Jan 26, 2005
Reform the Top Civil Service
forthcoming budget will test the resolve of the UPA government to put
economic reforms back on the fast track. Politically feasible
reforms include the adoption of a 15 percent uniform tariff on all
imports, a unified value added tax on goods and services as outlined in
the Kelkar report on the implementation of the Fiscal Responsibility and
Budget Management (FRBM) Act, taming of the deficit as required by the
FRBM Act, and slashing the list of small-scale-industries (SSI)
reservation to 100 items or less.
But the UPA government, which places governance high up on the
reforms agenda, must also show courage to initiate the reform of India's
top-level bureaucracy. Whatever its merits in the immediate
post-independence era, the top civil service, monopolized by the elite
Indian Administrative, Foreign and Central Services, is in dire need of
reform today. Like the rest of the economy, it too must give up its
India wide monopoly on administration and face competition.
Under the presidential system, an incoming U.S. President is free to
appoint his Cabinet members from the entire U.S. citizenry. This
allows him to bring the top experts from different fields into his
Cabinet. For example, the U.S. Secretaries of State have often been
top experts in international affairs while Treasury Secretaries have been
top bankers, financial experts or economists. In addition, the U.S.
President gets to appoint several top layers of bureaucracy and is
therefore able to bring individuals with the necessary detailed
specialized knowledge into his administration. Simultaneously, Cabinet
members and top bureaucrats from the outgoing administration typically
return to think tanks and universities to upgrade their knowledge base
while they wait for their side to be returned to the
White House in the next election.
In contrast, in India, under the Parliamentary system, the Cabinet must be
selected from among the Members of Parliament who, for the most part, are
career politicians. As such the chances that experts will hold the
Cabinet positions are negligible. This fact places the top-level
bureaucracy in India in an enormously privileged position: most Cabinet
members look to their secretaries for guidance when it comes to
policymaking. Under such circumstances, if the secretaries and those
immediately below them also happen to lack the necessary expertise, we run
the risk of blind leading the blind.
In the years immediately following the independence, this risk was
minimal. Prime Minister Nehru himself was extremely knowledgeable, the
independence movement had produced a stellar cast of leaders and, above
all, policymaking was a much simpler task. This last fact meant that
the acquisition of the necessary expertise by super bright members of the
top civil service within
a relatively short period was entirely feasible.
With both the Indian and global economy grown manifold and the
globalization progressed much farther than at independence, policymaking
is a complex task today. As an example, take the tasks facing the
commerce ministry. A very partial list of its duties includes making
rules to meet our WTO obligations while maximizing the benefits from trade
for the country, negotiating future
agreements with other WTO members, handling trade disputes with the
trading partners in the WTO, negotiating and implementing free trade area
agreements with selected trade partners, making export and import policy,
and dealing with anti-dumping and safeguard actions taken by India against
foreign firms and those taken by foreign governments against Indian firms.
Each of these tasks requires technical knowledge in both economics and
Having spent the better part of the last ten years studying these
subjects, I still must still constantly consult other experts to improve
understanding of them. Therefore, unless I am especially slow to
learn, it is inconceivable that our top commerce ministry officials whose
terms typically last for only three years and who come to the ministry
from departments where they "specialized" in altogether
different subjects can gain command of the subjects in a matter of months.
Unsurprisingly, notable contributions by many brilliant and sincere
officers notwithstanding, on balance, successive ministers have been
poorly served. The recent Patents (Amendment) Ordinance, 2004 graphically
illustrates why deeper knowledge matters: reading the Ordinance, one
cannot help but wonder if the pharmaceutical multinationals duped our
innocent officials into believing that what is good for the U.S. (and
perhaps Indian) pharmaceutical industry is also good for India.
Commerce ministry is, of course, not an exception. The argument I
make applies to other ministries such as finance (which has so far done
the most to draw upon the professional expertise, though not nearly
enough), external affairs, heavy industry, textiles and apparel, law,
education and food and agricultural. There is a distinct possibility
that the pace of reforms has been slow in part because self-interested
bureaucrats, who inherently prefer to maintain status quo and fear the
transfer of power from them to markets,
have contributed to making their ministers skeptical towards reforms.
Any reform of the top civil service must solve two related problems: it
must open the door to experts and break the current monopoly of the IAS
and IFS over top bureaucratic jobs. There is a common solution to
both problems: open all jobs at the level of Joint Secretary and up to
outsiders. There should be no guarantee of seniority-based automatic
promotions to the officers to these positions just because they had
successfully competed in an examination two decades earlier.
Instead, they should be expected to compete against the best available
candidates within and outside the IAS and IFS.
Both U.K. and New Zealand, which had top civil service systems much like
the current Indian system, have reformed them over the last decade to
decade and a half to allow lateral entry and introduce competition.
New Zealand has gone so far as to adopt a system in which the top civil
servant in each department is appointed on a contractual basis for a
renewable fixed term. U.K. has a more mixed system that nevertheless
provides the necessary competition at the margin.