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Friday, November 16, 2012

Sacking non-performing 'privileged and slumbering' babus will spark growth

A special report in this newspaper recently, showed something clearly: the economy is stalling because our bureaucracy is broken. Everyone knows that new investments have to kick in to restart growth. The private sector looks unwilling to budge, so it is up to the government to restart growth through big projects. But how will such projects start if bureaucracy is content to take no calls, sign no files and get the paperwork done for those investments?

It all began in Febraury last year, when Sidharth Behura, the former telecom secretary was arrested and jailed. His boss, former telecom minister Andimuthu Raja was jailed earlier, in connection with the 2G case. Around the same time, the residence of another former telecom secretary, Shyamal Ghosh was raided by the CBI, nine years after his retirement.

These events sent shockwaves through the bureaucracy: what if actions taken today were taken up for scrutiny later, and what if people taking those actions were to be held accountable - even many years later? Why take the risk of doing something today, when its consequences are unclear, even after retirement?

After all, it is easier to write 'please discuss' on a file than to write something that leads to action. This is probably the reason why oil company Cairn India, which has substantial reserves in Barmer, Rajasthan, cannot get a green light to boost its output significantly, in a country that imports nearly 80% of its crude demand.

A large project like the Delhi-Mumbai Infrastructure Corridor (DMIC) aims to connect these two cities through new, high-speed road and rail links, creating several new cities along the way, building new ports and airports along the route. The DMIC is also supposed to connect with west India with the east. The governments of India and Japan have sealed up funding. Yet, there is little or no movement on this project, which has the potential to change India's future for the better.

Why hasn't the project taken off? Short answer: a babu is in charge, with little or no expertise in managing projects of this size and possibly with no appetite for risk, either.

Clearly, investments stall when files stop moving. Today, things are so dire that the prime minister has to request bureaucrats to do their job, with a clean conscience and no fear, but fails to goad babudom into action. In desperation, the government has set up a board to propel the paperwork for investments through various ministries. This will be housed in the Cabinet secretariat. Manmohan Singh will personally supervise it.

Today, the way things are structured, there are no risks to not taking risks. Babus assume, correctly, that no work equals no foreseeable trouble. To break the grip of this assumption on bureaucracy, the incentive structure for babus has to be tweaked.

The government has to change the rules of the game by writing rules that specify penalties for bureaucrats who sit idle. Today, at least on paper, there are no such rules. Any bureaucrat who keeps his superior happy can expect to serve for over 30 years and retire on an assured pension, with medical benefits for life.

Unlike private sector employees, who can be promoted or fired, depending on how they perform, bureaucrats cannot be fired. Even better, unless the supervising minister gives permission, the more senior ones cannot even be prosecuted. Promotions are time-bound, another way of saying that how far you go depends on how long you've been warming chairs.

Along with other privileges, bureaucrats have extraordinary perks: government housing and medical care, assured pensions for life assured seats in Central government schools for their kids wherever they are posted.

Under such conditions, the incentive to work was always low. Today, normal bureaucratic apathy has changed to panicked stillness. Instead of flowing at the speed of mud, bureaucracy is frozen in inaction.

The rules governing babus need to go. The government should sack a few non-performers. Still more can be transferred to Saiha, at the southernmost tip of Mizoram or to the Andaman Islands. A few pensions should be withheld. This will make it clear that shirking work has its own risks and penalties. These measures should prod bureaucracy out of its slumber.

Politicians have extremely risky careers: every elected representative has to have her mandate renewed every five years or less, ministerial berths are not assured and 'working' careers could end in defeat or disgrace. Unsurprisingly, most reform initiatives originate from political leaders.

Into the cozy, privileged - and now downright slumbering - world, the government must inject something to make things a little livelier. New rules imposing penalties for non-performance, scrapping provisions that guarantee employment, firing and penalties on a few standstill babus should do the trick.

Once bureaucrats realize that it is risky to take no risks by avoiding decisions, they should be galvanized into action, competing among themselves to clear files that they now shun. Then, the dead hand of bureaucracy shall spring to life and start annotating and signing files furiously, projects and investments will start and the economy wake up from its slumber. 
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