academicians of international repute with extensive industry experience could also be potentially tapped. Such academicians will bring the latest policy knowledge and comparative understandings of the world, which are likely to prove crucial in designing strategic policy directions. The third category to look for would be Indians working in the private sector abroad in very senior positions.

Pay Senior Public Servants Salaries Comparable to the Private Sector

It will be crucial that salaries between the private and public sectors are broadly equalized – no open market intake can succeed without this. Such parity would of course apply only to senior executives appointed on contracts. No Pay Commission-type across-the-board hike should be contemplated. People must always be paid in terms of their productivity; the salary must be deserved. This policy will also help reduce corruption (the elimination of corruption will depend on a much wider set of reforms, including the electoral reforms touched upon in the previous chapter).

Reduce the Number of Departments

Ahmed Shafiqul Huque, an Associate Professor in McMaster University in Canada,has identified an explosion in the number of departments in the Indian Government over the years:
The number of departments in the central government of India grew from three (Public, Secret, and Revenue) in 1774 to eight in 1833, while the central secretariat was reorganised into four departments, namely, Home, Foreign, Finance, and Military in 1843. The number of departments rose to 10 in 1919, and 18 in 1947. These were subsequently re-designated as ministries. There were 20 ministries and departments in India in 1952, 54 in 1978, and 70 in 1993.[i]
Despite the great complexity of modern societies, increases in the complexity of the government machinery are not justifiable, as we saw in the Australian example. The disease of reckless expansion of the government machinery in India goes well beyond an increase in the number of departments. There has also been an exponential increase in the number of senior executive positions. Multiple departments with multiple secretaries exist today not to meet any genuine need but for the following two reasons:
  • First, to accommodate the large number of IAS officers recruited from the mid-1960s onwards who have been promoted through the automation of seniority.
  • There are also increasing pressures on Prime Ministers and Chief Ministers who often lead coalition governments today, to accommodate MPs and MLAs who want Ministerial berths in return for support – leading to pressures to create even more departments.
  • The solution to this fungal growth of low performing departments and officers is to significantly reduce the number of departments as well as positions of secretaries and joint secretaries. This can happen only with outstanding leadership, which means that open market recruitment will have to come first. That will have to be followed by very careful restructuring of the machinery of the government including the professionalization of departments. Only after that can the much tighter new structures be put in place.
* * *
The problems of ineffectiveness, lack of innovation, and corruption in the Indian bureaucracy can be speedily reduced through reforms such as these. Some people have pointed out to me the Herculean difficulties involved in such reforms. To paraphrase the key objections: ‘These reforms are too radical for the Indian situation. Who will select these top quality people; in particular, can we trust our Ministers to do this task well? What about Constitutional barriers to reform? What about the IAS itself – will its enormously powerful lobby allow these changes to happen?’ In reply I would suggest that India can seek assistance from other countries which have taken such steps in the past. As Professor John Halligan has kindly written to me, ‘the Australian reforms have been implemented over twenty-five years. It is important to lay the foundations for reform and to build on them with various levels of change’.
[Note: This is an extract from my book, Breaking Free of Nehru

[i] Huque, Ahmed Shafiqul, Asian Journal of Public Administration. Vol.16, No. 2, 1994, pp.249–59. 

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