Size does not matter. Efficiency does

Ideas from a veteran administrator on how to ensure maximum governance with minimum government in Indian conditions

bkchaturvedi

BK Chaturvedi | June 30, 2015


#steel frame   #narendra modi   #prime minister narendra modi   #maximum governance minimum governnment   #modi cabinet   #ias officers  


On assumption of office, prime minister Narendra Modi had emphasised the governance mantra, “maximum governance with minimum government”. In the formation of the government he kept the cabinet size initially to less than 10 percent of the strength of the Lok Sabha as against the 15 percent ceiling under Article 75 of the constitution.

Political leaders while finalising cabinets in the states or at the centre try to accommodate as many aspirants as possible. That the present central leadership was able to eschew this attitude was a welcome step in reducing the size of government. A compact ministry has enabled much better coordination in several sectors, especially energy and transport.

Unfortunately there has been no follow-up of the policy. No effort seems to have been made to consider its implementation in the main body of civil service. The issue needs to be looked at in several dimensions. The focus of change should be efficiency of public service. We need to consider the current size of Indian bureaucracy, nature of restructuring required to make it efficient, policy interventions to improve efficiency and improving share of private sector in providing services with regulatory oversight by the government to have minimum government.

Not really overstaffed

The size of the Indian bureaucracy has been commented upon adversely by various stakeholders periodically. Whenever any reform is planned, the prime candidate is bureaucracy and a widely held belief is that it is bloated. The facts suggest a more nuanced approach. The central government has nearly 32 lakh employees including 14 lakh railway employees. In per capita terms it translates into 257 employees per lakh of population as against 840 per lakh in the US.

If the railways were to be excluded, it will be about one-seventh of those working in the US. We have 1,623 employees per lakh of population if we include employees of state governments and other local bodies too. This contrasts with 7,681 employees per lakh in the US. Our strength is one-fourth to one-fifth of the US. According to another estimate, we have about 19 million employees against 21.8 million in the US and 5.9 million in the UK. Compared with India, the UK has more than five times and US have more than four times employees per lakh of population. By these standards we are not overstaffed.

To improve the efficiency there is a need to restructure the civil services. We should reduce the supporting staff, improve the quality and skill set of employees and do away with a staff component which reflects a feudal mindset. Of the central employees, 63 percent hold group ‘D’ posts and 26 percent group ‘C’ posts. Only 8 percent hold group ‘B’ posts and 3 percent group ‘A’ posts. Group ‘D’ posts have a large body of employees working as peons, khalasis, cleaning and other employees, postmen and police constables. Group ‘C’ is the clerical cadre. In the states, a similar pattern exists. Singapore, which had a high share of group ‘C’ and ‘D’ employees, reduced it from 67 percent in 1970 to 20 percent in 2008 to improve efficiency. During this period the share of group ‘A’ staff increased to 52 percent from 5 percent. The need for us is to change the composition of staff and improve the share of Group ‘A’ and ‘B’ staff gradually to 50 percent from the current level of about 11 percent and minimise the number of low-skilled employees. This will help us to improve overall capability of government. This change will require a major reform in the way work is organised in offices. This restructuring will have to be done in phases so that it is financially sustainable.

Two critical areas where the staff strength is very poor are the judiciary and police. While the US has 107 judges per million of population we have merely 16. Similarly the UK, Australia and Canada have 55, 60 and 75 judges per million of population. We are woefully short in this area. The rule of law, the cornerstone of governance, has no meaning in absence of our ability to decide legal disputes quickly. Similar is the case with police. We have 130 policemen per lakh of population as against 401 in the US, 361 in Scotland and 202 in Canada. A UN analysis indicates a median of about 300 policemen per lakh of population globally. We need to increase the strength of the police. There is a clear need to appoint more judges and policemen to ensure an enabling support system for the rule of law. These and other reforms in police and judiciary can improve governance.

Globally, a major part of day-to-day governance is carried out at the local level. We have not paid attention to strengthening this part of government. India’s local body infrastructure or the third tier of the government is weak. It neither has been delegated enough powers nor has adequate capacity to provide effective governance. We need to change the system. There has to be a larger devolution of powers to panchayats and municipal corporations. These must include both financial as well as administrative powers. The argument that it will lead to more corruption is counterfactual. We should have detailed plans for undertaking capacity building of the staff of the local bodies. The best governance and accountability can be provided on all routine matters by the officials at hand.

