Lateral entry is good, but more is needed
Bringing in private sector talent can buttress the bureaucracy but far-reaching reforms are needed to revitalize it
On Sunday, the Narendra Modi government took its first step towards fulfilling a goal it had set in 2014. That was when the Centre had mooted the idea of allowing lateral entry from academia and the private sector at the joint-secretary level. The years since have seen a fair amount of will-they-won’t-they. The proposal was abandoned, publicly disavowed, and then resurrected last year. Now, the department of personnel and training’s call for applications to fill 10 joint-secretary level posts in various departments—it has the feel of a pilot project—shows that this time, there is intent to persist with the process initiated last year. This is both welcome and inadequate to address India’s governance challenges.
The civil service’s fall from grace has been partly earned and partly a matter of circumstances. The function and form of any governance institution is shaped by the political and economic contexts it works within. These contexts have changed dramatically over the decades. Vallabhbhai Patel’s conception of the Indian Administrative Service’s (IAS’) role as a binding agent in a newly independent nation that was wildly heterogenous and traumatized was of its time. The old, existential threats no longer exist. Indian federalism has changed accordingly, both politically and economically. When it comes to the latter, the IAS is caught uneasily between old and new: intervening in the market for socio-economic purposes and facilitating market outcomes.
Responding to such challenges requires political will and direction. Too often, these have been missing. At other times, they have been employed to perverse effect by a political elite that finds a subservient bureaucracy useful. IAS officers are afforded certain constitutional protections. But there are plenty of ways for politicians to apply pressure on them. These range from transfers to changing a post’s functions to make it a de facto demotion. The same tactics can be used to reward bureaucratic loyalty. Thus, for example, Lakshmi Iyer and Anandi Mani, after empirically studying the links between politicians and bureaucrats, noted in Traveling Agents: Political Change And Bureaucrat Turnover in India (The Review Of Economics And Statistics, 2012) that a change in a state’s chief minister caused the probability of bureaucratic reassignments to spike. They also found that officers of high initial ability were no more likely to be assigned to important posts than those who possessed less ability but were politically compliant—and that officers belonging to the same caste as the chief minister’s base had a higher chance of winning such assignments. This skews the risk-reward calculation for bureaucrats. Expertise is no longer the only—or perhaps even the best—way to advance. Frequent transfers are not only personally disruptive, they can scupper an officer’s chances of obtaining the highest Central posts via a notoriously non-transparent “empanelment” process. This dynamic also discourages specialized knowledge. Short tenures provide little opportunity for it, for one. Secondly, while IAS officers have generous study-leave provisions, the seniority-based promotion structure and lack of correlation between areas of expertise and posting make the benefits questionable. The upshot is a bureaucracy ill-suited to the rapidly changing nature of technology-fuelled economic progress and governance. Lateral entry is essential to infuse fresh vigour into this closed “mandarin” system. The UK has already attempted this with some success. Countries with similar systems that haven’t are suffering. Japan’s famously powerful bureaucracy is dealing with a loss of effectiveness and reputation not dissimilar to India’s. The French bureaucracy is, and always has been, infamously stifling. India’s political context, however, means that this will have to be done carefully. The recruitment and selection process must be transparent and involve an autonomous body like the Union Public Service Commission to minimize the risk of political considerations trumping merit. This is the route the UK, Australia and New Zealand have taken, and the second administrative reforms committee has recommended as much. The inevitable push-back from the IAS will also have to be managed. So will the lateral entry recruits’ lack of familiarity with operating in a government environment, particularly one as labyrinthine as India’s. All of which should make it clear that as potentially beneficial as lateral entries are, they are not a panacea. They can buttress the IAS. They cannot replace it. Technocratic skills are important. But so is the IAS’ unduplicable experience of ground-level governance in India. From rewarding performance to curbing the culture of political patronage, difficult—a pessimist would say near impossible—reforms are necessary. Without this, all the private sector talent in the world will not be able to make up for the deficiencies of a bureaucracy low on morale, performance and reputation.
What steps should be taken to meet the country’s governance challenges?
