With the reconstitution of the Planning Commission, the government has once again sent out signals that it means business. The new faces in the commission represent a class of people who have achieved considerable success in their own work environments, and who bring a passion to the roles they have been assigned. The President’s address to Parliament has underscored the determination to produce results, and there is evidence that ministries are being activated and some strategies worked out.
The air of expectation that things will happen this time is quite palpable, but one wonders what is different now. Improvements in levels of governance cannot come out of existing systems and deliveries, and yet there is little indication of how things will change. There have been no suggestions of reforms in processes and procedures: The reports of the Administrative Reforms Commission have offered little by way of solutions, and the major impediment to foreign direct investment (FDI) appears to be the excruciating pace at which the bureaucracy works.
Political and Economic Risk Consultancy, a Hong Kong-based organization, in its latest report has ranked India’s bureaucracy the worst in Asia, with a score of 9.45—zero being the best grade and 10 the worst. It is the only country whose ranking has worsened in the last three years. There are several reasons for this.
The first is ambiguity in policy. There are several examples. The foreign institutional investment (FII) policy, for example, allows free flow of funds without transparency of origin, for short-term investment into markets and market-related products, and has a low taxation burden in the form of capital gains tax. FDI has to bear the burden of full corporate taxation, as well as clearances from multiple agencies and continuous scrutiny. Poor mining policies and lack of consensus with states have stultified mineral exploitation, converting it into a resource available only to those with political access. However, most of these problems are in the realm of implementation issues, and can be addressed by ministers who are determined to get matters moving at their ministries.
The second is in the area of implementation strategies and monitoring. In the last five years, there have been several expert committees whose reports (nearly 70 in number) are available with the government, representing suggestions for implementation in areas as wide-ranging as agriculture and skill development: These only need effective implementation at the ministry level, this at the level of secretaries and joint secretaries. There has been almost no attempt to get these recommendations off the ground.
The third is the most difficult. This is in the area in which the public interfaces with the government, in the day-to-day business of life. In the area of sales tax and income tax, in paying bills and getting planning permissions, in running hospitals and schools, the functionaries of the government behave as though they are an Inquisition to extract the most from clients. This cutting edge bureaucracy, the reluctance at the lower levels of government to change, the lack of responsibility and accountability are all states of governance that we have wished upon ourselves.
Part of the problem is probably the scales of pay, but this has been substantially taken care of after the Sixth Pay Commission. More importantly, it has to do with how government servants perceive themselves and how society perceives them. They are part of the elite; and part of the way they display their importance is by being difficult to work with—whether in matters requiring their approval or when dealing with the people they meet. One reason could be the lack of checks and balances—as was demonstrated last week by the inspection of the Sushruta Trauma Centre in Delhi by the health secretary. But this is not all. The real problem arises from the hierarchical nature of decision-taking and the intense fear of taking the wrong decision, resulting in the tendency to pass the buck upwards. From the civil servant’s perspective, it is ideal to hide a decision behind a committee. In India, over the years this has gotten worse—decisions we used to take at the level of joint secretaries now require cabinet approval, that too after a formal recommendation by the committee of secretaries.
The Right to Information (RTI) Act and public interest litigation (PIL) have no doubt contributed to transparency in decisions, but they have also increased the reluctance to take decisions at lower levels. The answer is “no” unless there is no way of avoiding a “yes”—and corruption flourishes in such an atmosphere.
There are no easy solutions here. One way is to distance people from the bureaucracy through technology—payment of bills, tickets for travel, and applications for jobs and admissions can now be done without face-to-face contact. There should be an attempt to enhance these services. However, at the level of approvals for economic activity, improvements can only happen if those at the top are more vigilant—through better supervision and checks and, most importantly, speedy deterrents.
We need to change the way government transacts its business.
S. Narayan is a former finance secretary and economic adviser to the primeminister. We welcome your comments at policytrack@livemint.com