How to fix the 5 problems that ail Indian bureaucracy

By Aman Sharma, ET Bureau

(Courtesy: Economic Times, 2 May 2013)

Three years ago, a survey done by the government among its civil servants showed that every third bureaucrat felt the system was not fair or transparent, while half of them cited working under strong external pressures. Familiar themes were delved into on April 21, Civil Services Day, as India's top bureaucrats and ministers came together to debate whether they were hindering India's economic growth and progress.

There's a growing feeling in international quarters that they are. Last year, the Hong Kong based Political & Economic Risk Consultancy ranked the Indian bureaucracy as the worst in Asia, saying its officials are rarely held accountable and were the root cause of the mistrust felt by companies towards the government.

In February, Vittorio Colao, global CEO of Vodafone Group, which is locked in a $2-billion tax dispute with India, termed its bureaucracy "damaging" to the country. It was in this backdrop that senior bureaucrats (Ajit Seth, Pulok Chatterji, and secretaries from all major ministries) and ministers (Salman Khurshid, Kapil Sibal, Jairam Ramesh and V Narayanaswamy) sat down last month to outline problems and suggest solutions. ET plugged into their conversations to identify the five major fix-it issues; subsequently, we tapped Naresh Chandra, former cabinet secretary and one of India's most prominent bureaucrats, on how these could be fixed.

Reduce Subjectivity in the Appraisal Process

A greater weightage is given to subjective factors than objective in the performance appraisal, from which promotions and postings flow. The current system assigns 60% weightage to personal attributes and functional competency (a subjective assessment) and just 40% to work output (an objective assessment). This has created a situation where 90% of bureaucrats were rated 'outstanding' (scoring 9 on 10) without even having a face-to-face meeting with the appraiser. "If everyone is outstanding, no one is," cabinet secretary Ajit Seth said at the conference. He conceded the current system, which has been there since 2007, needed an overhaul.

The cabinet secretariat has drafted a new appraisal process. Drawn up after examining similar systems in Australia, Malta, New Zealand, and Singapore, it mirrors the norm in the corporate sector, and links team performance to individual appraisals. It also gives greater importance to results and performance: 80% weightage to results, 20% to personal qualities and functional skills. "The superior must read the whole report of the junior to judge his performance, reduce subjectivity and keep the grading loose," says Chandra. The proposal is still being discussed in the government and no implementation timeline has been set. Unless this system changes, quips a secretary-level officer, not wanting to be named, our government will lose every match despite having "11 outstanding centre forwards in a hockey team".

Link Compensation to Competence

Personnel Secretary PK Mishra, at the conference, advocated for a radical system that ensures lower compensation to incompetent bureaucrats. "In Brazil, 60% of a government servant's pay depends on competency and only 40% is fixed," he said. "The concept is that if you do not measure up to a performance standard, you are paid less. Unless we accept these modern concepts wholeheartedly, the image of Indian civil services is unlikely to improve."

But performance-linked benefits might not go down too well with the Indian bureaucracy. For example, the Sixth Pay Commission had recommended the introduction of a new performance-based pecuniary benefit for Central Government employees, over and above their regular salary.

Employees would be eligible for variable pay only if their department achieved 70% of its targets. Most government departments are yet to implement it. According to Chandra, variable pay might not work in the bureaucracy. "It will become a scenario of reward hunting, like the ills plaguing the performance-appraisal system," he says.

Fixed Tenures for All Bureaucrats

At the conference, Mrutyunjay Sarangi, Secretary, Labour and Employment, caused a stir when he said that, in the states, for every officer who refuses to sign a file due to political pressure, there are 10 others willing to do that job. Foreign Minister Salman Khurshid admitted to the concept of a "committed bureaucracy" in certain states. Civil servants were aligned to political parties, leading to a spate of transfers and hounding out of bureaucrats following a change in political dispensation.

Chandra told ET the problem was endemic in states like Uttar Pradesh and Tamil Nadu, where chief ministers have failed to draw a distinction between "political direction and political interference". He suggests a fixed tenure for civil servants at all levels. "The Centre must ensure that all states make public the reasons if a bureaucrat is transferred within three months of a posting," says Chandra.

A proposal to have a fixed tenure at all levels will have to be cleared by the Cabinet. In 2006, the Cabinet had cleared a fixed tenure of two years for defence secretary, home secretary, cabinet secretary, and chiefs of the Intelligence Bureau and the Research & Analysis Wing. Likewise, the Supreme Court had fixed a two year tenure for CBI director.

Sr Bureaucrats should Lead in Innovation...

Addressing the conference, Prime Minister Manmohan Singh asked bureaucrats to think "out of the box" and use technology more to deliver public services and improve governance. Later in the day, his principal secretary and arguably the country's most powerful bureaucrat, Pulok Chatterji, said bureaucrats failed to innovate "as they know, in the government, no one will question them if they stick to the status quo".

Chandra told ET the Indian bureaucracy is a classic case of "homeostasis": junior- and midlevel bureaucrats always look for a precedent in decision-making because they fear boldness could lead to harassment later. It's why, he adds, the lead has to come from senior bureaucrats, both in the way they deal with officials below them and political masters. "The concept of flexibility and innovation should first come at the level of senior bureaucrats who are leading the ministries and only then will it percolate down the system," he says.

According to Chandra, this has to be buttressed by legal protection for decisions taken by bureaucrats while in service. Towards this end, the government is working to amend the Prevention of Corruption Act, and the proposal is pending before the Cabinet.

Inter-departmental Collaboration

At the conference, Chatterji said that while this government had done reasonably well on the policy front, it fell short on implementation and delivery because of an absence of teamwork; they were, too often, working in silos. "We should learn teamwork from a corporate governance (point of view) and not always look at problems from the narrow perspective of each department," he said.

According to Chandra, this is partly a construct of India's governance structure, which has too many points of reference, and old and elaborate procedures. "Our ministries are highly fragmented," he says. "We have nearly five times the number of ministries than the US. The work supposed to be done by a single ministry in the US is done by six here. Everything is not teamwork here."

Even in collaboration with other parts of the government, Chandra adds, senior bureaucrats need to take the lead. "We should learn from E Sreedharan and take lead from how the government chose to build Delhi Metro by seamless cooperation between departments," he says. "If our departments had worked in silos then, Mr Sreedharan would still be digging tunnels in Delhi."