Indian Defence Review

Max Weber had argued that bureaucracy constitutes “the most efficient and rational way in which human activity can be organized and that systematic process and organized hierarchies are necessary to maintain order, maximize efficiency and eliminate favoritism”.

Robert K. Merton, on the other hand, was anguished by the dysfunction resulting from bureaucratic structures. The negative consequences according to him are displacement of goal, trained incapacity, over conformity to rules.

In the context of India, Francis Fukuyama observes that “India is famous for high levels of corruption and clientelism, excessive rules and bureaucratic red tape”. He also believes that India clearly needs much greater state capacity across the board to govern professionally and properly.

Bureaucracy in India has gone through mainly three phases, (a) passive compliance with government policy, (b) conformance to the party in power during the emergency years (1973-77), and (c) regulation rather than control after economic liberalization in the 1990s. Mr. Nehru as India’s first PM chose the path of socialism where ‘PSUs were considered temples of modern India. The ‘License, Permit, Quota’ Raj gave bureaucracy field day to dispense favors and largess.

The nationalization of banks in 1971 and of coal mines in 1973 were the final straws in the camel’s back of nationalizing financial intermediation. Prof. Jagdish Bhagwati writes in his book ‘Tryst with Destiny’ that Mrs. Gandhi’s nationalization spree was responsible for the socialist banyan tree to strike firm roots. Controlling a vital mineral resource like coal, apart from oil and gas exploration, made the government’s monopoly sweeping.

Prof. Raj Krishna believes that the “Hindu rate of growth” of 3.5 percent from 1950-1980, was largely due to the asphyxiating control of the bureaucracy, lack of accountability, and scant concern for the efficiency of commercial entities in a market-driven free market scenario.

The Emergency imposed in 1975 was a major blow to India’s democratic credentials. The party in power expected the bureaucracy to be committed to the political philosophy of the party, to realize the goals of socialism. Bureaucracy was also in overdrive to realize mandates like forcible sterilization.

The civil servants, as Justice Shah Commission (1977) noted ‘showed loyalty to the party in power in order to advance their career. Forging of records, fabricating grounds of detention were endemic’. In other words, bureaucracy was committed to the ‘party in power than to the ‘rule of law’. 

India took baby steps toward economic liberalization through its Industrial Policy (1978). The real tectonic shift in governance, however, kick-started with economic liberalization in the 1990s. From a control regime, India embraced a regulatory mechanism and adapted market economics propagated by the Washington Consensus in the field of banking, and taxation, FE rate, and FDI inflow. FERA become FEMA, and TRAI regulated the telecom sector. (PERDA) and (IRDA) regulated pension and insurance. SEBI regulated the stock market, Justice FSLRC (2013) recommended the creation of a National Debt Management Agency (NDMA), Financial Redressal Agency, and Monetary Policy Committee.

While the MPC has been put in place since 2016 to take a broad-based decision on how to fix the repo rate, the other two entities are yet to see the light of the day. The major turnaround in public policy was the role of the state is to create enabling environment for the private sector.  The gleaming airports, the sleek national highways, and the highly efficient telecom sector are testimony to the change in governance. Bureaucracy is no longer involved in controls and quota enforcement but in promoting ‘liberalization, privatization, and globalization’.

Public-private partnerships have become the new buzzword for bolstering the infrastructure sector.  The bureaucracy was now expected to be creating an enabling environment for the private sector to realize its ‘animal spirits.

India is a unique case where the current bureaucratic system itself acts as the greatest resistance in increasing bureaucratic capacity. The entire setup is skewed in favor of generalists over specialists. This is because people receive their promotion on the basis of service tenure rather than performance. India’s challenges at the time of independence were huge but still basic, like maintaining law and order and revenue collection.  

However, today, with far more complex challenges of sustainable development, the policy challenges are much more complex and require domain experts. This would increase the bureaucratic capacity, thus allowing greater autonomy and ultimately improving the quality of governance and service delivery.

The ideological shift in India from socialism to a market economy has significantly impacted the growth variables. It has also decreased the percentage of people below the poverty line by 26 percent (300 million). While the parties in power have different political ideologies, there is a remarkable coalescence their continued commitment to free market philosophy and economic efficiency.

However, these achievements do not mask our poor progress in terms of human development parameters like Infant Mortality Rate (IMR), Maternal Mortality Rate (MMR), Quality of School Education, basic health care & nutrition. These are constitutional mandates before the State in order to realize socio economic justice for all.

After independence bureaucracy was governed by the control mandate of giving licenses, permit, and quota. After economic liberalization they are expected to provide an enabling environment for the private sector to flourish and harness the animal spirits. For this to happen, Francis Fukuyama rightly believes that bureaucratic autonomy is sine qua non of quality governance. In India, after 1956 the planning commission provided a unique template for planning, policy design and evaluation of major programs.

However, with the dismantling of the planning commission such professional approach of setting targets, evaluating performances, making mid-course correction and most importantly democratic accountability have been given a go by. Further, for public policy and governance to succeed institutions must be given independence, civil servants should be more professional through capacity build up program and there is fair synergy between political expediency and sound professional opinion.

Bureaucracy must uphold rule of law in a professional and objective manner. Institutional independence must be respected by the party in power. For this to happen the selection process for major constitutional functionaries like the C&AG, CEC should be done by a collegium system, with the PM, CJI& LOP as members rather than by the party in power. Most importantly, the bureaucracy must be ring-fenced against arbitrary political masters, by ensuring the stability of tenure.

On their part, the bureaucrats must rise to the challenge of nation-building, providing effective law and order, and most importantly equip themselves professionally and update their skills periodically to be at par with the best global standards of governance.

The Economist in a recent editorial has pointed out that liberal democracy is at a crossroads, as the governing elite is sub serving the interests of the elite and not of the common man.  As India celebrates the Civil Services Day, its future as a global power will hinge on how it balances growth with development, efficiency with inclusiveness.

A market economy with proper regulation, Prof Joseph Stieglitz believes, can ensure shared prosperity. The civil services will need to be more professional and politically neutral to realize these lofty ideals & constitutional mandates.