Dear members,
At the time of writing this column, the reviews of the first year of Shri Narendra Modi led NDA government are hogging the media limelight with loads of claims and counterclaims, analysing its performance in different areas. A critical factor for any government to succeed is – how well it can transform and direct the bureaucracy in attaining its stated promises.
Believed to be the world’s largest bureaucracy, the Central and various State Governments engaged about 6.4 million employees at all levels as per the report following the first Civil Services Survey conducted in 2010. Notorious for inefficiency, corruption and red tape, the Indian bureaucracy was rated to be the worst in Asia as per an international study conducted in 2012. The study also held it responsible for most of the complaints that the business executives have about India.
The transformation of bureaucracy is not a new challenge and, in fact, was faced by every government in the past. Pandit Nehru considered his inability to change the colonial administration to be his greatest failure as India’s first Prime Minister, identifying it as one of the leading causes of India’s inability to solve the problem of poverty (Tenth report of the Second Administrative Reforms Commission (ARC) released in November 2008).
This ARC report also quotes Mrs. Indira Gandhi, who said, “The problem of administration has added to the difficulties of the country. All along the line, administration has deteriorated – at the Centre, in the States, and even in the lower rungs of the governmental setup. Toning up would have to be done, new procedures might have to be evolved, and even fresh recruitment at all levels would have to be considered”.
The ARC report further states categorically that the change in the civil service has to be drastically transformative, uncompromising and a clean rupture with the past. It admits that the functioning of the civil service is characterised by a great deal of negativity, lack of responsiveness to what the people want and the dictates of democracy. There have been about fifty Commissions and Committees at the Union Government level to look into what can be broadly characterised as administrative reforms since Independence. However, all these efforts have yielded very little .
Globally, the advanced countries have been pushing to reshape rigid, hierarchical nineteenth-century bureaucracies into more flexible, decentralised, citizen-responsive civil services, compatible with today’s technological and economic requirements. Major factors such as performance management, meritocracy, Outcomes/Outputs Framework, etc. are driving the changes.
In various studies, a consensus has emerged that “Performance Agreement” is the most common accountability mechanism in most countries that have reformed their public administration systems with the details of the annual performance agreements and the results of the assessment by the third party being provided to the legislature as a part of the Performance Budget/Outcome Budget.
The United States of America started experimenting with performance management of its staff a long time ago. In 1912, an appropriations act directed the U.S. Civil Service Commission to establish a uniform efficiency rating system for all agencies. Subsequently, the Performance rating Act passed in 1950 required establishment of appraisal systems within all agencies and set three summary rating levels: Outstanding, Satisfactory, and Unsatisfactory.
The Civil Reforms Act of 1978 established the Office of Performance Management (OPM). A regular extension and changes/updates have been the key features of the performance management process deployed in the USA.
The Indian government followed a traditional system of Annual Confidential Report (ACR) where at the end of a pre-set period (usually a calendar year), achievements of the officer were recorded with complete secrecy of the exercise most of the time. The ACR was replaced with the Performance Appraisal when the government notified the All India Services (Performance Appraisal Report) Rules, 2007 replacing the All India Services (Confidential Rolls) Rules, 1970. The reforms in this vital process have been terribly slow. In 2009, the Performance Management Department (PMD) was set up in the Cabinet Secretariat to roll out the Performance Management and Evaluation System (PMES).
As per a very recent news report, the income tax department has decided to overhaul its annual performance appraisal system for tax officials, relying on the quality and effectiveness of their work and not plainly on the quantum of tax demands raised. Let us hope this is well implemented and is effective in achieving its stated objective of reducing frivolous tax demands and becoming taxpayer friendly.
An eminent economist V. K. Ramachandran says: “One of the most important lessons of the economic history of modern nations is that the most crucial requirements of social transformation can only be delivered by the public authority. A government that does not pay for skilled personnel to deliver education, health and land reform is one that condemns its people to under-development.”
In its 2014 manifesto, the BJP committed to taking up administrative reforms as a priority. While the new government has taken several steps such as online bio-metric attendance system, engagement with and empowerment of the civil service, this challenge of vitalising the bureaucracy is huge and a major impediment to realising the NDA government’s ambitious goals such as “ease of doing business in India” and “make in India”. Let us hope that this government achieves a significant success on this front, that will truly help deliver their promise of “minimum government, maximum governance”.
Separately, this is also the annual season of performance appraisal in most mid and large sized firms of chartered accountants following the closure of the financial year. With talent management becoming a major challenge, it is high time that accountants embrace the performance management and appraisal systems wholeheartedly. The performance reviews when done correctly can be positive, and constructive interactions will allow team members to know where they stand and what they need to do to achieve more. They also motivate people to achieve their potential and to contribute more effectively to their firm. Several institutes of chartered accountants, including Australia and England & Wales, have issued a detailed guidance on this subject. I hope the ICAI takes the lead in this area as well and helps the firms in India with required guidance, tools and techniques.
On the BCAS front, I congratulate the Vice President Raman Jokhakar on his unopposed election as the next President. I also congratulate Chetan Shah, on his election as the next Vice President. The managing committee for 2015-16 too has been elected. The new team will take charge at the conclusion of the next AGM on 6th July. Only a few weeks are left before I hand over the reins to young and energetic Raman. And the thoughts about how life will be after that fill my mind, having spent last six years as an office bearer. But more about that next month.