The restructuring will also result in larger expenditure on staff pay. Unfortunately, we have a low tax/GDP ratio of 17.7 percent as compared to 26.9 percent of the US, 39 percent of the UK and 42.6 percent of Italy. Considering that our GDP is less than many of these countries and the tax rates are lower too, the overall revenue available will not be enough to enable a fast-track reform. Expenditure per employee of group ’A’ or ‘B’ is higher. Change in the composition of employees with a larger share of these groups will increase the financial burden on the exchequer. The policy on increasing the share of these groups of employees will have to be hence implemented in phases over the next two decades. But the process must start now.

Technology can help

Technology can be a major instrument of better governance and help reduce staff requirement. Digitalisation of the economy can help faster processing of a large volume of data and information. It also enables more objective decision taking. We must expand its usage. This will require rapid expansion of the reach of internet services. With the use of Aadhaar, IT, mobile network, postal network and common service centres (CSC) we can organise much better service delivery and improve overall governance. Efforts are being made to provide bank accounts to all citizens. This process must expand. We can also use the large postal network to supplement these efforts. All subsidies should be direct and credited in the accounts.

For the technology to bring about change in governance, it should embrace all levels of government and should not be confined to the central government alone. Most of the services to the common man are delivered at the level of the state government, municipal corporations, panchayats, block or village.

Relying on private players

Less government means a larger share of the private sector in delivery of public services. To some extent it is already happening. Between 2003-04 and 2011-12 the share of private investment has gone up three times in the infrastructure sectors of telecom, power, ports, and airports. With the introduction of the public-private partnership (PPP) concept, a number of roads have been built. In mining and oil and gas, new private investments have come. Outsourcing of services like cleaning and maintenance is taking place. Airlines and road transport is increasingly going in private hands. Railways plan to expand private investments to ensure rapid expansion. While these are helping reduce the size of government in several areas, there is a strong need for a regulatory structure to ensure efficient delivery of services at reasonable price. In areas of roads, power, airlines and telecom, questions have been raised on these issues. People will ask for the public sector to step in if the private sector services are inefficient or they indulge in profiteering. Recently in Delhi power companies have come under attack as many consumers felt that they were charging very high power rates. As the private sector makes greater inroads in our life, these questions will need very careful handling. A strong and fair regulatory environment will help the public interest.

For reforms to succeed and governance to improve, political commitment of central ministers, chief ministers and other ministers to principles of good governance is critical. It should start in the states from the top with a commitment by chief ministers to keep small cabinets. States generally have a large number of ministers and they like to hit the ceiling to accommodate all factions and some more. This permissiveness must be replaced by commitment to greater efficiency and right-sizing of governments. Recent experience with states like Gujarat, Bihar, Odisha, Madhya Pradesh, Sikkim and Mizoram that have showed improved governance is that the personal integrity of the chief minister is very important. In particular, they should be honest and act against corrupt elements. They should support and implement good governance practices like ensuring a stable bureaucracy, transparent procurement procedures and maximising transparency in decision-taking. When these are combined with other governance reforms mentioned earlier, the governance levels will certainly be high. The commitment of the political executive to the above reforms is critical to improving governance.

Good governance is the most important need of the citizens. ‘Minimum government and maximum governance’ in our conditions implies small cabinets at central and state levels, restructuring of civil service and augmenting its strength to maximise efficiency, use of technology to improve public service delivery and sharp increase in the share of private sector for delivering these services. Less government has to be supported by a strong political commitment to good governance and should provide signals that the political executive is not profligate. At the operating level, we will need more well trained employees and must gradually change civil service composition. We require doctors, engineers, IT professionals, well trained civil servants, judges, police constables and not peons. The restructuring has to also focus on the larger share of employees with local government, devolution of financial and administrative powers and capacity building of the staff. We need to use private investors to provide a large range of public services with strong regulations from the government. The next few years will indicate whether we are moving towards our goal.

(The column appears in the June 16-30, 2015 issue)

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