As early as 1973, he had been able to get Bimal Jalan, who was then with ICICI, on board, Singh said — and subsequently, Montek Singh Ahluwalia, Shankar Acharya, Rakesh Mohan, Arvind Virmani, and Ashok Desai for key economic assignments. “I got Nicholas Stern involved; Jagdish Bhagwati and T N Srinivasan; Vijay Joshi from Oxford.” This was important because “old orthodoxies” needed to be revisited, and “it was helpful (to have a) group of young and learned people to back the process”, Singh said. Years later, and despite the formidable challenge that lateral entry posed, Singh was able to get in Raghuram Rajan
In that interview, the former Prime Minister attributed his early success in getting domain experts from outside to the fact that the Indian Economic Service at the time was small, and “nobody felt threatened”. But later, “the IES felt that their opportunities for career advancement and promotions were being denied”. That same broad sentiment could in part explain the chorus of criticism that greeted the invitation on Sunday for applications from “talented and motivated Indian nationals” for lateral entry into 10 joint secretary-level posts in the central government.
Much of the criticism, though, has been political. But what these critics seem to have ignored is the fact that through the 1970s and 80s — much before the age of specialisation and opening of the economy — professionals from both the private sector and state-owned companies headed departments in several ministries.
Mantosh Sondhi, who headed Ashok Leyland and the Bokaro Steel Plant, and who founded the Heavy Vehicle Factory, Chennai, was chosen by Indira Gandhi’s government for the top job in the Department of Heavy Industry. This post was later held by Venkataraman Krishnamurthy, who also headed BHEL and SAIL. D V Kapur, founder chairman of NTPC, served as Secretary in the Departments of Power, Heavy Industry, and Chemicals and Petrochemicals. R V Shahi, former CMD of the private power utility BSES, was Power Secretary from 2002-07.
Back in 1965, when Lal Bahadur Shastri was Prime Minister, Dr Verghese Kurien, founder of the Kaira District Cooperative Milk Producers’ Union — popularly known as Amul dairy — agreed to become chairman of the National Dairy Development Board on condition that the Board would be headquartered in Anand, at a safe distance from Krishi Bhawan. In the 70s, Prakash Tandon, the first Indian Chairman of Hindustan Lever, was appointed head of State Trading Corporation (STC). P C Alexander, a former Principal Secretary to two PMs who, as Joint Secretary in the Ministry of Commerce negotiated the terms of the engagement, has written about Tandon’s success in infusing a new culture of management into STC.
Rajiv Gandhi’s government chose K P P Nambiar, a former Chairman of Kerala State Electronics Development Corporation, to head the Department of Electronics in 1986. The other famous appointment of a technocrat by Rajiv’s government was that of Sam Pitroda, who was made head of several technology missions.
The Planning Commission, forerunner to the NITI Aayog, inducted many talented young professionals at relatively senior levels. Yoginder Alagh, Vijay Kelkar, Nitin Desai, and Sukhamoy Chakravarty all went on to hold top positions in government. However, the Union Public Service Commission had to approve the appointments if the tenures were of more than a year.
Given the requirements of technical expertise, lateral entry has traditionally been easier in the economic ministries and in the Departments of Space, Science and Technology, Biotechnology, Electronics, etc. In its 2002 report, the Civil Services Review Committee headed by Alagh, however, recommended lateral entry into other Departments as well, along the lines of countries like the US, where the administration has a mix of permanent civil servants and mid-career professionals.
“There is a need for differentiated skills which require recruitment of specialists. When officers know that they will have to compete, they will work towards accumulation of relevant professional experience,” the committee said, and suggested that successful individuals from non-profit organisations and cooperatives be inducted into middle and senior levels of the government.
The committee placed on record the contribution of the civil service to the country’s development, but noted that levels of professionalism and integrity had declined and a “ruler mindset” and “negative orientation” had set in. It underscored the need to remove deadwood and move towards greater specialisation.
The success of the lateral entry announced by the government now will depend on transparency and its ability to address potential conflicts of interest, and to lay down proper terms of engagement.