Why competition will be good for the bureaucracy

Speaking in the House of Commons in 1922, British prime minister Lloyd George called the civil service in India a “steel frame”, and argued that the structure would collapse without it. A lot has changed with time after India inherited this steel frame from its colonial ruler. In 2012, Political & Economic Risk Consultancy Ltd, a Hong Kong-based consultancy, found that the bureaucracy in India was the worst among 12 Asian countries surveyed. Clearly, the bureaucratic system in the country has not evolved according to the changing nature of administrative challenges and a growing economy where the activity is shifting towards the private sector.

The latest evidence, as reported in this newspaper and elsewhere, is the war of words between members of civil services, as the officers of the elite Indian Administrative Service (IAS) are lobbying hard against parity with other All India Services in compensation, promotions and other benefits. Both sides are making representations before the Seventh Pay Commission, which is expected to submit its report later this month. In effect, the debate is about maintaining the supremacy of one service over all others and reducing competition in appointments at higher levels.

This again is an indication of the need for structural reforms in the Indian bureaucratic system, especially at the top level. Both administration and policymaking are getting increasingly complex and require specialized skill sets. In fact, a good administrator may not always prove to be a good policymaker or vice-versa.

To be sure, the need for change is well recognized and about 50 committees and commissions have looked into administrative and related issues since independence. For instance, the government in 1966 constituted the First Administrative Reforms Commission (FARC) which was followed by a number of other committees. The United Progressive Alliance government in 2005 constituted the Second Administrative Reforms Commission (SARC). Both the commissions recommended changes in the appointment process at the higher levels of the civil service to make it more open. The crux of the matter is that there should be more competition for appointments at the higher levels as policymaking needs technical knowledge and domain expertise. The FARC had recommended that the entry in middle and senior positions in the Central Secretariat be allowed from all services on the basis of specialization, experience and knowledge.

The SARC went on to argue in favour of lateral entry from the private sector in senior positions, as that would bring in corporate culture and domain expertise which may not be available with civil servants in key areas. However, such recommendations normally don’t cut much ice with the incumbents. Be it in the financial markets, the real economy or the government, incumbents don’t like competition. Unsurprisingly, the SARC in its consultation found that most officers’ associations were not in favour of lateral entry in government jobs from the private sector, though some were in favour of being allowed to join the private sector for a specified period. As a result, higher positions in the government have remained largely with officers belonging to one service. In fact, even appointment to head regulatory agencies also normally goes in the favour of a serving or a retired bureaucrat.

This is contrary to the practice in developed countries such as the United States and the United Kingdom, where appointments at senior levels are made from a wider talent pool, which includes eligible civil servants and aspirants from the private sector with relevant expertise. Outside talent from the private sector is more likely to be target-oriented, which will improve the performance of the government. Also, more competition will encourage career civil servants to develop expertise in areas of their choice.

In its report, the SARC noted, “…the framework, systems and methods of functioning of the civil services based on the Whitehall model of the mid-nineteenth century remains largely unchanged”. It is high time that necessary changes which have been recommended and discussed over and over again are implemented.

Clearly, a 21st century economy needs to look beyond a 19th century model of bureaucracy and governance.